[10-Q] Sight Sciences, Inc. Quarterly Earnings Report
Sight Sciences (SGHT) reported Q3 2025 results with revenue of $19.9 million, slightly lower than $20.2 million a year ago, as Surgical Glaucoma held steady and Dry Eye remained soft. Gross profit was $17.2 million while operating expenses fell to $25.1 million, narrowing the net loss to $8.2 million from $11.1 million. For the nine months, revenue was $57.0 million and net loss was $34.3 million.
Cash and cash equivalents were $92.4 million as of September 30, 2025, down from $120.4 million at year-end, reflecting operating cash outflows. Long-term debt stood at $40.1 million. The company amended its Hercules loan in September, extending the interest-only period to February 1, 2027 and increasing potential incremental tranches (subject to lender approval) while maintaining the $65 million facility.
Management executed a targeted restructuring in Q3, recording $2.8 million of charges to reduce operating expenses. Subsequent to quarter-end, two Medicare Administrative Contractors set jurisdiction-wide pricing for CPT 0563T tied to TearCare, effective retroactive to January 1, 2025. A prior $34 million jury verdict in patent litigation awaits judgment and may be affected by USPTO reexaminations.
- None.
- None.
Insights
Operational reset trims losses; liquidity adequate with a costly debt stack.
SGHT delivered flat Q3 revenue at
The September amendment to the Hercules facility extends interest‑only to
The Q3 restructuring charged
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to ____________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of the close of business on October 31, 2025, the registrant had
Table of Contents
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Page |
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Special Note Regarding Forward-Looking Statements |
3 |
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PART I. |
FINANCIAL INFORMATION |
5 |
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Item 1. |
Condensed Consolidated Financial Statements |
5 |
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Condensed Consolidated Balance Sheets (Unaudited) |
5 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) |
6 |
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Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) |
7 |
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Condensed Consolidated Statements of Cash Flows (Unaudited) |
9 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
10 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
35 |
Item 4. |
Controls and Procedures |
36 |
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PART II. |
OTHER INFORMATION |
36 |
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Item 1. |
Legal Proceedings |
36 |
Item 1A. |
Risk Factors |
36 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
42 |
Item 3. |
Defaults Upon Senior Securities |
42 |
Item 4. |
Mine Safety Disclosures |
42 |
Item 5. |
Other Information |
42 |
Item 6. |
Exhibits |
43 |
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Signatures |
44 |
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “Sight Sciences,” “we,” “us” and “our” refer to Sight Sciences, Inc.
This Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025 (this "Quarterly Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
Actual events or results may differ from those expressed in or implied by forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future
3
events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 7, 2025 (our "Annual Report"), our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025 and June 30, 2025 filed with the SEC on May 8, 2025 and August 7, 2025, respectively, and elsewhere in this Quarterly Report. Moreover, we operate in a highly competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
4
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
SIGHT SCIENCES, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
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September 30, |
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December 31, |
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2025 |
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2024 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for credit losses of $ |
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Inventory, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued compensation |
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Accrued and other current liabilities |
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Total current liabilities |
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Long-term debt, net |
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Other noncurrent liabilities |
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Total liabilities |
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Commitments and contingencies (Note 6) |
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Stockholders’ equity: |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in-capital |
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Accumulated deficit |
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( |
) |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
SIGHT SCIENCES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except share and per share data)
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Three Months Ended |
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Nine Months Ended |
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2025 |
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2024 |
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2025 |
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2024 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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( |
) |
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( |
) |
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( |
) |
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( |
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Investment income |
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Interest expense |
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( |
) |
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( |
) |
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( |
) |
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( |
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Loss on debt extinguishment |
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( |
) |
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Other (expense) income, net |
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( |
) |
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( |
) |
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( |
) |
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Loss before income taxes |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Provision for income taxes |
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( |
) |
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Net loss and comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Net loss per share attributable to common stockholders, basic and diluted |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
SIGHT SCIENCES, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except share data)
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Three Months Ended September 30, 2025 |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at June 30, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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— |
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— |
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Withholding taxes on net share settlement of restricted stock units |
|
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2025 |
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( |
) |
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Nine Months Ended September 30, 2025 |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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|||||
Balance at December 31, 2024 |
|
|
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|
$ |
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$ |
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|
$ |
( |
) |
|
$ |
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||||
Issuance of common stock upon exercise of stock options |
|
|
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— |
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— |
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|||
Issuance of common stock upon vesting of restricted stock units |
|
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( |
) |
|
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— |
|
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— |
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||
Withholding taxes on net share settlement of restricted stock units |
|
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— |
|
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— |
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( |
) |
|
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— |
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( |
) |
Employee stock purchase plan purchases |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2025 |
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( |
) |
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||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
SIGHT SCIENCES, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except share data)
|
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Three Months Ended September 30, 2024 |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2024 |
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( |
) |
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Nine Months Ended September 30, 2024 |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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||||
Issuance of common stock upon exercise of stock options |
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— |
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— |
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|||
Issuance of common stock upon vesting of restricted stock units |
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( |
) |
|
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— |
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— |
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||
Withholding taxes of net share settlement of restricted stock units |
|
|
— |
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— |
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( |
) |
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— |
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( |
) |
Warrant issuance |
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— |
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— |
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— |
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||
Employee stock purchase plan purchases |
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— |
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— |
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|||
Stock-based compensation expense |
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— |
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— |
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— |
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||
Net loss |
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— |
|
|
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— |
|
|
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— |
|
|
|
( |
) |
|
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( |
) |
Balance at September 30, 2024 |
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|
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|
|
|
|
|
|
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( |
) |
|
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||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
SIGHT SCIENCES, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
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Nine Months Ended |
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September 30, |
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2025 |
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2024 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Accretion of debt discount and debt issuance costs |
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Stock-based compensation expense |
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Allowance (benefit) for credit losses |
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( |
) |
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Provision (benefit) for excess and obsolete inventories |
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( |
) |
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( |
) |
Noncash operating lease expense |
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Loss on disposal of property and equipment |
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Noncash loss on debt extinguishment |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventory |
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( |
) |
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Prepaid expenses and other current assets |
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( |
) |
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( |
) |
Other noncurrent assets |
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( |
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( |
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Accounts payable |
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( |
) |
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Accrued compensation |
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( |
) |
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Accrued and other current liabilities |
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( |
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Other noncurrent liabilities |
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( |
) |
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Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities |
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Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Net proceeds from Hercules Loan Agreement |
|
|
|
|
|
|
||
Repayment of Prior Loan Agreement |
|
|
|
|
|
( |
) |
|
Debt issuance costs |
|
|
|
|
|
( |
) |
|
Proceeds from employee stock purchase plan purchases |
|
|
|
|
|
|
||
Taxes paid on net share settlement of restricted stock units |
|
|
( |
) |
|
|
( |
) |
Proceeds from exercise of common stock options |
|
|
|
|
|
|
||
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
Net change in cash, cash equivalents, and restricted cash |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Supplemental noncash disclosure of investing and financing activities |
|
|
|
|
|
|
||
Acquisition of property and equipment included in accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
Common stock warrants issued upon execution of Hercules Loan Agreement |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
SIGHT SCIENCES, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1. Company and Nature of Business
Description of Business
Sight Sciences, Inc. (the “Company”) was incorporated in the State of Delaware in 2010 and is headquartered in Menlo Park, California. The Company is an ophthalmic medical device company focused on the development and commercialization of surgical and nonsurgical technologies for the treatment of prevalent eye diseases. The Company’s mission is to develop transformative, interventional technologies that allow eyecare providers to procedurally elevate the standards of care — empowering people to keep seeing.
The Company's product portfolio aligns with its two reportable operating segments: Surgical Glaucoma and Dry Eye. The products for the Surgical Glaucoma segment consist of the OMNI® Surgical System family of products ("OMNI") and the SION® Surgical Instrument ("SION"). The Company’s commercial OMNI offerings, consisting of the Ergo Series of the OMNI Surgical System ("OMNI Ergo") and the OMNI EDGE Surgical System ("OMNI EDGE") are implant-free, minimally invasive glaucoma surgery technologies. OMNI Ergo and OMNI EDGE are indicated in the United States to reduce intraocular pressure in adult patients with primary open-angle glaucoma. The OMNI Ergo is CE Marked for the catheterization and transluminal viscodilation of Schlemm’s canal and cutting of the trabecular meshwork to reduce intraocular pressure in adult patients with open-angle glaucoma. SION is a bladeless, manually operated device used in ophthalmic surgical procedures to excise trabecular meshwork. The product portfolio for the Dry Eye segment consists of the TearCare® System ("TearCare") for ophthalmologists and optometrists. TearCare is a proprietary, interventional, dry eye device designed to melt and facilitate the comprehensive removal of meibomian gland obstructions and restore gland functionality and healthy oil production for adult patients with evaporative dry eye disease due to meibomian gland disease when used in conjunction with manual expression of the meibomian glands, enabling clearance of gland obstructions by physicians to address the leading cause of dry eye disease.
Liquidity Considerations
Since inception, the Company has incurred losses and negative cash flows from operations. As of September 30, 2025, the Company had an accumulated deficit of $
The Company believes its cash and cash equivalents balance, and other existing sources of liquidity will satisfy its working capital and capital resource requirements for at least 12 months from the date of issuance of these condensed consolidated financial statements. Any failure to generate increased revenue, achieve improved gross profit, or control operating costs could require the Company to raise additional capital through equity or debt financing. Such additional financing may not be available on acceptable terms, or at all. If the Company is unable to improve its financial performance, or to secure additional funding when desired, it may need to delay the development of its products, reduce research and development activities, modify or abandon planned future expenditures, or reduce operating costs. Any of these actions could harm the Company’s business, requiring it to change its business strategy, scale back its operations, or limit its ability to achieve its strategic objectives.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements and accompanying notes thereto are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") applicable to interim periods and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sight Sciences UK, Ltd and Sight Sciences GmbH. All intercompany balances and transactions have been eliminated in consolidation.
The unaudited condensed consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair
10
presentation of the Company's financial information contained herein. The condensed consolidated balance sheet as of December 31, 2024 is derived from the Company's consolidated audited financial statements as of that date. These interim condensed consolidated financial statements do not include all disclosures required by US GAAP and should be read in conjunction with the Company's audited consolidated financial statements and the accompanying notes thereto for the fiscal year ended December 31, 2024, which are contained in the Annual Report. The Company's results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other interim period.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expense during the reporting period. The most significant estimates relate to the allowance for credit losses, inventory excess and obsolescence, the selection of useful lives of property and equipment, determination of the fair value of stock option grants, and provisions for income taxes and contingencies. Management evaluates its estimates and assumptions on an ongoing basis using historical experience, an assessment of current and anticipated future macroeconomic conditions, authoritative accounting guidance, and other factors management believes to be reasonable, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the financial statements. To the extent there are differences between these estimates and actual results it could result in a material effect on the Company’s financial condition, results of operations and liquidity.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with an original maturity of 90 days or less, when purchased, to be cash and cash equivalents. Cash and cash equivalents include U.S. treasury securities that are classified as held-to-maturity and recorded at amortized cost in the financial statements. The remainder of cash and cash equivalents consists of checking and savings deposits, as well as money market funds, recorded at cost, which approximates fair value. The Company’s cash balances exceed those that are federally insured. To date, the Company has not recognized any losses as a result of uninsured balances.
The Company also has restricted cash balances, which consist of checking and savings deposits, recorded at cost, which approximates fair value. These restricted cash balances are held as collateral in conjunction with the Company’s corporate credit card program. As of September 30, 2025, the Company had $
Income Taxes
New Accounting Pronouncements
Accounting Standards Recently Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The Company adopted the standard on January 1, 2025 for fiscal year reporting. The standard is to be applied on a prospective basis although optional retrospective application is permitted. While the standard will require additional disclosures related to the Company’s income taxes within the Company’s Annual Report on Form 10-K for the year
11
ended December 31, 2025, the standard did not have any impact on the Company’s consolidated operating results, financial condition or cash flows.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. The ASU requires additional disclosure in the notes to the consolidated financial statements about certain expenses such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other expenses which are presented on the face of the income statement within continuing operations. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact this new standard will have on the related disclosures in the consolidated financial statements.
As of September 30, 2025, there are no additional ASUs issued and not yet adopted that are expected to have a material impact on the Company's financial statements and related disclosures.
Note 3. Fair Value Measurements
The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3—Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety is based on the lowest-level input that is significant to the fair value measurement in its entirety.
The Company's cash and cash equivalents included Level 1 investments in U.S. treasury securities and money market funds. The Company had investments in money market funds of $
|
|
September 30, 2025 |
|
|||||||||||||
|
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Aggregate Fair Value |
|
||||
U.S. treasury securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
December 31, 2024 |
|
|||||||||||||
|
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Aggregate Fair Value |
|
||||
U.S. treasury securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company measures the fair value of outstanding debt for disclosure purposes on a recurring basis. As of September 30, 2025 and December 31, 2024, total debt of $
12
The Company measures the fair value of the unissued common stock warrants that may be issued pursuant to the Hercules Loan Agreement (as defined in Note 5, Debt) using the Black-Scholes option pricing method. These warrants are classified as Level 3 liabilities. As of both September 30, 2025 and December 31, 2024, the fair value of these warrants was less than $
The financial statements as of September 30, 2025 and December 31, 2024 do not include any assets or liabilities that are measured at fair value on a nonrecurring basis.
Note 4. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consist of the following (in thousands):
|
|
As of September 30, |
|
|
As of December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Tools and equipment |
|
$ |
|
|
$ |
|
||
Computer equipment and software |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Construction in process |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense was $
Accrued and Other Current Liabilities
Accrued and other current liabilities consist of the following (in thousands):
|
|
As of September 30, |
|
|
As of December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Accrued expenses |
|
$ |
|
|
$ |
|
||
Current portion of lease liabilities |
|
|
|
|
|
|
||
Short-term interest payable |
|
|
|
|
|
|
||
Other accrued liabilities |
|
|
|
|
|
|
||
Total accrued and other current liabilities |
|
$ |
|
|
$ |
|
||
Other Noncurrent Liabilities
Other noncurrent liabilities consist of the following (in thousands):
|
|
As of September 30, |
|
|
As of December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Noncurrent portion of lease liabilities |
|
$ |
|
|
$ |
|
||
Other noncurrent liabilities |
|
|
|
|
|
|
||
Total other noncurrent liabilities |
|
$ |
|
|
$ |
|
||
13
Note 5. Debt
Hercules Capital Loan Agreement
In January 2024, the Company entered into a Loan and Security Agreement (the "Hercules Loan Agreement") with Hercules Capital, Inc ("Hercules") and certain of its affiliates (collectively with Hercules, the "Lenders"), which provides for a maximum $
In addition to the Initial Loan and the Tranche 1(b) Loan, the Hercules Loan Agreement provides additional tranches available to the Company (the “Tranche Loans,” and together with the Initial Loan and the Tranche I(b) Loan, the “Term Loans"). Tranche 2 originally consisted of $
The Hercules Loan Agreement originally provided for a maturity date of
In September 2025, the Company and Hercules entered into a third amendment (the “Amendment”) to the Hercules Loan Agreement, pursuant to which the expiration of the interest-only period under the agreement was extended by an additional six-months, from
The Term Loans accrue interest at a floating annual rate equal to the greater of
In conjunction with the funding of the Initial Loan, the Company issued warrants to the Lenders to purchase up to an aggregate of
The obligations under the Hercules Loan Agreement are guaranteed by the Company and its future subsidiaries, subject to exceptions for certain foreign subsidiaries. The obligations under the agreement are secured by substantially all of the Company's assets, including its material intellectual property. Additionally, the Company is subject to customary affirmative and negative covenants, including covenants that limit or restrict the ability of the Company to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. The Company is also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement. The Company was in compliance with all covenants as of September 30, 2025.
14
While any Term Loans remain outstanding under the Hercules Loan Agreement, the Company is required to use commercially reasonable efforts to grant to the Lenders the option to invest up to $
Maturities Schedule
Long-term and short-term debt as of September 30, 2025 and December 31, 2024, respectively, was as follows (in thousands):
|
|
As of September 30, |
|
|
As of December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Term Loan |
|
$ |
|
|
$ |
|
||
Total principal payments due |
|
|
|
|
|
|
||
Unamortized discount and debt issuance costs |
|
|
|
|
|
( |
) |
|
Total amounts outstanding |
|
|
|
|
|
|
||
Less: current portion |
|
|
|
|
|
|
||
Long-term debt, net |
|
$ |
|
|
$ |
|
||
The repayment schedule relating to the Term Loans as of September 30, 2025, is as follows (in thousands):
|
|
Amount |
|
|
2025 (remainder) |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Total principal payments |
|
$ |
|
|
Final fee due at maturity |
|
|
|
|
Total repayments |
|
$ |
|
|
Note 6. Commitments and Contingencies
Operating Lease Obligations
The Company has various operating leases, which include facility leases and equipment leases. Operating leases are recorded on the consolidated balance sheets as both a right-of-use asset ("ROU asset") and lease liability, which are recognized based on the present value of the future minimum lease payments over the lease term. In determining the present value of these lease payments, the Company uses its incremental borrowing rate ("IBR") based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The Company’s IBR represents the interest rate that the Company would expect to incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located. In determining the lease term, the Company includes all renewal options that are reasonably probable to be executed.
The Company leases its corporate headquarters in Menlo Park, California. The lease commenced in August 2021 and was originally for a term of
The Company recognizes rent expense on a straight-line basis over the noncancelable lease term. The Company’s rent expense was $
15
September 30, 2025 and 2024, respectively. As of September 30, 2025, the weighted average remaining lease term for the leases was
Operating lease expense and supplemental cash flow information related to operating leases for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Operating lease expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash paid for operating leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Aggregate future minimum lease payments as of September 30, 2025, under these noncancelable operating leases were as follows (in thousands):
|
|
As of September 30, |
|
|
|
|
|
2025 |
|
|
|
2025 (remainder) |
|
$ |
|
|
|
2026 |
|
|
|
|
|
Total future minimum lease payments |
|
$ |
|
|
|
Less: imputed interest |
|
|
( |
) |
|
Present value of future minimum lease payments |
|
$ |
|
|
|
Less: current portion of operating lease liability |
|
|
( |
) |
|
Noncurrent portion of lease liabilities |
|
$ |
|
|
|
Legal Proceedings
On September 16, 2021, the Company filed suit in the U.S. District Court for the District of Delaware (C.A. No. 1:21-cv-01317) (the “Court”) alleging that Ivantis, Inc. (“Ivantis”) directly and indirectly infringes the Company’s U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 by making, using, selling, and offering for sale the Hydrus® Microstent. The Company’s complaint seeks money damages and injunctive relief. On January 24, 2022, Ivantis asserted counterclaims requesting declaratory judgments that the Company's asserted patents-in-suit are not infringed and/or invalid. On August 1, 2022, the Company filed an amended complaint alleging that Alcon Inc., Alcon Vision, LLC and Alcon Research, LLC (collectively, “Alcon”) infringe the four originally asserted patents by making, using, selling, and offering for sale the Hydrus® Microstent, and that all defendants also infringe U.S. Patent No. 11,389,328. The defendants asserted counterclaims requesting declaratory judgments that the Company’s asserted patents-in-suit are not infringed and/or are invalid. In September 2022, Ivantis and Alcon filed petitions with the U.S. Patent and Trademark Office (“USPTO”) seeking inter partes review of U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 (IPR2022-01529, IPR2022-01530, IPR2022-01533, IPR2022-01540), each of which the USPTO denied for raising prior art references and invalidity arguments that were cumulative of those previously considered by the USPTO. On April 26, 2024, at the conclusion of a five-day jury trial, the Company was awarded a positive jury trial verdict of $34 million, comprised of $5.5 million in lost profits damages and $28.5 million in royalty damages for commercial sales of the Hydrus® Microstent for the period between its commercial launch through trial. The patents at issue were U.S. Patent Nos. 8,287,482, 9,370,443, and 11,389,328. In December 2024, the Court heard oral arguments on the parties’ post-trial briefings at the conclusion of which, the Court ordered the parties to engage in non-binding mediation. In March 2025, the Company and Alcon informed the Court that the dispute had not been resolved through mediation and asked the Court to rule on the parties’ post-trial motions and enter a judgement. The judgment has not yet been entered and, once entered, it will be subject to appeal.
In June 2025, Alcon filed petitions with the USPTO for ex parte reexaminations challenging the validity of each of the three patents asserted by the Company at trial, based on prior art patents and publications. The USPTO has granted Alcon’s requests to initiate the reexaminations. It is possible that the April 2024 jury verdict in the Company’s favor, including its ability to collect past damages and ongoing royalties, may be materially and adversely impacted if the reexamination proceedings result in final, non-appealable judgments of invalidity of the asserted claims of the patents-in-suit before a final, non-appealable judgment is entered by the Court in the patent infringement litigation or if the asserted claims are amended during the reexamination proceedings. For example,
16
entry of such judgments of invalidity by the USPTO could include vacating the jury verdict and a finding that the patents-in-suit are invalid. The Company is presently unable to predict the outcome of this lawsuit or the ex parte reexamination proceedings or to reasonably estimate the potential financial impact of the lawsuit or ex parte reexamination proceedings.
In addition to the foregoing, from time to time, the Company is subject to legal claims, regulatory matters and contingencies in the ordinary course of business. Accruals for these matters are reflected in the financial statements based on management’s assessment, including the advice of legal counsel, of the expected outcome of these matters. Liabilities for estimated losses are accrued if the potential losses from any legal proceedings, regulatory matters or contingencies are considered probable and the amounts can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount of loss can be reasonably estimated. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to legal claims, regulatory matters and contingencies, and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period.
Except as described above, as of September 30, 2025 the Company was not a party to any legal proceedings, regulatory matters, or other disputes or claims which, if determined adversely, it believes would, individually or taken together, have a material adverse effect on the Company’s business, financial condition, operating results, liquidity, or future prospects.
Indemnification
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.
The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as a director or officer may be subject to any proceeding arising out of acts or omissions of such director or officer in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of September 30, 2025 and December 31, 2024.
Strategic Reduction in Force Initiative
In August of 2025, the Company implemented a targeted plan, intended to reduce operating expenses, improve cost efficiencies, and better align its operating structure for long-term profitability growth. In connection with the targeted plan, the Company restructured its global workforce in order to reduce operating expenses. Approximately
In conjunction with the execution of the targeted plan, the Company incurred approximately $
17
Note 7. Stockholders' Equity
Common Stock
The Company’s certificate of incorporation provides for
At September 30, 2025 and December 31, 2024, the Company had reserved common stock for future issuances as follows:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Common stock available for future grants |
|
|
|
|
|
|
||
Common stock options issued and outstanding |
|
|
|
|
|
|
||
Restricted stock units outstanding |
|
|
|
|
|
|
||
Shares available for future purchase under employee stock purchase plan |
|
|
|
|
|
|
||
Common stock reserved for issuance upon exercise of outstanding warrants |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Common Stock Warrants
On January 22, 2024, in conjunction with the funding of the Initial Loan under the Hercules Loan Agreement, the Company issued common stock warrants to the Lenders to purchase up to an aggregate of
If the additional Term Loans are funded, the Company will be obligated to issue to the Lenders additional warrants to purchase common stock in an amount equal to
The unissued warrants do not meet the requirements for classification as equity and are recorded as liabilities in other noncurrent liabilities in the consolidated financial statements. The fair value of the unissued warrants was initially recorded upon the funding of the Hercules Loan Agreement. As of both September 30, 2025 and December 31, 2024, the fair value of the unissued warrants recorded was less than $
Note 8. Equity Incentive Plans
2011 Stock Option Plan and 2021 Incentive Award Plan
In 2011, the Company approved the 2011 Stock Option Plan (the “2011 Plan”) that provided for the grant of stock options to employees and nonemployees of the Company.
In July 2021, the board of directors and stockholders adopted and approved the 2021 Incentive Award Plan, (the “2021 Plan”). Under the 2021 Plan, the Company has the ability to issue incentive stock options ("ISOs"), nonqualified stock options ("NSOs"), stock appreciation rights, dividend equivalent rights, restricted stock awards, and restricted stock units ("RSUs").
18
Stock options under the 2021 Plan can typically be granted for periods of up to ten years. For stock options granted to a grantee who, at the time the option is granted, owned stock representing more than 10% of the voting power of all classes of stock of the Company (or any parent or subsidiary of the Company), the term of the stock option may be granted for periods of up to five years. The ISOs and NSOs will be granted at a price per share not less than the fair value at the date of grant. The exercise price of a stock option granted to a 10% stockholder shall be not less than 110% of the grant date fair value of the shares. Stock options granted to new hires generally vest over a four-year period, with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting in 36 equal monthly installments thereafter. Stock options granted as merit awards generally vest in 48 equal monthly installments following the grant date.
RSUs are share awards that entitle the holder to receive shares of common stock upon vesting and settlement of the awards. RSUs granted to employees generally vest over a four-year period with straight-line vesting in equal amounts, either in annual or quarterly installments. RSUs granted to newly hired non-executive employees generally vest over a four-year period, with
The Company initially reserved
As of September 30, 2025 and December 31, 2024, there were
The 2011 Plan was superseded by the 2021 Plan at the time of the initial public offering of the Company's common stock, which closed on July 15, 2021, and no further grants have been made under the 2011 Plan from the date the 2021 Plan became effective.
Stock Option Awards
The following table summarizes stock option activity under the 2021 Plan during the periods presented:
|
|
Number of |
|
|
Weighted-Average Exercise Price |
|
|
Weighted-Average |
|
|
Average Intrinsic Value |
|
||||
Balances as of December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Grants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Forfeited/cancelled |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Exercised/released |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balances as of September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and exercisable as of September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and expected to vest as of September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
During the three months ended September 30, 2025 and 2024, the Company recorded stock-based compensation expense of $
19
The aggregate intrinsic value of stock options exercised during the three and nine months ended September 30, 2025 was $
Determination of Fair Value
The Company estimated the grant date fair value of stock options using the Black-Scholes option-pricing model, which requires the use of highly subjective and complex valuation assumptions to determine the fair value of stock-based awards, including the option’s expected term, the expected volatility of the underlying stock, the risk-free interest rate, and the expected dividend yield. For purposes of the Black-Scholes valuation model, the Company used the simplified method for determining the expected term of the granted stock options since the Company does not have adequate historical data to utilize in calculating the expected term. The grant date fair value of stock options granted was calculated using the following weighted average assumptions:
|
|
Three Months Ended |
|
Nine Months Ended |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
Expected term (in years) |
|
N/A |
|
N/A |
|
N/A |
|
|
Expected volatility |
|
N/A |
|
N/A |
|
N/A |
|
|
Risk-free interest rate |
|
N/A |
|
N/A |
|
N/A |
|
|
Dividend yield |
|
N/A |
|
N/A |
|
N/A |
|
|
Restricted Stock Units
The following table summarizes RSU activity under the 2021 Plan during the periods presented:
|
|
Number of |
|
|
Weighted-Average Grant Date Fair Value Per Share |
|
||
Outstanding, December 31, 2024 |
|
|
|
|
$ |
|
||
Grants |
|
|
|
|
|
|
||
Forfeited/cancelled |
|
|
( |
) |
|
|
|
|
Vested |
|
|
( |
) |
|
|
|
|
Outstanding, September 30, 2025 |
|
|
|
|
$ |
|
||
During the three months ended September 30, 2025 and 2024, the Company recorded stock-based compensation expense of $
Employee Stock Purchase Plan
In July 2021, the board of directors and stockholders approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP permits participants to purchase shares of common stock at a discount through payroll deductions of up to a specified percentage of their eligible compensation. Shares of common stock are offered during two offering periods annually, each running for nine months, with the first offering period typically beginning in the second quarter, and the second offering period typically beginning in the fourth quarter. The purchase of shares for participants in the ESPP occurs at the conclusion of each offering period.
The Company initially reserved
20
limitations. Pursuant to the evergreen provision, the initial share reserve was increased by
As of September 30, 2025 and December 31, 2024, there were
During the three and nine months ended, September 30, 2025, participants purchased
The grant date fair value of shares issuable under the ESPP was calculated using the Black-Scholes valuation model using the following assumptions:
|
|
Three Months Ended |
|
Nine Months Ended |
||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
Expected term (in years) |
|
|
|
|
||||
Expected volatility |
|
|
|
|
||||
Risk-free interest rate |
|
|
|
|
||||
Dividend yield |
|
|
|
|
||||
Stock-Based Compensation
The following is a summary of stock-based compensation expense by function (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Cost of goods sold |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 9. Net Loss per Share Attributable to Common Stockholders
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. As the Company reported a net loss for the three and nine months ended September 30, 2025 and 2024, basic net loss per share is the same as diluted net loss per share as the inclusion of potentially dilutive shares would have been antidilutive if included in the calculation.
21
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods presented (in thousands, except share and per share data):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to common |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The following potentially dilutive issued and outstanding securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive as a result of the net loss position:
|
|
September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Stock option awards |
|
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
||
Common stock warrants |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Note 10. Segment Information
The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), manages the business through two operating segments, consistent with how the CODM: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions, and (iii) designates responsibilities of his direct reports. The Company’s operating segments, which also qualify as reportable segments include: (i) Surgical Glaucoma and (ii) Dry Eye. These segments are generally determined based on the decision-making structure and the grouping of similar products and services.
The CODM uses segment gross profit to assess the operating performance and make resource allocation decisions for each of its segments. Segment gross profit represents revenue reduced by cost of goods sold within each of the operating and reportable segments. The CODM reviews a monthly executive reporting package based on consolidated results of the Company when making decisions about allocating resources and assessing performance. The CODM evaluates actual segment performance to budget and forecast, including monthly sales performance, when allocating capital and personnel.
The Company does not have any intercompany transactions between segments that require elimination. The CODM does not review operating expenses separately for its segments, as the Company does not allocate operating expenses, with many operating costs shared between the segments, and therefore, this is not considered when allocating resources and assessing performance. The Company evaluated the monthly executive reporting package and did not identify any significant or other expenses for disclosure that are not already presented.
In reviewing and assessing segment performance and managing operations, management does not review segment assets. Substantially all of the Company’s revenue is generated from sales in the United States.
22
The following table summarizes select operating results information for each reportable segment (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Dry Eye |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dry Eye |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dry Eye |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Other (expense) income, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Loss before income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 11. Subsequent Events
On October 17, 2025, the Company announced that two Medicare Administrative Contractors (“MACs”), Novitas Solutions, Inc. and First Coast Service Option, Inc., each established jurisdiction-wide pricing, effective retroactively to January 1, 2025, for CPT code 0563T (evacuation of meibomian glands, using heat delivered through wearable, open-eye eyelid treatment devices and manual expression, bilateral), which is specifically associated with procedures using TearCare.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information included in Part I, Item 1, “Financial Statements,” within this Quarterly Report and our audited consolidated financial statements and related notes included in Part II, Item 8, “Financial Statements and Supplementary Data,” in our Annual Report. Certain statements included in this discussion and analysis constitute “forward-looking statements” that are subject to considerable risks and uncertainties. Please see the information under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report.
Overview
Sight Sciences’ mission is to develop transformative, interventional technologies that allow eyecare providers to procedurally elevate the standards of care – empowering people to keep seeing. We are passionate about improving patients’ lives by helping them preserve their sight. Our objective is to develop and market products for use in new treatment paradigms and to create an interventional mindset in eyecare whereby our products may be used in procedures which supplant conventional outdated approaches. Our business philosophy is grounded in the following principles:
Our initial product development has focused on the treatment of two of the world’s most prevalent and underserved eye diseases, glaucoma and dry eye disease (“DED”). We have commercialized products in each of our two reportable operating segments, Surgical Glaucoma and Dry Eye. Our Surgical Glaucoma revenue consists of sales of our OMNI® Surgical System family of products (“OMNI”), currently comprised of our Ergo Series OMNI Surgical System and OMNI Edge Surgical System, and the SION® Surgical Instrument (“SION”), while our Dry Eye revenue consists of sales of the TearCare® System (“TearCare”), and related components and accessories. Each product is primarily sold through a highly involved direct sales model that offers intensive education, training and customer service. We believe this model not only enables us to differentiate our products and company from competitors, but also expands our addressable market by educating ECPs, patients and other stakeholders on our products and evolving treatment paradigms. Outside of the U.S., we have established direct commercial operations in the United Kingdom and Germany. We sell OMNI directly in the United Kingdom and Germany, and indirectly in several other countries in Europe through distributors.
We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, such as ambulatory surgery centers (“ASCs”) and hospital outpatient departments (“HOPDs”), which are typically reimbursed by Medicare or private payors for procedures using our products. We are focused on educating surgeons on the clinical benefits of earlier interventions with the comprehensive OMNI procedure, engagement efforts with accounts in light of reimbursement clarity, enhanced competitive counter selling, investments in targeted commercial resources, pseudophakic standalone market development, and the recent launch of our OMNI Edge Surgical System in the second quarter of 2025, an expansion of the OMNI family.
We sell TearCare to ECPs. In October 2025, two Medicare Administrative Contractors (“MACs”), Novitas Solutions, Inc. (“Novitas”) and First Coast Service Options, Inc. (“FCSO”), each established jurisdiction-wide pricing, effective retroactively to January 1, 2025, for CPT code 0563T (evacuation of meibomian glands, using heat delivered through wearable, open-eye eyelid treatment devices and manual expression, bilateral), which is specifically associated with procedures using TearCare. In jurisdictions outside of those covered by Novitas and FCSO, there is still no meaningful reimbursement coverage by Medicare or private payors for DED procedures, including TearCare, and patients are typically paying out-of-pocket for TearCare procedures, although some payors
24
may agree to provide case-based coverage outside of a formal policy. We plan to continue to engage with other MACs, third-party payors, the clinical societies, and other stakeholders in continued support of patient access for interventional meibomian gland disease procedures performed with the TearCare System; however, there can be no guarantee that other third-party payors, including other MACs, will provide similar reimbursement coverage and/or payment decisions, if at all, for DED procedures, including TearCare.
We are continuing our commercial launch of TearCare and are focused on our comprehensive, clinical data-driven, long-term market development plan that aims to improve awareness and patient access to TearCare. In addition, in the areas where we have achieved some level of reimbursement coverage and/or payment decision, we will focus our commercial resources on supporting providers in these specific geographies to drive utilization. Our strategy is focused on driving adoption and utilization through our experienced sales, marketing, and customer support teams who are already dedicated to the dry eye market, and the ECP customers who have previously purchased TearCare SmartHubs in these states. We will also target new ECP customers in these states based on their current treatment approaches to DED, and also focus on our Surgical Glaucoma customers in these states who may also benefit from adding TearCare to their treatment offerings. In the fourth quarter of 2024, we instituted a price increase for our TearCare products to reflect the clinical value of our technology as part of our strategy to establish broader coverage with commercial payors and Medicare. This increase materially reduced customer demand for TearCare in the fourth quarter of 2024 and through the third quarter of 2025. However, with the pricing established by Novitas and FCSO, we believe demand will increase beginning in the fourth quarter of 2025.
We have dedicated meaningful resources to execute our commercial strategy, while also seeking to reduce operating expenses and improve cost efficiencies to better align our operating structure for long-term, profitable growth. In the third quarter of 2025, we implemented a targeted restructuring plan in which we reduced our headcount by approximately 20% of our global workforce, and reduced our operating expenses, principally by (i) delaying certain research and development project spend while prioritizing near term pipeline projects, (ii) reducing our selling, general, and administrative operating expenses by implementing measures to limit marketing, travel, and administrative costs, and (iii) not backfilling certain open and planned headcount. As part of this restructuring, we also executed changes to our operations in the United Kingdom (“UK”) which included elimination of three general and administrative and sales management roles.
The overall success of our approach to eyecare to date is evidenced by over 350,000 estimated uses of Surgical Glaucoma products and their predicates in over 2,200 hospitals and ASCs in the U.S. and Europe, and over 70,000 estimated uses of TearCare in over 1,500 eyecare facilities in the U.S. through September 30, 2025.
We do not have, and do not currently intend to develop, any internal manufacturing capabilities or infrastructure, and rely on a limited number of third-party manufacturers, many of which are single source suppliers, for the components, accessories and materials that are utilized in the assembly of our products. We believe the manufacturing capacity provided by our current suppliers will be adequate to meet our current and anticipated manufacturing needs across all of our product lines. However, as part of our long-term manufacturing strategy, we are actively expanding third party manufacturing capacity and options for our products, which we expect to be available to us starting in the first quarter of 2026 for certain products. We plan to continue to utilize third party contract manufacturers for our products and any related components.
Revenue in our Surgical Glaucoma segment for the nine-months ended September 30, 2025 and 2024 was $56.1 million and $57.1 million, respectively, with gross margins for the same periods of 86.3% and 87.6%, respectively. Revenue in our Dry Eye segment for the nine-months ended September 30, 2025 and 2024 was $0.9 million and $3.7 million, respectively, with gross margins for the same periods of 52.1% and 45.8%, respectively. For the nine-months ended September 30, 2025, we generated more than 90% of our revenue from customers in the U.S.
Our Surgical Glaucoma revenue was down for the nine months ended September 30, 2025 compared to the same period in 2024 due to a number of factors, including reimbursement coverage changes and increased competition from other minimally invasive glaucoma surgery (“MIGS”) devices. We expect to continue to experience adverse revenue impacts arising out of the restrictions on the performance of multiple MIGS procedures in combination with cataract surgery for Medicare patients in the jurisdictions administered by the five MACs that issued the local coverage determinations (“LCDs”) containing such restrictions. We believe that these restrictions, which became effective in the fourth quarter of 2024, have led to a decrease in the number of overall MIGS devices used in procedures that are being performed, including procedures utilizing our OMNI technology. In addition, our Surgical Glaucoma gross margins have been adversely impacted in 2025, and we expect that they will continue to be
25
adversely impacted in the near term, by the tariffs imposed by the U.S. on China, since most of our OMNI and SION products are currently produced and assembled by a Taiwan-based manufacturer in China. In the nine months ended September 30, 2025, we incurred increased cost of goods sold associated with tariff-related expenses of $0.6 million.
Our Dry Eye revenue was down for the nine months ended September 30, 2025 compared to the same period in 2024 due to lower demand in the Dry Eye segment resulting from our increase in TearCare component pricing which took effect on October 1, 2024. While we have established pricing with two MACs as of October 2025, there is no guarantee as to the timing of reimbursement decisions or the amount of reimbursement, if any, with other payors. Given the earlier stage of TearCare’s commercial development, we expect our Dry Eye segment’s gross margins to be lower than our Surgical Glaucoma segment’s gross margins for the near- and medium-term due to the allocation of fixed labor and overhead costs to the segment's cost of goods sold. In addition, we expect our Dry Eye gross margins will be adversely impacted in future periods by the tariffs imposed by the U.S. on China, since most of our TearCare SmartLids are produced and assembled by a Taiwan-based manufacturer in China. However, tariff impact for the nine months ended September 30, 2025 was immaterial due to our usage of inventory purchased prior to the implementation of these tariffs.
We expect Dry Eye gross margin to improve over time as market access expands, although these improvements may be partially offset by the impact of tariffs.
We believe in the importance of continued strategic investment in initiatives that:
As a result, we intend to continue to invest in product development, market access, sales and marketing, clinical studies, and education initiatives. Because of these and other factors, we expect to continue to incur net losses for at least the next several years, and we may seek additional debt and/or equity financing to fund our operations and planned growth.
To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, debt financing agreements, the sale of common stock in our initial public offering (“IPO”), and revenue from the sale of our products. As of September 30, 2025, we had cash and cash equivalents of $92.4 million, an accumulated deficit of $380.6 million and an outstanding interest-bearing term loan balance of $40.0 million plus a $2.4 million final fee payment due at maturity under the Hercules Loan Agreement (excluding debt discount and amortized debt issuance costs).
Effective as of November 4, 2025, each of Brenda Becker and Erica Rogers tendered their resignations from the Board and the committees of the Board on which they served, and the Board adopted a resolution decreasing the size of the Board from nine (9) to seven (7) directors. Additionally, effective upon, and in light of, Mses. Becker’s and Rogers’ resignations as Class I directors, the Board reassigned Catherine Mazzacco from Class II to Class I of the Board. Ms. Mazzacco will serve as a Class I director for a term ending at the Company’s 2028 annual meeting of stockholders.
26
Effective November 5, 2025, Alison Bauerlein was promoted from Chief Financial Officer and Treasurer to Chief Operating Officer of the Company, and James Rodberg was promoted from Vice President of Finance and Corporate Controller to Chief Financial Officer and Treasurer of the Company to fill the vacancies created by Ms. Bauerlein’s promotion. Ms. Bauerlein also assumed the role of Principal Operating Officer and Mr. Rodberg assumed the roles of Principal Financial Officer and Principal Accounting Officer in this transition.
Factors Affecting Our Business and Results of Operations
We believe there are several important factors that have impacted and that will continue to impact our business, financial condition, and results of operations. Except as described in Part II, Item 1A, "Risk Factors," of this Quarterly Report, there have been no material changes to such factors from those described in our Annual Report under the heading "Factors Affecting Our Business and Results of Operations."
Components of Our Results of Operations
Revenue
We currently derive the majority of our U.S. revenue from the sale of our OMNI and SION products to ASCs and HOPDs and from the sale of our TearCare products to ECPs. To date, the revenue from our Surgical Glaucoma segment has accounted for over 90% of our total revenue, substantially all of which was generated from sales within the U.S. Our Surgical Glaucoma customers place orders based on their expected procedure volume and reorder as needed, typically on a biweekly, monthly or bimonthly basis. Our TearCare customers typically purchase a TearCare System which consists of one or more TearCare SmartHubs® (“SmartHubs”), multiple single-use TearCare SmartLids® (“SmartLids”) and other accessories. After utilizing their initial inventory, customers can reorder SmartLids as needed. No single customer accounted for 10% or more of our revenue for the nine months ended September 30, 2025 and 2024.
The growth of our revenue is primarily driven by the demand for elective surgery and treatment utilizing our products in the United States and Europe, product reimbursement rates and coverage criteria, and competition. Such demand is often lower during summer months because of ECP vacations and in winter months because of fewer business or surgery days due to holidays and adverse weather conditions.
Cost of Goods Sold
Our components and products are produced by third-party suppliers and manufacturers. Our cost of goods sold consists primarily of amounts paid for our products to third-party manufacturers, and our manufacturing overhead costs, which consist primarily of personnel expenses, including salaries, benefits and stock-based compensation, and reserves for excess, obsolete and non-sellable inventory. Cost of goods sold also includes depreciation expenses for production equipment which we provide to our third-party manufacturers and certain direct costs, such as shipping and handling costs and tariffs on imported products and components.
Gross Profit and Gross Margin
We calculate gross profit as revenue minus cost of goods sold. We calculate gross margin as gross profit divided by revenue. Our gross profit and gross margin have been, and we believe they will continue to be, affected by a variety of factors, including differences in segment gross profit and gross margins, changes in average selling prices, changes in product reimbursement rates, product sales mix, production and ordering volumes, manufacturing, tariff and freight costs, product yields, and headcount. In general, we expect our gross profit to increase over time as our revenue increases, and we expect our gross margins to increase over the long term to the extent our production and ordering volumes increase and as we spread the fixed portion of our overhead costs over a larger number of units produced.
We intend to use our design, engineering and manufacturing know-how and capabilities to further advance and improve the efficiency of our suppliers’ manufacturing processes, which we believe will reduce costs and increase our gross margins. However, our gross margins will be adversely impacted by the tariffs imposed by the U.S. on China and other manufacturing countries of origin for our products for as long as the tariffs are in effect. Most of our OMNI and SION products, as well as our TearCare SmartLids, are currently produced and assembled by a Taiwanese manufacturer out of its China manufacturing facilities; however we expect that a portion of our product volumes will be produced in additional manufacturing facilities outside of China starting with our OMNI Edge product line in the first quarter of 2026, with additional products added in 2026.
27
Our gross margins could fluctuate from quarter to quarter due to a number of factors, including variations in product mix, changes in product reimbursement rates or average selling prices, transitions to new suppliers, introduction of new products by us or our competitors, adoption of new manufacturing processes and technologies, and responses to evolving macroeconomic and geopolitical conditions, including the adoption of new or increased tariffs by the United States, China, and other countries.
Research and Development Expenses
Research and development ("R&D") expenses consist primarily of costs associated with engineering, product development, clinical studies to develop and support our products, including clinical trial design, clinical trial site initiation and study costs, internal and external costs associated with our regulatory compliance and quality assurance functions, medical affairs, cost of products used for clinical trials and other costs associated with products and technologies that are in development. These expenses also include personnel expenses, including salaries, benefits and stock-based compensation related to R&D functions, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation expenses for equipment and an allocation of information technology ("IT") and facility overhead expenses.
Our R&D expenses as a percentage of revenue may vary over time depending on the level and timing of new product development efforts, as well as clinical development, clinical trial and other related activities. We expect to continue to make key investments in our R&D initiatives as we continue to invest in our active clinical trial programs, develop new products, and enhance our existing products.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation related to selling, marketing and corporate functions, allocation of IT and facility overhead expenses, bad debt expense, finance, legal and human resource costs. Other SG&A expenses include training, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, professional services fees (including external legal, audit, consulting and tax fees), insurance costs, and general corporate expenses.
Our SG&A expenses as a percentage of revenue may vary over time depending on the level and timing of commercial expansion efforts. We expect to continue to make strategic investments in our SG&A expenses as we continue to invest in our commercial team, market access initiatives and launch new products to enable growth.
Investment Income
Investment income primarily consists of interest and amortization on held-to-maturity investments in U.S. treasury securities and money market funds.
Interest Expense
Interest expense consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the accretion of debt discount and amortization of debt issuance costs associated with the Term Loans.
Loss on Debt Extinguishment
The loss on debt extinguishment is associated with the termination and settlement of the Prior Loan Agreement.
Other (Expense) Income, Net
Other (expense) income, net primarily consists of income and expenses that do not originate from our primary business.
28
Results of Operations
Comparison of the Three Months Ended September 30, 2025 and 2024 (dollars in thousands)
|
|
Three Months Ended September 30, |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
|
|
(unaudited) |
|
|
|
|
|
|
|
|||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
$ |
19,718 |
|
|
$ |
18,632 |
|
|
$ |
1,086 |
|
|
|
5.8 |
% |
Percentage of total revenue |
|
|
99.1 |
% |
|
|
92.4 |
% |
|
|
|
|
|
|
||
Dry Eye |
|
|
188 |
|
|
|
1,525 |
|
|
|
(1,337 |
) |
|
|
(87.7 |
) |
Percentage of total revenue |
|
|
0.9 |
% |
|
|
7.6 |
% |
|
|
|
|
|
|
||
Total revenue |
|
|
19,906 |
|
|
|
20,157 |
|
|
|
(251 |
) |
|
|
(1.2 |
) |
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
2,592 |
|
|
|
2,453 |
|
|
|
139 |
|
|
|
5.7 |
|
Dry Eye |
|
|
117 |
|
|
|
797 |
|
|
|
(680 |
) |
|
|
(85.3 |
) |
Total cost of goods sold |
|
|
2,709 |
|
|
|
3,250 |
|
|
|
(541 |
) |
|
|
(16.6 |
) |
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
17,126 |
|
|
|
16,179 |
|
|
|
947 |
|
|
|
5.9 |
|
Dry Eye |
|
|
71 |
|
|
|
728 |
|
|
|
(657 |
) |
|
|
(90.2 |
) |
Total gross profit |
|
|
17,197 |
|
|
|
16,907 |
|
|
|
290 |
|
|
|
1.7 |
|
Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
86.9 |
% |
|
|
86.8 |
% |
|
|
|
|
|
|
||
Dry Eye |
|
|
37.8 |
% |
|
|
47.7 |
% |
|
|
|
|
|
|
||
Total gross margin |
|
|
86.4 |
% |
|
|
83.9 |
% |
|
|
|
|
|
|
||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
3,352 |
|
|
|
4,746 |
|
|
|
(1,394 |
) |
|
|
(29.4 |
) |
Selling, general and administrative |
|
|
21,750 |
|
|
|
23,390 |
|
|
|
(1,640 |
) |
|
|
(7.0 |
) |
Total operating expenses |
|
|
25,102 |
|
|
|
28,136 |
|
|
|
(3,034 |
) |
|
|
(10.8 |
) |
Loss from operations |
|
|
(7,905 |
) |
|
|
(11,229 |
) |
|
|
3,324 |
|
|
|
29.6 |
|
Investment income |
|
|
965 |
|
|
|
1,454 |
|
|
|
(489 |
) |
|
|
(33.6 |
) |
Interest expense |
|
|
(1,306 |
) |
|
|
(1,151 |
) |
|
|
(155 |
) |
|
|
(13.5 |
) |
Loss on debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other (expense) income, net |
|
|
(2 |
) |
|
|
26 |
|
|
|
(28 |
) |
|
|
(107.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before income taxes |
|
|
(8,248 |
) |
|
|
(10,900 |
) |
|
|
2,652 |
|
|
|
24.3 |
|
Provision for income taxes |
|
|
(79 |
) |
|
|
166 |
|
|
|
(245 |
) |
|
|
(147.6 |
) |
Net loss and comprehensive loss |
|
$ |
(8,169 |
) |
|
$ |
(11,066 |
) |
|
$ |
2,897 |
|
|
|
26.2 |
% |
Revenue. Revenue was $19.9 million during the three months ended September 30, 2025, a decrease of $0.3 million, or 1.2% compared to $20.2 million in the prior year comparable period. Our Surgical Glaucoma revenue for the three months ended September 30, 2025 was $19.7 million, an increase of $1.1 million, or 5.8%, from the prior year comparable period. The overall increase in Surgical Glaucoma revenue was primarily attributable to an increase in the number of OMNI and SION units sold in the comparable periods and an increase in average selling prices. This increase was primarily driven by an increase in ordering facilities, partially offset by a decrease in unit utilization per ordering facility, primarily due to the restrictions on the performance of multiple MIGS procedures in combination with cataract surgery for Medicare patients in the jurisdictions administered by the five MACS that issued the LCDs containing such restrictions, which restrictions became effective in the fourth quarter of 2024.
Our Dry Eye revenue for the three months ended September 30, 2025 was $0.2 million, a decrease of $1.3 million, or 87.7%, from the prior year comparable period. The overall decrease in Dry Eye revenue was primarily due to decreased volumes of SmartLids purchased, and fewer new customers added in the period, which led to lower SmartHub revenue. The primary reason that fewer products were sold was due to impact of our continued focus on the next phase of our commercial strategy for the Dry Eye segment, which involves achieving reimbursed market access for our TearCare products.
29
Cost of Goods Sold. Cost of goods sold was $2.7 million during the three months ended September 30, 2025, a decrease of $0.5 million, or 16.6%, from $3.3 million in the prior year comparable period. Our Surgical Glaucoma cost of goods sold increased $0.1 million as compared to the prior year comparable period. The increase was primarily driven by tariff costs, higher overhead costs per unit, and product sales mix. Our Dry Eye cost of goods sold decreased $0.7 million in the three months ended September 30, 2025 compared to the prior year comparable period, primarily driven by lower revenue.
Gross Profit and Gross Margin. Our total gross profit was $17.2 million in the three months ended September 30, 2025, an increase of $0.3 million from the prior year comparable period. Our gross margin for the three months ended September 30, 2025 increased to 86.4%, from 83.9% in the prior year comparable period. Gross margin in our Surgical Glaucoma segment was 86.9% for the three months ended September 30, 2025, an increase from 86.8% for the prior year comparable period, primarily due to higher average selling prices, partially offset by overhead costs per unit, tariff costs, and product sales mix. In our Dry Eye segment, gross margin decreased from 47.7% for the three months ended September 30, 2024 to 37.8% for the three months ended September 30, 2025, primarily driven by higher overhead costs per unit associated with lower sales volumes, partially offset by higher average selling prices.
Research and Development Expenses. R&D expenses were $3.4 million for the three months ended September 30, 2025, a decrease of $1.4 million from the prior year comparable period. The decrease in R&D expenses was driven by a $0.5 million decrease in clinical studies expense and a $0.7 million decrease in payroll expenses, including decreases in bonus and stock-based compensation expenses compared to the prior year period. R&D expenses during the three months ended September 30, 2025 included $1.0 million of restructuring costs.
Selling, General, and Administrative Expenses. SG&A expenses were $21.8 million for the three months ended September 30, 2025, a decrease of $1.6 million from the prior year comparable period. The decrease was primarily driven by a $1.3 million decrease in legal expenses, a $1.4 million decrease in stock-based compensation expenses, and a $1.3 million decrease in commissions and bonuses. Partially offsetting these expense decreases was a $1.6 million increase in payroll-related expenses. SG&A expenses for the three months ended September 30, 2025 included $1.8 million of restructuring costs.
Investment Income. Investment income was $1.0 million for the three months ended September 30, 2025, a decrease of $0.5 million from the prior year comparable period, due to lower investment balances as well as lower yields on held-to-maturity investments during the current period.
Interest Expense. Interest expense increased $0.2 million during the three months ended September 30, 2025 compared to the prior year comparable period, due to a higher outstanding principal balance under the Hercules Loan Agreement.
Loss on Debt Extinguishment. There was no loss on debt extinguishment for either of the three months ended September 30, 2025 and 2024.
Other (Expense) Income, Net. Other expense, net was less than $0.1 million for the three months ended September 30, 2025, compared to other income, net of less than $0.1 million for the prior year comparable period.
30
Comparison of the Nine Months Ended September 30, 2025 and 2024 (dollars in thousands)
|
|
Nine Months Ended September 30, |
|
|
Change |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
|
|
(unaudited) |
|
|
|
|
|
|
|
|||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
$ |
56,063 |
|
|
$ |
57,132 |
|
|
$ |
(1,069 |
) |
|
|
(1.9 |
)% |
Percentage of total revenue |
|
|
98.4 |
% |
|
|
94.0 |
% |
|
|
|
|
|
|
||
Dry Eye |
|
|
915 |
|
|
|
3,660 |
|
|
|
(2,745 |
) |
|
|
(75.0 |
) |
Percentage of total revenue |
|
|
1.6 |
% |
|
|
6.0 |
% |
|
|
|
|
|
|
||
Total |
|
|
56,978 |
|
|
|
60,792 |
|
|
|
(3,814 |
) |
|
|
(6.3 |
) |
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
7,662 |
|
|
|
7,084 |
|
|
|
578 |
|
|
|
8.2 |
|
Dry Eye |
|
|
438 |
|
|
|
1,984 |
|
|
|
(1,546 |
) |
|
|
(77.9 |
) |
Total |
|
|
8,100 |
|
|
|
9,068 |
|
|
|
(968 |
) |
|
|
(10.7 |
) |
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
48,401 |
|
|
|
50,048 |
|
|
|
(1,647 |
) |
|
|
(3.3 |
) |
Dry Eye |
|
|
477 |
|
|
|
1,676 |
|
|
|
(1,199 |
) |
|
|
(71.5 |
) |
Total |
|
|
48,878 |
|
|
|
51,724 |
|
|
|
(2,846 |
) |
|
|
(5.5 |
) |
Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
86.3 |
% |
|
|
87.6 |
% |
|
|
|
|
|
|
||
Dry Eye |
|
|
52.1 |
% |
|
|
45.8 |
% |
|
|
|
|
|
|
||
Total |
|
|
85.8 |
% |
|
|
85.1 |
% |
|
|
|
|
|
|
||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
12,169 |
|
|
|
13,698 |
|
|
|
(1,529 |
) |
|
|
(11.2 |
) |
Selling, general and administrative |
|
|
70,139 |
|
|
|
76,629 |
|
|
|
(6,490 |
) |
|
|
(8.5 |
) |
Total operating expenses |
|
|
82,308 |
|
|
|
90,327 |
|
|
|
(8,019 |
) |
|
|
(8.9 |
) |
Loss from operations |
|
|
(33,430 |
) |
|
|
(38,603 |
) |
|
|
5,173 |
|
|
|
13.4 |
|
Investment income |
|
|
3,139 |
|
|
|
4,628 |
|
|
|
(1,489 |
) |
|
|
(32.2 |
) |
Interest expense |
|
|
(3,853 |
) |
|
|
(3,501 |
) |
|
|
(352 |
) |
|
|
(10.1 |
) |
Loss on debt extinguishment |
|
|
— |
|
|
|
(1,962 |
) |
|
|
1,962 |
|
|
n.m. |
|
|
Other (expense) income, net |
|
|
(118 |
) |
|
|
(25 |
) |
|
|
(93 |
) |
|
|
(372.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before income taxes |
|
|
(34,262 |
) |
|
|
(39,463 |
) |
|
|
5,201 |
|
|
|
13.2 |
|
Provision for income taxes |
|
$ |
2 |
|
|
$ |
198 |
|
|
|
(196 |
) |
|
|
(99.0 |
) |
Net loss and comprehensive loss |
|
|
(34,264 |
) |
|
|
(39,661 |
) |
|
$ |
5,397 |
|
|
|
13.6 |
% |
Revenue. Revenue was $57.0 million during the nine months ended September 30, 2025, a decrease of $3.8 million, or 6.3% compared to $60.8 million in the prior year comparable period. Our Surgical Glaucoma revenue for the nine months ended September 30, 2025 was $56.1 million, a decrease of $1.1 million, or 1.9%, from the prior year comparable period. The overall decrease in Surgical Glaucoma revenue was primarily attributable to a decrease in the number of OMNI units sold in the current period compared to the prior year comparable period, partially offset by increased average selling prices. This decrease in units sold was primarily driven by a decrease in unit utilization per ordering facility, primarily due to the restrictions on the performance of multiple MIGS procedures in combination with cataract surgery for Medicare patients in the jurisdictions administered by the five MACS that issued the LCDs containing such restrictions, which restrictions became effective in the fourth quarter of 2024, partially offset by an increase in ordering facilities.
Our Dry Eye revenue for the nine months ended September 30, 2025 was $0.9 million, a decrease of $2.7 million, or 75.0%, from the prior year comparable period. The overall decrease in Dry Eye revenue was primarily due to decreased volumes of SmartLids purchased after our TearCare System price increases that went into effect on October 1, 2024 and fewer new customers added in the period, which led to lower SmartHub revenue. The primary reason that fewer products were sold was due to our focus on the next phase of our commercial strategy for the Dry Eye segment, which involves achieving reimbursed market access for our TearCare products.
31
Cost of Goods Sold. Cost of goods sold was $8.1 million during the nine months ended September 30, 2025, a decrease of $1.0 million from $9.1 million in the prior year comparable period. Our Surgical Glaucoma cost of goods sold increased $0.6 million as compared to the prior year comparable period. The increase was primarily driven by tariff costs, higher overhead costs per unit, and product sales mix.
Our Dry Eye cost of goods sold decreased $1.6 million in the nine months ended September 30, 2025 compared to the prior year comparable period, primarily driven by lower revenue resulting from the shift in strategy.
Gross Profit and Gross Margin. Our total gross profit was $48.9 million in the nine months ended September 30, 2025, a decrease of $2.8 million from the prior year comparable period. Our gross margin for the nine months ended September 30, 2025 increased to 85.8%, from 85.1% in the prior year comparable period. Gross margin in our Surgical Glaucoma segment was 86.3% for the nine months ended September 30, 2025, a decrease from 87.6% for the prior year comparable period, primarily due to product sales mix and higher overhead costs per unit, partially offset by higher average selling prices. In our Dry Eye segment, gross margin increased from 45.8% for the nine months ended September 30, 2024 to 52.1% for the nine months ended September 30, 2025, primarily driven by the higher average selling prices, partially offset by higher overhead costs per unit.
Research and Development Expenses. R&D expenses were $12.2 million for the nine months ended September 30, 2025, a decrease of $1.5 million from the prior year comparable period. The decrease in R&D expenses was driven by a $0.8 million decrease in consulting and outside services, a $0.4 million decrease in clinical studies expense, and a $0.7 million decrease in payroll expenses, including a decrease in bonus and stock-based compensation expenses compared to the prior year. Included in R&D expenses during the nine months ended September 30, 2025 was $1.0 million of restructuring costs.
Selling, General, and Administrative Expenses. SG&A expenses were $70.1 million for the nine months ended September 30, 2025, a decrease of $6.5 million from the prior year comparable period. The decrease was primarily driven by a $5.2 million decrease in legal expenses, a $2.5 million decrease in stock-based compensation expenses, and a $2.0 million decrease in commissions and bonuses. These declines were partially offset by a $2.6 million increase in payroll-related expenses and a $1.3 million increase in sales training and marketing costs. Included in SG&A expenses for the nine months ended September 30, 2025 was $1.8 million of restructuring costs.
Investment Income. Investment income was $3.1 million for the nine months ended September 30, 2025, a decrease of $1.5 million from the prior year comparable period, due to lower investment balances as well as lower yields on held-to-maturity investments during the current period.
Interest Expense. Interest expense increased $0.4 million during the nine months ended September 30, 2025 compared to the prior year comparable period, due to a higher outstanding principal balance associated with the Hercules Loan Agreement.
Loss on Debt Extinguishment. There was no loss on debt extinguishment for the nine months ended September 30, 2025. We recognized loss on debt extinguishment of $2.0 million for the nine months ended September 30, 2024, associated with refinancing the indebtedness under our prior secured credit facility (the “Prior Loan Agreement”).
Other (Expense) Income, Net. Other expense, net was expense of $0.1 million for the nine months ended September 30, 2025, compared to expense of less than $0.1 million for the prior year comparable period.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
|
||
Net cash used in operating activities |
|
$ |
(27,867 |
) |
|
$ |
(18,892 |
) |
Net cash used in investing activities |
|
|
(380 |
) |
|
|
(248 |
) |
Net cash provided by (used in) financing activities |
|
|
526 |
|
|
|
(425 |
) |
Net change in cash, cash equivalents, and restricted cash |
|
$ |
(27,721 |
) |
|
$ |
(19,565 |
) |
32
Net Cash Used in Operating Activities. Net cash used in operating activities for the nine months ended September 30, 2025 was $27.9 million, consisting primarily of a net loss of $34.3 million, as well as a net change in our operating assets and liabilities of $5.9 million, partially offset by non-cash charges of $12.0 million. The net change in our operating assets and liabilities was primarily due to a $3.5 million decrease in accrued compensation, a $1.7 million increase in our inventory balance, and a $0.9 million increase in prepaid expenses and other current assets. These changes were partially offset by a $1.0 million decrease in accounts receivable. The non-cash charges primarily consisted of $10.5 million related to stock-based compensation expense, $0.7 million of accretion of debt discount and debt issuance costs, $0.4 million of depreciation and amortization, and $0.4 million of noncash operating lease expense.
Net cash used in operating activities for the nine months ended September 30, 2024 was $18.9 million, consisting of a net loss of $39.7 million, partially offset by non-cash charges of $15.6 million as well as a net change in our operating assets and liabilities of $5.2 million. The net change in our operating assets and liabilities was primarily due to a $1.4 million decrease in accounts receivable, a $1.9 million decrease in our inventory balance, and a $3.4 million increase in accrued compensation. These were partially offset by a $1.5 million decrease in other noncurrent liabilities. The non-cash charges primarily consisted of $13.1 million related to stock-based compensation expense, $1.0 million of noncash loss on debt extinguishment, $0.5 million of depreciation and amortization, $0.5 million of noncash operating lease expense, and $0.5 million of accretion of debt discount and debt issuance costs.
Net Cash Used in Investing Activities. Net cash used in investing activities for both the nine months ended September 30, 2025 and 2024 was $0.4 million and $0.2 million, respectively. The cash used in both periods was for purchases of property and equipment.
Net Cash Provided (Used in) by Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2025 was $0.5 million, consisting primarily of proceeds from the exercise of stock options and proceeds from employee stock plan purchases. Net cash used in financing activities for the nine months ended September 30, 2024 was $0.4 million, consisting primarily of the costs associated with the refinancing of the outstanding term loan agreement.
Liquidity and Capital Resources
Sources of Liquidity
To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, the sale of common stock in our IPO, debt financing arrangements, and revenue from the sale of our products. In January 2024, we entered into a Loan and Security Agreement (the “Hercules Loan Agreement”) with Hercules Capital, Inc (“Hercules”) and certain of its affiliates (collectively with Hercules, the “Lenders”), which provides for a senior secured term loan facility in the aggregate principal amount of up to $65.0 million. We used the proceeds from an initial $35.0 million tranche (the “Initial Loan”) funded under the Hercules Loan Agreement to discharge our indebtedness under the Prior Loan Agreement with our prior lenders. In December 2024, we consummated the drawdown of the $5.0 million Tranche I(b) term loan advance (the "Tranche I(b) Loan") contemplated by the Hercules Loan Agreement.
As of September 30, 2025, we had cash and cash equivalents of $92.4 million, an accumulated deficit of $380.6 million, and an outstanding term loan balance of $40.0 million plus a $2.4 million fee final payment due at maturity under the Hercules Loan Agreement (excluding debt discount and amortized debt issuance costs). Based on our current planned operations, we expect our cash and cash equivalents balance, as well as other sources of liquidity, will enable us to fund our operations for at least the next 12 months and the foreseeable future.
Our historical cash outflows have primarily been associated with cash used for operating activities such as sales, marketing and commercialization of our products, research and development activities, regulatory and market access activities, intellectual property enforcement and portfolio expansion, capital expenditures and debt service costs. Our cash requirements will be significantly impacted by our ability to manage and grow our business by maintaining and expanding our sales to existing customers or introducing our products to new customers; our ability to obtain and maintain sufficient reimbursement for our products, including successfully protecting reimbursement for our Surgical Glaucoma products and expanding and maintaining sufficient reimbursement for our Dry Eye products; the level of our investment in commercialization and research and development activities, including clinical trials; whether we enter into any strategic acquisitions or investments, and the timing and amount of the
33
associated capital expenditures; the outcome of our litigation against Alcon, including receipt of any final, non-appealable award thereunder; and competitive dynamics within our industry. There are numerous factors that may impact our long-term cash requirements, and we are unable to accurately predict them at this time. An extended period of global supply chain disruption, geopolitical or trade tensions, or economic uncertainty could materially affect our business, results of operations, financial condition, and access to sources of liquidity. For example, the U.S. has recently imposed tariffs that apply to all of our products and product components imported from China, which has, increased and may to continue to increase, the cost of our products and components and have a negative impact on our gross margins and liquidity.
We may in the future need to seek additional sources of liquidity and capital resources through equity or debt financings, such as additional securities offerings or through borrowings under a new or existing credit facility. There can be no assurance that such transactions will be available to us on favorable terms, if at all.
Hercules Capital Loan Agreement
In January 2024, we entered into the Hercules Loan Agreement with the Lenders, which provides for a maximum $65.0 million credit facility. An Initial Loan of $35.0 million was funded under the Hercules Loan Agreement on January 22, 2024, which was used to discharge our indebtedness under the Prior Loan Agreement. On December 10, 2024, we consummated the drawdown of the $5.0 million Tranche I(b) Loan under the Hercules Loan Agreement. Upon consummation of the Tranche I(b) Loan, the aggregate principal amount of borrowings under the Hercules Loan Agreement was $40.0 million.
In addition to the Initial Loan and the Tranche 1(b) Loan, the Hercules Loan Agreement provides additional tranches available to us (the “Tranche Loans,” and together with the Initial Loan and the Tranche I(b) Loan, the “Term Loans). Tranche 2 originally consisted of $10.0 million available to draw through September 15, 2025, contingent upon the achievement of certain performance milestones prior to June 30, 2025, which milestones were not met and thus this Tranche 2 was not available to the Company. Tranche 3 consisted of $15.0 million available to draw through the interest only period in increments of $5.0 million, subject to the sole approval of Hercules' investment committee.
The Hercules Loan Agreement originally provided for a maturity date of July 1, 2028, with an interest only period running for the first 30 months of the agreement term. This interest-only period was extendable for an additional six months for a total of 36 months upon the achievement of certain performance milestones prior to June 30, 2025; these milestones were not met by the June 30, 2025 deadline and thus the six-month extension of the interest only period was not available to the Company.
In September 2025, the Company and Hercules entered into a third amendment (the “Amendment”) to its Loan and Security Agreement. The Amendment provided for an additional six-month extension of the interest only period, to now extend to February 1, 2027. The Amendment also amended the Hercules Loan Agreement to reallocate the undrawn and unavailable $10.0 million tranche by increasing the amount available to draw through the interest only period from $15.0 million to $25.0 million in minimum increments of $5.0 million, subject in each case to the sole approval of Hercules’ investment committee, maintaining the maximum $65.0 million credit facility.
The Term Loans accrue interest at a floating annual rate equal to the greater of 10.35%, or the Wall Street Journal prime rate (the “Prime Rate”) plus 2.35%, with the interest rate equal to 10.35% at September 30, 2025. The final payment fee is set at 5.95% of the funded balance, which is recognized as a debt discount and is being accreted into the amortization of debt issuance costs using the effective interest rate method over the term of the loan.
In conjunction with the funding of the Initial Loan, we issued warrants to the Lenders to purchase up to an aggregate of 135,686 shares of our common stock at an exercise price of $5.159 per share, which were recorded and classified as equity. On December 10, 2024, upon the funding of the Tranche I(b) Loan, we issued additional warrants to the Lenders to purchase 26,095 shares of our common stock at an exercise price of $3.83 per share. Each warrant is exercisable for a period of seven years from the date of issuance. If the additional Term Loans are funded, we will be obligated to issue to the Lenders additional warrants to purchase common stock in an amount equal to 2.0% of the funded balance of each tranche loan under the Hercules Loan Agreement, divided by the exercise price on the date we draw funds under such tranche loan. The exercise price will be calculated using the five-day volume-weighted average stock price as of such date. See Note 7, Stockholders' Equity, for additional information regarding these common stock warrants.
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The obligations under the Hercules Loan Agreement are guaranteed by us and our future subsidiaries, subject to exceptions for certain foreign subsidiaries. The obligations under the agreement are secured by substantially all of our assets, including its material intellectual property. Additionally, we are subject to customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. We are also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement. We were in compliance with all covenants as of September 30, 2025.
While any Term Loans remain outstanding under the Hercules Loan Agreement, we are required to use commercially reasonable efforts to grant to the Lenders the option to invest up to $3.0 million in our next round of equity financing, if any, that is broadly marketed to multiple investors on the same terms, conditions and pricing offered to investors in such subsequent equity financing.
Leases
Our corporate headquarters are located in Menlo Park, California, where we lease approximately 11,000 square feet of office, research and development, engineering and laboratory space pursuant to a lease that commenced on August 1, 2021 and expires on October 31, 2026.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities, and the reported amounts of revenue and expense during the reporting period. We evaluate our estimates and assumptions on an ongoing basis using historical experience, existing and known circumstances, authoritative accounting guidance, and various other factors we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.
There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report under the heading “Critical Accounting Estimates."
JOBS Act Accounting Election
The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of our financial statements to those of other public companies more difficult.
Recently Issued Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies, in the notes to our unaudited condensed consolidated financial statements in this Quarterly Report for recent accounting pronouncements not yet adopted as of the date hereof.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate risk. Our exposure to interest rate risk is principally confined to our cash and cash equivalents and the Hercules Loan Agreement.
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As of September 30, 2025, we had cash and cash equivalents of $92.4 million, which consisted of bank deposits, money market funds, and U.S. treasury bills. We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents.
The Hercules Loan Agreement contains a floating rate equal to the greater of 10.35% or the Prime Rate plus 2.35%, with an interest rate equal to 10.35% as of September 30, 2025. Based upon the balance outstanding as of September 30, 2025, a hypothetical 1.0% (100 basis points) change in interest rates would not have a material impact on our financial statements.
There have been no material changes to such risks from those described in our Annual Report under the heading "Quantitative and Qualitative Disclosures About Market Risk."
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation and supervision of our principal executive officer and our principal financial and accounting officer, evaluated our disclosure controls and procedures. The term 'disclosure controls and procedures,' as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to a company's management, including its principal executive officer, and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.
Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that as of September 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Except as set forth in Note 6, Commitments and Contingencies, to the notes to the unaudited condensed consolidated financial statements in Part I, Item 1, “Financial Information” of this Quarterly Report, which is incorporated herein by reference, we do not believe we are currently a party to any legal proceedings, regulatory matters, or other disputes or claims which, if determined adversely to us, would, individually or taken together, have a material adverse effect on our business, financial condition, operating results, liquidity or future prospects. However, we may, in the ordinary course of business, face various claims brought by third parties, and we may, from time to time, make claims or take legal actions to assert our rights, including intellectual property rights, as well as claims relating to employment matters and the safety or effectiveness of our products. Any of these claims could subject us to costly litigation, and, while we generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers may deny coverage, may be inadequately capitalized to pay on valid claims, or our policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on our business, financial condition, results of operations and liquidity. Additionally, any such claims, whether or not successful, could damage our reputation and business, and may have an adverse impact on us as a result of defense and settlement costs, diversion of management time and resources, and other factors.
Item 1A. Risk Factors.
Except as set forth below, we are not aware of any material changes to the risks and uncertainties described
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under the heading “Risk Factors” in our Annual Report or Quarterly Reports on Form 10-Q for the three months ended March 31, 2025 and June 30, 2025, respectively, which are incorporated herein by reference. The risks described in our Annual Report and Quarterly Reports are not the only ones we face. Additional risks we currently do not know about or that we currently believe to be immaterial may also impair our business, financial condition, operating results, liquidity, and future prospects.
We rely on third parties to manufacture and supply all of our products, and a substantial portion of our products and components are manufactured in China. A number of our suppliers are also single-source providers. We are subject to numerous risks relating to our reliance on such third-party suppliers, including the impact of tariffs on products imported from China.
Our business strategy depends on our ability to manufacture our current and future products in sufficient quantities, on terms acceptable to us, and on a timely basis to meet customer demand, while adhering to product quality standards, complying with regulatory requirements, and managing manufacturing and import costs. We do not have, and do not currently intend to develop, any internal manufacturing capabilities or infrastructure, and we rely on a limited number of third-party manufacturers, many of which are single-source suppliers, for the components, accessories, materials and assembly that we utilize in our products. Specifically, most of our OMNI and SION products, as well as our TearCare SmartLids, are produced and assembled by a single Taiwan-based manufacturer in China. These commercial products comprise substantially all of our current revenue. Our suppliers may be unwilling or unable to supply products or components to us reliably and at the levels we anticipate or that are required by our customers, or we may be unable to purchase these items on terms that are acceptable to us, or at all.
Our suppliers must be able to provide us with products and components in compliance with regulatory requirements, including the FDA’s Quality System Regulation (“QSR”) and other applicable laws or regulations, in accordance with agreed-upon specifications, at acceptable costs and on a timely basis. If our suppliers are unable or unwilling to meet our demand requirements, we may not have enough of our products available for delivery to support ECPs that utilize our products as part of their treatment. For instance, if the supply of our products and components from our manufacturer in China was interrupted or suspended for any significant period, we may be unable to meet customer demand for these products during that time. Our ability to obtain products and components in sufficient quantities and on a timely basis from our suppliers may be limited for several reasons, including quality issues at their manufacturing facilities, damage to their manufacturing equipment or facilities, problems with their own suppliers, inability to obtain components required for our products, their financial difficulties, our relative importance as a customer to each supplier, or prohibitive cost increases associated with importing items from certain regions where our suppliers are located. Any shortfall in the supply of our products may result in lower adoption and utilization rates of our products by ECPs, as well as harm to our reputation, either of which could have a material adverse effect on our business, financial condition and results of operations.
Geopolitical tensions between the U.S. and China, and between the U.S. and other countries, have created considerable political and economic unrest and uncertainty that may adversely impact our business. As discussed above, most of our products are produced and assembled at a manufacturing facility in China. There is currently significant uncertainty about the relationship between the U.S. and China with respect to a number of geopolitical issues, including trade policies, government regulations and tariffs, and we expect this uncertainty will continue in future periods. Commencing in February 2025, the U.S. has imposed a significant new tariff on products imported from China. The tariff rate has fluctuated significantly since its inception and may continue to vary materially in the future.
This tariff applies to all of our products and product components imported from China. China has responded with certain retaliatory tariffs, and the U.S. and China could implement additional retaliatory tariffs. The China tariff has increased the cost of our products and components and will likely have a negative impact on our gross margins for as long as it remains in effect. For instance, at the current implemented tariff rates, we expect that our Surgical Glaucoma segment’s unmitigated tariff exposure would increase our cost of goods sold by between approximately $1.0 million and $1.5 million for full year 2025. There can be no assurance that U.S. tariff rate on products imported from China will not increase or materially and adversely affect our cost of goods sold in the future. Any further escalation in the use of retaliatory trade tariffs between the U.S. and China could cause a further increase in the cost of our products and components. There is also the risk that new tariffs could be implemented with other U.S. trading partners. These tariffs may cause supply chain disruptions and will also likely increase the shipping and other
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logistical costs involved in importing our products and components, which would further adversely impact our gross margins.
In September 2025, the U.S. Department of Commerce Bureau of Industry and Security announced that a Section 232 investigation was initiated to assess the effects on national security of imports of personal protective equipment, medical consumables, and medical equipment, including devices. If this investigation concludes that there is a national security risk associated with these imports, the President could impose trade restrictions or tariffs on these imports, including our products, which could further increase the cost of our products and components. The imposition of tariffs or other restrictions as a result of this Section 232 investigation could cause supply chain disruptions and would also likely increase the shipping and other logistical costs involved in importing our products and components, which would further adversely impact our gross margins, if enacted.
To partially mitigate these risks, we are evaluating additional manufacturing locations to produce and assemble our products and are in the process of establishing additional manufacturing lines outside of China. We have also increased our inventory levels of certain products to reduce the impact of further China tariff increases. However, at least through 2025 and into 2026, we expect the substantial majority of our products will continue to be manufactured in China, and will therefore continue to be subject to the prevailing tariff rates. In addition, the additional third-party manufacturing locations identified also have tariffs on imports from those countries, ranging from 15% to 19% currently, which will adversely impact our gross margins.
The process of identifying and qualifying additional manufacturing facilities could be time-consuming and expensive, result in interruptions in our operations, cause delays in the supply of our products, or affect the quality or performance specifications of our products. We cannot assure you that we will be able to identify and engage additional contract manufacturers on terms similar to our current arrangements or that are otherwise favorable to us. In addition, we cannot guarantee that the costs associated with obtaining products and components from an additional manufacturer, including any associated tariffs, will be lower than the costs associated with obtaining products from our current manufacturers, or that any reduction in the costs will be sufficient to offset the cost of adding new manufacturers. Furthermore, any change in our manufacturers could require us to complete another qualification process at the manufacturer’s facility, and there is no guarantee the facility would pass our quality audit. The occurrence of any of these events could increase our operating costs or harm our ability to meet the demand for our products in a timely manner, either of which could have a material adverse effect on our business, financial condition and results of operations.
We do not typically enter into long-term supply agreements with our third-party manufacturers and do not anticipate doing so in the near term. Accordingly, we will continue to be subject to the risk that our suppliers can cancel our agreements on relatively short notice, or that we will be unable to renew or extend contracts and arrangements with such third parties on terms that are favorable to us, or at all. These risks are likely to be exacerbated by our limited experience manufacturing our current products and negotiating agreement terms with third-party manufacturers.
If demand for our products increases, we will have to invest additional resources to manage the manufacturing process. If we fail to secure increased production capacity efficiently, we may not be able to respond to customer demand on a timely basis, our sales may not increase in line with our expectations, and our operating margins could fluctuate or decline. In addition, the manufacture of future products may require modification of our current production processes, the identification of new suppliers for specific components, sub-assemblies and materials, or the development of new manufacturing processes or technologies. It may not be possible for our current third-party manufacturers to produce these products at a cost or in quantities sufficient to make these products commercially viable or to maintain current operating margins, all of which could have a material adverse effect on our business, financial condition and results of operations.
We may not be able to secure or maintain adequate levels of third-party coverage and reimbursement for procedures in which our Surgical Glaucoma or Dry Eye products are used, and third parties may rescind or modify their coverage or delay payments related to these products, which would adversely affect our business, financial condition, and results of operations.
We derive revenue from sales of OMNI and SION to physicians, ASCs, and HOPDs, which typically bill all or a portion of the costs and fees associated with our products to various third-party payors, including Medicare, Medicaid, foreign governmental payors, private commercial insurance companies, health maintenance organizations and other healthcare-related organizations, and then bill patients for any applicable deductibles or co-payments.
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Historically, we have sold our TearCare system components to customers on a limited cash-pay basis to drive customer awareness and acceptance in advance of reimbursement. We are pursuing reimbursement coverage for TearCare so ECPs can bill all or a portion of the costs and fees associated with this product to various third-party payors, including Medicare, Medicaid, private commercial insurance companies, health maintenance organizations, and other healthcare-related organizations, and then bill patients for any applicable deductibles or co-payments. As a result, access to adequate coverage and reimbursement for procedures in which our Surgical Glaucoma and Dry Eye products are used by third-party payors is essential to their broad acceptance and adoption by patients and ECPs.
Internationally, medical reimbursement systems vary significantly from country to country, with some countries limiting medical centers’ spending through fixed budgets, regardless of levels of patient treatment, and other countries requiring application for, and approval of, government or third-party reimbursement. For example, in the third quarter of 2024, certain reimbursement advice published by the United Kingdom’s National Health Service rendered untenable the code that had previously been relied upon as applicable to procedures performed with our OMNI technology. This shift has resulted in reduced reimbursement for OMNI procedures as compared to historic reimbursement levels, which in turn could materially affect our business, results of operations and prospects in the United Kingdom.
These third-party payors continually review new and existing technologies for possible coverage and can deny or reverse coverage for new or existing products and procedures, and there can be no assurance that third-party payor policies provide coverage, or will continue to provide coverage, for procedures in which OMNI or our other products are used. For example, in the U.S., the Centers for Medicare & Medicaid Services (“CMS”), MACs or commercial payors could require or issue coverage policies that could restrict or eliminate coverage for the patient populations eligible for treatment with our products or that are otherwise unfavorable to our business. In June 2023, for instance, five MACs published the Prior LCDs, which proposed to identify certain non-implantable MIGS procedures as investigational and not reasonable and necessary in the jurisdictions where these MACS administer Medicare Part B benefits, including but not limited to adult canaloplasty in combination with trabeculotomy ab interno, a procedure performed with OMNI and for which it is indicated. The Prior LCDs may also have categorized our SION technology as investigational and thus non-covered with respect to goniotomy procedures. Although the Prior LCDs were withdrawn in late December 2023 and replaced with the now-effective Final LCDs which allow for continued coverage of standalone canaloplasty and goniotomy procedures performed with our OMNI and SION technologies in these five MAC jurisdictions, in the future, governmental or private payors may issue coverage policies or guidance that may establish non-coverage, materially restrict coverage, or reduce reimbursement levels for one or more procedures involving our products. Any such policies, determinations or guidance could in turn influence coverage determinations by other third-party payors.
In addition, each of the Final LCDs adopted a non-coverage policy when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy, at the same time in the same patient’s eye. We estimate that approximately 15% of total MIGS codes billed in the nine months ended September 30, 2024 were done in combination with another MIGS code and expect the non-coverage determination for multiple MIGS procedures will reduce overall MIGS claims volumes, which may adversely impact our business, revenue and prospects. If we are not successful in reversing any proposed non-coverage policies, or if third-party payors that currently cover or reimburse procedures in which our products are used reverse or limit their coverage in the future, or if other third-party payors issue similar policies, it would have a material adverse effect on our business, financial condition, and results of operations. Moreover, any uncertainty with respect to coverage or coding may impact management’s ability to accurately forecast results.
We also derive revenue from sales of TearCare to ECPs and eye care clinics, which bill all or a portion of the costs and fees associated with treatments and products to patients or, on a limited basis, to third-party payors. We believe that access to adequate coverage and reimbursement for procedures in which TearCare is used by third-party payors is important to the broad acceptance and adoption of TearCare. In October 2025, two MACs, Novitas Solutions, Inc. (“Novitas”) and First Coast Service Option, Inc. (“FCSO”), each established jurisdiction-wide pricing effective January 1, 2025 for CPT code 0563T (evacuation of meibomian glands, using heat delivered through wearable, open-eye eyelid treatment devices and manual expression, bilateral), which is specifically associated with procedures using TearCare. In other MAC jurisdictions, there is still no meaningful reimbursement coverage by Medicare or private payors for DED procedures, including TearCare, and patients are typically paying out-of-pocket for TearCare, although some payors may agree to provide case-based coverage outside of a formal policy. We are currently aware of three other MACs that continue to maintain low payment rates for TearCare procedures in their fee schedules. If these low payment rates are not removed or increased to what we believe is an
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appropriate reimbursement level, they could adversely impact our efforts to achieve reimbursement for TearCare that is sufficient to support its broad commercial growth and adoption. While we will continue to engage with those MACs that currently maintain low fee schedules for the TearCare procedure, there is no guarantee that these MACs will remove these low payment values and replace them with payment values that are sufficient to drive widespread customer adoption. In addition, there is no guarantee that other payors will establish sufficient payment values for the TearCare procedure. If other payors assign payment values to the TearCare procedure that are substantially below those currently established by FCSO and Novitas, it may not be commercially feasible for us to market and sell TearCare in those jurisdictions, which in turn would hamper customer adoption of the TearCare procedure and adversely affect our business and results of operations,
Further, commercial payors may from time to time make “no coverage” or similar determinations with respect to our TearCare product that could hamper our efforts to drive broad commercial adoption of TearCare. These determinations could be made with reference to a variety of factors, including our legacy TearCare component pricing practices, perceived clinical efficacy compared to other treatment alternatives and similar considerations. We are pursuing a comprehensive long-term market development and patient access plan for TearCare and are focusing our efforts on partnering with key strategic accounts to pursue prior authorization approvals and reimbursement claims for procedures in which TearCare is used, but there is no guarantee that we will be successful. This strategy is dependent, among other things, on ECPs’ willingness to submit, and success in submitting, TearCare procedure claims with invoicing that supports appropriate reimbursement, as well as their success in appealing these claims with payors as needed. If patients are not willing to pay for procedures in which TearCare is used, or if third-party payors continue to decline to provide coverage and reimbursement, or provide insufficient levels of coverage and reimbursement, it would have a negative impact on ECPs’ adoption of TearCare and sales of TearCare, which could adversely affect our business and results of operations. In 2024 and through the first three quarters of 2025, various commercial insurance carriers paid small number of TearCare claims on a case-by-case basis, but these reimbursement amounts varied materially, and no formal coverage policies have yet to be established by any commercial payors. As the majority of potential TearCare patients are insured by commercial payors, if the Company is unsuccessful in helping commercial payors to establish formal coverage policies with adequate reimbursement for the TearCare procedure, reimbursed market access for TearCare will be materially limited. Further, though CPT code 0563T specifically describes the procedure enabled by the TearCare technology, it is possible that others could seek could seek to use, promote for use, or bill under this code, or the code could subsequently be modified or interpreted in a manner adverse to the Company so as to allow competitive products to be billed thereunder.
Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, no uniform policy of coverage and reimbursement for procedures using our products exists among third-party payors. Therefore, coverage and reimbursement for procedures using our products can differ significantly from payor to payor. Obtaining and maintaining coverage and reimbursement can be a time-consuming process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products. We may not be able to provide data sufficient to satisfy governmental and third-party payors that procedures using our products should be covered and reimbursed. With regard to our international sales efforts, even if and as we succeed in bringing our products to market in foreign countries, uncertainties regarding future healthcare policy, legislation and regulation, as well as private market practices, could affect our ability to sell our products in commercially acceptable quantities at acceptable prices.
In the United States, the American Medical Association (“AMA”) generally assigns specific billing codes for procedures under a coding system known as Current Procedural Terminology (“CPT”), which surgeons use to bill third-party payors and receive reimbursement. Once a permanent CPT code ("Category I CPT code") is established for a service, CMS establishes payment levels under Medicare, while other payors may establish rates and coverage rules independently. Canaloplasty followed by trabeculotomy procedures using OMNI are typically billed using the Category I CPT code 66174, which describes canaloplasty. Coding for ophthalmic surgical procedures is complex, and changes to the codes used to report services performed with our products may result in significant changes in reimbursement, which could negatively impact our revenue. For example, in 2021 the RVS Update Committee ("RUC") of the AMA reevaluated the physician work associated with CPT code 66174. As a result of this RUC review and further conversion factor reductions, CMS reduced the Medicare Physician Fee Schedule amount associated with this service from approximately $950 in 2021, to $761 in 2022, to $622 in 2023, to $608 in 2024, to $600 in 2025, and to $545 in 2026. Many of the factors considered by the RUC, and many of the factors evaluated by payors and other payor advisory bodies, in assessing the costs of, and payments with respect to, procedures
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associated with our products are not within our control. For instance, with respect to determination of hospital, ASC and physician payment associated with CPT code 66174, evaluation of procedure costs may include the costs of competitive products that are priced well below our products and may also reflect reduced physician work with respect to procedures that are less comprehensive than the procedures performed with OMNI. This, in turn, may adversely affect our ability to obtain and maintain adequate and appropriate levels of reimbursement for the comprehensive procedure enabled by our OMNI technology, which could adversely affect our financial condition and results of operations.
The AMA maintains a subset of temporary CPT codes (“Category III CPT codes”used for new and emerging technologies. For example, TearCare was assigned a Category III CPT code effective beginning January 1, 2020. Coverage for Category III CPT codes is often limited. Medicare does not generally establish national payment rates for Category III CPT codes on the Medicare Physician Fee Schedule (“MPFS”). As a result, individual Medicare contractors and private payors (i) may establish their own payment rates for services described by Category III CPT codes, as has been the case with TearCare, which payment rates are subject to change, may be variable across Medicare contractors, may be materially below the final reimbursement rates that we are currently targeting, or (ii) may determine not to reimburse services described by Category III CPT codes.
Further, we believe that future coverage and reimbursement may be subject to increased restrictions, such as additional prior authorization requirements, both in the United States and in international markets. Third-party coverage and reimbursement for procedures using our products or any of our products in development for which we may receive regulatory clearance, certification or approval may not be available or adequate in either the United States or international markets. Further, other devices or treatments that compete with our products may be more widely covered or subject to different co-pay policies and requirements, which could impact demand for our products. If hospital, surgical center, ECP and/or patient demand for our products is adversely affected by third-party reimbursement policies and decisions, it could have a material adverse effect on our business, financial condition and results of operations.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
None.
Issuer Repurchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Trading Plans
Our directors and officers may enter into trading plans or other arrangements with financial institutions to purchase or sell shares of our common stock, which plans or arrangements are intended to comply with the affirmative defense provisions of Rule 10b5-1 of the Exchange Act, or which may represent a non-Rule 10b5-1 trading arrangement as defined under Item 408(a) of Regulation S-K.
During the three months ended September 30, 2025, none of our directors or officers
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Item 6. Exhibits.
The following exhibits are filed or furnished as a part of, or incorporated by reference into, this Quarterly Report.
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Incorporated by Reference |
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Exhibit Number |
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Exhibit Description |
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Form |
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File No. |
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Exhibit |
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Filing Date |
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Filed/Furnished Herewith |
3.1 |
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Restated Certificate of Incorporation of Sight Sciences, Inc. |
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8-K |
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001-40587 |
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3.1 |
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7/19/21 |
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3.2 |
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Amended and Restated Bylaws of Sight Sciences, Inc. |
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8-K |
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001-40587 |
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3.2 |
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7/19/21 |
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10.1 |
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Third Amendment to Loan and Security Agreement, dated September 30, 2025, by and among Sight Sciences, Inc., certain affiliates of Hercules Capital, Inc., and Hercules Capital, Inc. |
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8-K |
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001-40587
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10.1
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9/30/25 |
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31.1 |
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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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* |
31.2 |
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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* |
32.1 |
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Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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** |
32.2 |
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Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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** |
101.INS |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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* |
101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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* |
101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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* |
101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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* |
101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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* |
101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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* |
104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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* |
* Filed herewith.
** Furnished herewith.
43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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SIGHT SCIENCES, INC. |
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Date: November 6, 2025 |
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By: |
/s/ James Rodberg |
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James Rodberg |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
44
FAQ
How did Sight Sciences (SGHT) perform in Q3 2025?
What is SGHT’s cash and debt position as of September 30, 2025?
What changed in the Hercules loan agreement in September 2025?
Did SGHT record restructuring costs in Q3 2025?
What is the status of the patent litigation verdict mentioned by SGHT?
Were there reimbursement developments for TearCare after quarter‑end?
How many shares were outstanding?
