Eye Check up

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A Quick Take On Sight Sciences

Sight Sciences, Inc. ( NASDAQ: SGHT ) went public in July 2021, raising approximately $240 million in gross proceeds from an IPO that was priced at $24. 00 per share.

The firm is developing surgical and nonsurgical technologies for the treatment of various serious eye diseases.

SGHT continues to generate higher operating losses, a big negative in the current rising cost of capital environment.

Until management can make a meaningful turn to operating breakeven while growing revenue in a challenging reimbursement atmosphere, I’m on Hold for SGHT.

View Sciences Overview

Menlo Park, California-based Sight Sciences was founded to develop eye care medical devices for widely prevalent vision diseases.

Management is headed by Co-founder, President plus CEO Paul Badawi, who previously obtained a B. S. within Biological Sciences from the University of Chicago and a good MBA from UCLA.

The company’s primary offerings include:

  • OMNI Surgical System – Glaucoma

  • TearCare System — Dry attention disease

  • SION – bladeless goniotomy device

The firm sells its glaucoma treatment device and dry eyesight disease products through ophthalmologists and optometrists.

Management estimates that there are around 40, 000 optometrists plus 20, 500 general ophthalmologists who regularly see patients with dry eye disease in the particular U. S.

Sight Sciences’ Market & Competition

According to a 2020 market research report by Verified Market Research, the global marketplace for the therapy of glaucoma was an estimated $6. 9 billion in 2018 and is forecast to reach $12. 7 billion by 2026.

This represents the forecast CAGR of 6. 94% through 2019 in order to 2026.

The main drivers for this expected growth are increased prevalence of glaucoma owing to an aging of the global population.

Also, the particular North American region is expected to remain the largest market simply by demand with regard to glaucoma treatment due to improved patient demand and better healthcare infrastructure for delivering services.

Major competitive or other industry participants consist of:

  • Glaukos

  • Ivantis

  • AbbVie/Allergan

  • Novartis

  • Johnson & Johnson

  • Alcon

  • Aerie Pharmaceuticals

  • Bausch and Lomb

  • MST

  • New World Medical

  • Nova Eye

  • Kala Pharmaceutical drugs

  • Sun Pharmaceutical Industries

  • Others

The global dry eye syndrome market was approximately $5. 2 billion in 2019 and it is forecast to achieve $6. 5 billion dollars by 2027, representing an expected CAGR of 4. 7% from 2020 to 2027, according to a report by Fortune Business Insights.

Sight Sciences’ Recent Financial Performance

  • Total revenue by quarter has risen in the past 4 quarters, as shown in the chart below:

5 Quarter Total Revenue

5 Quarter Total Revenue (Seeking Alpha)

  • Gross profit by quarter has also grown, although unevenly:

5 Quarter Gross Profit

five Quarter Major Profit (Seeking Alpha)

  • Selling, G& A expenses as a percentage of total revenue simply by quarter have remained high and well above revenue:

5 Quarter SG&A % Of Revenue

5 Quarter SG& A % Of Revenue (Seeking Alpha)

  • Operating losses by one fourth have worsened as demonstrated here:

5 Quarter Operating Income

5 Quarter Operating Income (Seeking Alpha)

  • Earnings per share (Diluted) have also produced increasingly negative results in recent reporting periods:

5 Quarter Earnings Per Share

five Quarter Earnings Per Share (Seeking Alpha)

(All data in above charts is GAAP)

In the past 12 months, SGHT’s stock price has dropped 78. 5% vs. the U. S. S& P 500 Index’s drop of close to 3. 7%, as the chart below indicates:

52 Week Stock Price

52 Week Stock Price (Seeking Alpha)

Valuation And Other Metrics For View Sciences

Below is a table of relevant capitalization plus valuation figures for that company:

Measure (TTM)

Amount

Enterprise Value

$203, 980, 000

Market Capitalization

$389, 780, 000

Enterprise Value/Sales

3. 41

Revenue Growth Rate

54. 3%

Operating Cash Flow

-$67, 510, 500

Earnings Per Share (Fully Diluted)

-$1. 76

Net Income Margin

-133. 9%

(Source – Looking for Alpha)

Commentary On Sight Sciences

In its last earnings call (Source – Seeking Alpha ), covering Q2 2022’s results, administration highlighted the particular prominence of its solution in the microinvasive glaucoma surgery market.

The company is seeking to grow adoption from the OMNI system within the existing combination cataract segment as well as ‘pioneering the $4 billion US market regarding standalone MIGS. ‘

This particular expanded focus may be a result of increasing competition in its primary marketplace from new market entrants creating “confusion in the particular marketplace. ”

Also, the firm offers seen reduced Medicare payments for the reimbursement code, from $950 in 2021 to $750 in 2022 and ultimately to $600 in 2023, a significant deterioration.

As to its financial outcomes, topline income grew 37% year-over-year and gross margin rose in order to 84% through 82% last year.

Notably, management says that the particular growth within surgeons trained in the product will be a key leading indicator intended for growth in product sales plus the organization has qualified 2, 000 surgeons upon OMNI while it cites a Market Scope statement that ‘over 5, 600 US surgeons perform MIGS procedures, ‘ so the company offers some runway ahead.

However , operating deficits have made worse markedly within the two most recent quarters, rising 75% year-over-year in part because of investment in headcount for growth purposes and increasing stock-based compensation, diluting shareholders within the process.

R& D also rose since the business continued its development plus commercialization efforts, including soft launching the SION gadget this month and anticipated to more formally launch in Q4 2022.

For the balance sheet, the company finished the particular quarter with $220. 1 million associated with cash and equivalents plus $33 mil of long-term debt.

Looking ahead, management guided topline revenue development to 43% over 2021 at the midpoint of the range.

Regarding valuation, the market is valuing SGHT at an EV/Revenue multiple associated with 3. 4x, which is usually below the particular Healthcare Equipment sector median of 15. 5x. The particular Health Care sector on Seeking Alpha consists of a variety of large and medium-sized equipment companies in the Circumstance. S.

The primary risk to the company’s outlook is the dropping reimbursement rates for its OMNI system.

The potential upside catalyst to the stock could include strong uptake of its new SION system once it is definitely fully launched in Q4 2022.

In the interim, the company continues to produce higher working losses, a negative in the present rising price of capital environment.

Until administration can create a significant turn to operating breakeven while growing revenue in a difficult reimbursement atmosphere, I’m upon Hold to get SGHT.

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