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What changed in Sight Sciences, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sight Sciences, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+593 added−478 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-13)

Top changes in Sight Sciences, Inc.'s 2024 10-K

593 paragraphs added · 478 removed · 413 edited across 2 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

177 edited+68 added−32 removed329 unchanged
Biggest changeEven if we are able to raise awareness among ECPs, they may be slow to change their medical treatment practices and may be hesitant to select our products for a variety of reasons, including: • Lack of adequate, equitable third-party payor coverage or reimbursement, or changes in (or new) third-party payor coverage or reimbursement policies or determinations that are materially adverse to the Company's interest; • Lack of experience with our products and concerns that we are relatively new to market; • Perceived liability risk generally associated with the use of new products and treatment options; 28 • Lack, or perceived lack, of sufficient clinical evidence, including long-term data, supporting clinical benefits or the cost-effectiveness of our products over existing treatments; • The failure of key ophthalmologist and optometrist leaders to support and recommend our products; • Perceptions that our products are unproven; • ECPs’ long-standing relationships with companies, distributors and salespeople that sell competing products; • Competitive activities, including new product introductions and negative selling efforts from providers of alternative treatments; • Challenges of integrating TearCare into established ophthalmologic and optometric practices in light of ECP practice patterns and preferences, lack of awareness of our TearCare system and its capabilities, and lack of appropriate, equitable reimbursement for procedures involving our TearCare system; and • Perceptions regarding the time commitment and skill development that may be required to gain familiarity and proficiency with our OMNI and TearCare products.
Biggest changeEven if we are able to raise awareness among ECPs, they may be slow to change their medical treatment practices and may be hesitant to select our products for a variety of reasons, including: 27 • Lack of adequate, equitable third-party payor coverage or reimbursement, or changes in (or new) third-party payor coverage or reimbursement policies or determinations that adversely affect coverage for procedures involving OMNI; • Availability of lower-priced competitive products; • Unwillingness to alter historical practice patterns to incorporate OMNI use in Standalone procedures into their practices; • Lack of experience with our products and concerns that we are relatively new to market; • Perceived liability risk generally associated with the use of new products and treatment options; • Lack, or perceived lack, of sufficient clinical evidence, including with respect to an absence of OMNI randomized controlled trial data, clinical data on long-term outcomes, supporting clinical benefits of our products or the cost-effectiveness of our products over existing treatments; • The failure of key ophthalmologist and optometrist leaders to support and recommend our products; • Perceptions that our products are unproven; • ECPs’ long-standing relationships with companies, distributors and salespeople that sell competing products; • Competitive activities, including new product introductions, pricing tactics, and negative selling efforts from providers of alternative treatments; • ASC and ECP preferences for procedures that may be more profitable than those performed with our products, or for competitive products that are lower priced and thus offer greater profit margins in procedures in which our products are used; • Challenges of integrating TearCare into established ophthalmologic and optometric practices in light of ECP practice patterns and preferences, lack of awareness of our TearCare system and its capabilities, and lack of appropriate, equitable reimbursement for procedures involving our TearCare system; and • Perceptions regarding the time commitment and skill development that may be required to gain familiarity and proficiency with our OMNI and TearCare products.
The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects, as well as our ability to accomplish our strategic objectives. In that event, the market price of our common stock could decline and you could lose part or all of your investment.
The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects, as well as our ability to accomplish our strategic objectives. In that event, the market price of our common stock could decline and you could lose all or part of your investment.
Risks Related to Our Business We are an early-stage company with a history of significant losses, we expect to incur losses in the future and we may not be able to achieve or sustain profitability, which may make it difficult to evaluate the success of our business to date and to assess the prospects for our future viability.
Risks Related to Our Business We are an early-stage company with a history of significant losses, we expect to incur losses in the future, and we may not be able to achieve or sustain profitability, which may make it difficult to evaluate the success of our business to date and to assess prospects for our future viability.
The success of any new product offering or product enhancements to our solutions will depend on several factors, including our ability to: • Maintain strong relationships with ECPs; • Assemble sufficient resources to acquire or discover additional products; • Properly identify and anticipate physician and patient needs; • Develop and introduce new products and product enhancements in a timely manner; • Receive adequate and equitable coding, coverage and reimbursement for procedures performed with our products; • Avoid infringing upon, misappropriating or otherwise violating the intellectual property rights of third parties; 37 • Demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials or investigations; • Obtain the necessary regulatory clearances, certifications or approvals for expanded indications, new products or product modifications; • Comply with the requirements of FDA and similar foreign regulatory authorities regarding the marketing of new devices or modified products; • Produce new products in commercial quantities at an acceptable cost; • Provide adequate training to potential users of our products; and • Develop an effective and dedicated sales and marketing team.
The success of any new product offering or product enhancements to our solutions will depend on several factors, including our ability to: • Maintain strong relationships with ECPs; • Assemble sufficient resources to acquire or discover additional products; • Properly identify and anticipate physician and patient needs; 37 • Develop and introduce new products and product enhancements in a timely manner; • Receive adequate and equitable coding, coverage and reimbursement for procedures performed with our products; • Avoid infringing upon, misappropriating or otherwise violating the intellectual property rights of third parties; • Demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials or investigations; • Obtain the necessary regulatory clearances, certifications or approvals for expanded indications, new products or product modifications; • Comply with the requirements of FDA and similar foreign regulatory authorities regarding the marketing of new devices or modified products; • Produce new products in commercial quantities at an acceptable cost; • Provide adequate training to potential users of our products; and • Develop an effective and dedicated sales and marketing team.
Our operations have been financed primarily by net proceeds from the sale of our convertible preferred stock in private placements and sale of our common stock in our initial public offering, revenue from sales of our products and secured indebtedness.
Our operations have been financed primarily by net proceeds from the sale of our convertible preferred stock in private placements and the sale of our common stock in our initial public offering, revenue from sales of our products and secured indebtedness.
In particular, sales, marketing and business arrangements in the healthcare industry, including the sale of medical devices, are subject to extensive laws and regulations intended to prevent 58 fraud, misconduct, kickbacks, self-dealing and other abusive practices.
In particular, sales, marketing and business arrangements in the healthcare 58 industry, including the sale of medical devices, are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
Risks Related to Our Common Stock The price of our common stock may fluctuate substantially or may decline regardless of our operating performance and you could lose all or part of your investment The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including: • Changes in analysts’ estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’ estimates; • Changes in reimbursement coverage by current or potential payors, including new or updated local or national coverage determinations by one or more MACs; • Actual or anticipated quarterly variations in our or our competitors’ results of operations; • Periodic fluctuations in our revenue, which could be due in part to the way in which we recognize revenue; • The trading volume of our common stock; • General market conditions and other factors unrelated to our operating performance or the operating performance of our competitors; • Changes in operating performance and stock market valuations of other technology companies generally, or those in the medical device industry in particular; 59 • Actual or anticipated changes in regulatory oversight of our products; • The results of our clinical trials; • The loss of key personnel, including changes in our board of directors or management; • Product recalls or other problems associated with our products; • Legislation or regulation of our market; • Lawsuits threatened or filed against us; • The announcement of new products or product enhancements by us or our competitors; • Announced or completed acquisitions of businesses or technologies by us or our competitors; • Announcements related to patents issued to us or our competitors and related litigation; and • Developments in our industry.
Risks Related to Our Common Stock The price of our common stock may fluctuate substantially or may decline regardless of our operating performance and you could lose all or part of your investment The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including: • Changes in analysts’ estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’ estimates; • Changes in reimbursement coverage by current or potential payors, including new or updated local or national coverage determinations by one or more MACs; • Actual or anticipated quarterly variations in our or our competitors’ results of operations; • Periodic fluctuations in our revenue, which could be due in part to the way in which we recognize revenue; • The trading volume of our common stock; • General market conditions and other factors unrelated to our operating performance or the operating performance of our competitors; • Changes in operating performance and stock market valuations of other technology companies generally, or those in the medical device industry in particular; • Actual or anticipated changes in regulatory oversight of our products; • The results of our clinical trials; 59 • The loss of key personnel, including changes in our board of directors or management; • Product recalls or other problems associated with our products; • Legislation or regulation of our market; • Lawsuits threatened or filed against us; • The announcement of new products or product enhancements by us or our competitors; • Announced or completed acquisitions of businesses or technologies by us or our competitors; • Announcements related to patents issued to us or our competitors and related litigation; and • Developments in our industry.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions or consequences: • Untitled letters, warning letters or adverse publicity; • Fines, injunctions, consent decrees and civil penalties; • Recalls, termination of distribution, administrative detention, or seizure of our products; • Customer notifications or repair, replacement or refunds; • Operating restrictions or partial suspension or total shutdown of production; • Delays in or refusal to grant our requests for future clearances or approvals or foreign clearance, certification or approval of new products, new intended uses, or modifications to existing products; 54 • Withdrawals or suspensions of 510(k) clearances or certifications or Class I registrations, or requirements for new 510(k) or PMA clearances, certifications, or approvals, resulting in prohibitions on sales of our products pending such further clearance or certification; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • Criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions or consequences: • Untitled letters, warning letters or adverse publicity; • Fines, injunctions, consent decrees and civil penalties; • Recalls, termination of distribution, administrative detention, or seizure of our products; • Customer notifications or repair, replacement or refunds; • Operating restrictions or partial suspension or total shutdown of production; • Delays in or refusal to grant our requests for future clearances or approvals or foreign clearance, certification or approval of new products, new intended uses, or modifications to existing products; • Withdrawals or suspensions of 510(k) clearances or certifications or Class I registrations, or requirements for new 510(k) or PMA clearances, certifications, or approvals, resulting in prohibitions on sales of our products pending such further clearance or certification; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • Criminal prosecution.
Potential and completed acquisitions and strategic investments involve numerous risks, including: • problems assimilating the purchased technologies, products, or business operations; • dilutive issuances of equity securities, the use of our available cash, or the incurrence of debt, which could harm our operating results; • issues maintaining uniform standards, procedures, controls, and policies; • unanticipated costs and liabilities associated with acquisitions; • diversion of management’s attention from our core business; • adverse effects on existing business relationships with suppliers and customers; • risks associated with entering new markets in which we have limited or no experience; • potential loss of key employees of acquired businesses; and 44 • increased legal and accounting compliance costs, as well as potential litigation costs, arising out of the acquisition or investment.
Potential and completed acquisitions and strategic investments involve numerous risks, including: • problems assimilating the purchased technologies, products, or business operations; • dilutive issuances of equity securities, the use of our available cash, or the incurrence of debt, which could harm our operating results; • issues maintaining uniform standards, procedures, controls, and policies; • unanticipated costs and liabilities associated with acquisitions; • diversion of management’s attention from our core business; • adverse effects on existing business relationships with suppliers and customers; • risks associated with entering new markets in which we have limited or no experience; • potential loss of key employees of acquired businesses; and • increased legal and accounting compliance costs, as well as potential litigation costs, arising out of the acquisition or investment.
Any actual or perceived failure by us or the third parties with whom we work to comply with privacy or security laws, policies, legal obligations or industry standards, or any security incident that results in the unauthorized release or transfer of personally identifiable information, may result in governmental enforcement actions and investigations including by European Data Protection Authorities and U.S. federal and state regulatory authorities, fines and penalties, litigation and/or adverse publicity, including by consumer advocacy groups, and could cause our customers, their patients and other healthcare professionals to lose trust in us, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
Any actual or perceived failure by us or the third parties with whom we work to comply with privacy or security laws, policies, legal obligations or industry standards, or any security incident that results in the unauthorized access, release or transfer of personally identifiable information, may result in governmental enforcement actions and investigations including by European Data Protection Authorities and U.S. federal and state regulatory authorities, fines and penalties, litigation and/or adverse publicity, including by consumer advocacy groups, and could cause our customers, their patients and other healthcare professionals to lose trust in us, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
These companies may enjoy several competitive advantages, including: • Established treatment patterns pursuant to which prescription medications, traditional glaucoma surgery or more conventional MIGS procedures are generally first-line therapies for the treatment of glaucoma and eye drops or warm-compresses are first-line therapies for the treatment of MGD; • Established relationships with ECPs who are familiar with their products and procedures for the treatment of glaucoma or MGD; • Established relationships with key stakeholders, including hospital outpatient departments, ambulatory surgery centers, optometrists and ophthalmologists, general practitioners and administrators; • Greater financial and human capital resources; • Significantly greater name recognition; 31 • Additional lines of products, and the ability to offer rebates or bundle products to offer greater discounts or incentives to gain a competitive advantage; and • Established sales, marketing and worldwide distribution networks.
These companies may enjoy several competitive advantages, including: • Established treatment patterns pursuant to which prescription medications, traditional glaucoma surgery or more conventional MIGS procedures are generally first-line therapies for the treatment of glaucoma and eye drops or warm-compresses are first-line therapies for the treatment of MGD; • Established relationships with ECPs who are familiar with their products and procedures for the treatment of glaucoma or MGD; • Established relationships with key stakeholders, including hospital outpatient departments, ambulatory surgery centers, optometrists and ophthalmologists, general practitioners and administrators; • Greater financial and human capital resources; • Significantly greater name recognition; • Additional lines of products, and the ability to offer rebates or bundle products to offer greater discounts or incentives to gain a competitive advantage; and • Established sales, marketing and worldwide distribution networks.
The FDA and foreign regulatory agencies regulate, among other things, with respect to medical devices: design, development, manufacturing and release; laboratory, preclinical and clinical testing; labeling, packaging, 51 content and language of instructions for use and storage; product safety and efficacy; establishment registration and device listing; marketing, sales and distribution; pre-market clearance, approval, and certification; service operations; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market studies; and product import and export.
The FDA and foreign regulatory agencies regulate, among other things, with respect to medical devices: design, development, manufacturing and release; laboratory, preclinical and clinical testing; labeling, packaging, content and language of instructions for use and storage; product safety and efficacy; establishment registration and device listing; marketing, sales and distribution; pre-market clearance, approval, and certification; service operations; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market studies; and product import and export.
The FDA can delay, limit or deny clearance or approval of a device for many reasons, including: • Our inability to demonstrate to the satisfaction of the FDA that our products are safe or effective for their intended uses; 52 • The disagreement of the FDA with the design or conduct of our clinical trials or the interpretation of data from preclinical studies or clinical trials; • Serious and unexpected adverse device effects experienced by participants in our clinical trials; • The data from our preclinical studies and clinical trials may be insufficient to support clearance or approval, where required; • Our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • The manufacturing process or facilities we use may not meet applicable requirements; and • The potential for approval policies or regulations of the FDA to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval.
The FDA can delay, limit or deny clearance or approval of a device for many reasons, including: • Our inability to demonstrate to the satisfaction of the FDA that our products are safe or effective for their intended uses; • The disagreement of the FDA with the design or conduct of our clinical trials or the interpretation of data from preclinical studies or clinical trials; • Serious and unexpected adverse device effects experienced by participants in our clinical trials; • The data from our preclinical studies and clinical trials may be insufficient to support clearance or approval, where required; • Our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • The manufacturing process or facilities we use may not meet applicable requirements; and • The potential for approval policies or regulations of the FDA to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. 62 Item 1B.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person 61 acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. 62 Item 1B.
The healthcare laws and regulations that may affect our ability to operate include, but are not limited to: • The federal Anti-Kickback Statute, which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, in cash or in kind, to induce either the referral of an individual or furnishing or arranging for a good or service, for which payment may be made, in whole or in part, under federal healthcare programs, such as Medicare and Medicaid; 56 • The federal and state civil and criminal false claims laws and civil monetary penalties laws, including the federal civil False Claims Act, which prohibit, among other things, individuals and entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, state Medicaid programs, other third-party payors, or other federal healthcare programs that are false or fraudulent; • The federal Civil Monetary Penalties Law, which prohibits, among other things, individuals and entities from offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • Federal disclosure laws, such as the Physician Payments Sunshine Act, which require certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or CHIP to report annually to the CMS information related to payments and other transfers of value to physicians, which is defined broadly to include other healthcare providers, and teaching hospitals, and to report annually ownership and investment interests held by physicians and their immediate family members; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 ("HITECH Act"), and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements; • The FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • Federal and state laws and regulations regarding billing and claims payment applicable to our products and regulatory agencies enforcing those laws and regulations; and • Analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers, foreign and state laws, including the GDPR, governing the privacy and security of personal (including health) information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and state laws related to insurance fraud in the case of claims involving private insurers.
The healthcare laws and regulations that may affect our ability to operate include the following: • The federal Anti-Kickback Statute, which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, in cash or in kind, to induce either the referral of an individual or furnishing or arranging for a good or service, for which payment may be made, in whole or in part, under federal healthcare programs, such as Medicare and Medicaid; • The federal and state civil and criminal false claims laws and civil monetary penalties laws, including the federal civil False Claims Act, which prohibit, among other things, individuals and entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, state Medicaid programs, other third-party payors, or other federal healthcare programs that are false or fraudulent; • The federal Civil Monetary Penalties Law, which prohibits, among other things, individuals and entities from offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • Federal disclosure laws, such as the Physician Payments Sunshine Act, which require certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or CHIP to report annually to the CMS information related to payments and other transfers of value to physicians, which is defined broadly to include other healthcare providers, and teaching hospitals, and to report annually ownership and investment interests held by physicians and their immediate family members; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements; • The FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • Federal and state laws and regulations regarding billing and claims payment applicable to our products and regulatory agencies enforcing those laws and regulations; and • Analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers, foreign and state laws, including the GDPR, governing the privacy and security of personal (including health) information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and state laws related to insurance fraud in the case of claims involving private insurers.
Among other things, these provisions include those establishing: • A classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • No cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • The exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from filling vacancies on our board of directors; • The ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • The ability of our board of directors to alter our bylaws without obtaining stockholder approval; • The required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our restated certificate of incorporation regarding the election and removal of directors; • A prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; 61 • The requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Among other things, these provisions include those establishing: • A classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • No cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • The exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from filling vacancies on our board of directors; • The ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • The ability of our board of directors to alter our bylaws without obtaining stockholder approval; • The required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our restated certificate of incorporation regarding the election and removal of directors; • A prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • The requirement that a special meeting of stockholders may be called only by the chairperson of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Seeking such clearances, certifications or approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address 55 problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.
Seeking such clearances, certifications or approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.
The negative covenants restrict our ability to, among other things and subject to certain 43 exceptions contained in the Hercules Loan Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers and acquisitions; change our business activities; and make investments or restricted payments, in each case subject to customary exceptions.
The negative covenants restrict our ability to, among other things and subject to certain exceptions contained in the Hercules Loan Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes, such as mergers and acquisitions; change our business activities; and make investments or restricted payments, in each case subject to customary exceptions.
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. 30 The AMA maintains a subset of temporary CPT codes ("Category III CPT codes") used for new and emerging technologies.
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.
Further, under the FDA’s medical device reporting regulations and similar foreign regulations, we are required to maintain appropriate quality systems and report incidents in which our product may have caused or contributed to serious injury or death in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to serious injury or death.
Further, under the FDA’s medical device reporting regulations and similar foreign regulations, we are required to maintain appropriate quality systems and report incidents in which our product may have caused or contributed to serious 55 injury or death in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to serious injury or death.
The issuance of additional guidance related to existing or future tax laws, or changes to tax laws or regulations proposed or implemented by the current or a future U.S. presidential administration, Congress, or taxing authorities in other 46 jurisdictions, including jurisdictions outside of the United States, could materially affect our tax obligations and effective tax rate.
The issuance of additional guidance related to existing or future tax laws, or changes to tax laws or regulations proposed or implemented by the current or a future U.S. presidential administration, Congress, or taxing authorities in other jurisdictions, including jurisdictions outside of the United States, could materially affect our tax obligations and effective tax rate.
An inability to incorporate technologies or features that are important or essential to our products could have a material adverse effect on our business, financial condition and results of operations, and may prevent us from selling our products. In addition, we may lose valuable intellectual property rights or personnel.
An inability to incorporate technologies or features that are important 51 or essential to our products could have a material adverse effect on our business, financial condition and results of operations, and may prevent us from selling our products. In addition, we may lose valuable intellectual property rights or personnel.
We seek to protect such proprietary information, in part, through confidentiality agreements with our employees, collaborators, contractors, advisors, consultants and other third parties and invention assignment agreements with our employees. We cannot guarantee that we have entered into such agreements with each party that has or may have had access to our trade secrets or proprietary information.
We seek to protect such proprietary information, in part, through confidentiality agreements with our employees, collaborators, contractors, advisors, consultants and other third parties and invention assignment agreements with our employees. 50 We cannot guarantee that we have entered into such agreements with each party that has or may have had access to our trade secrets or proprietary information.
To the extent that our employees, consultants or contractors use intellectual property or proprietary information owned by others 50 in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Litigation may be necessary to defend against these claims.
To the extent that our employees, consultants or contractors use intellectual property or proprietary information owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Litigation may be necessary to defend against these claims.
Regulatory changes could result in restrictions on our ability to continue or expand our operations, higher than anticipated costs, or lower than anticipated sales. Even after we have obtained the proper regulatory clearance to market a device, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations.
Regulatory changes could result in restrictions on our ability to continue or expand our operations, higher than anticipated costs, or lower than 54 anticipated sales. Even after we have obtained the proper regulatory clearance to market a device, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations.
Our business practices and relationships with providers are subject to scrutiny under these laws. We may also be subject to privacy and security regulation related to patient, customer, employee and other third-party information by both the federal government and the states and foreign jurisdictions in which we conduct our business.
Our business practices and relationships with providers are subject to scrutiny under these laws. We may also be subject to privacy and security regulation related to patient, customer, 56 employee and other third-party information by both the federal government and the states and foreign jurisdictions in which we conduct our business.
Even when a provider is the sole contracted supplier of a GPO or IDN for a certain product category, members of the GPO or IDN are generally free to purchase from other suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause by the GPO or IDN upon 60 to 90 days’ notice.
Even when a provider is the sole contracted supplier of a GPO or an IDN for a certain product category, members of the GPO or IDN are generally free to purchase from other suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause by the GPO or IDN upon 60 to 90 days’ notice.
While having a contract with a GPO or IDN for a given product category can facilitate sales to members of that GPO or IDN, such contract positions can offer no assurance that any level of sales will be achieved, as sales are typically made pursuant to individual purchase orders.
While having a contract with a GPO or an IDN for a given product category can facilitate sales to members of that GPO or IDN, such contract positions can offer no assurance that any level of sales will be achieved, as sales are typically made pursuant to individual purchase orders.
However, we cannot prevent a physician from using 41 our products for off-label applications or using components or products that are not our products when performing procedures with our products. There may be increased risk of injury to patients if physicians attempt to use our devices off-label.
However, we cannot prevent a physician from using our products for off-label applications or using components or products that are not our products when performing procedures with our products. There may be increased risk of injury to patients if physicians attempt to use our devices off-label.
The long-term clinical outcomes of the use of our products for their cleared uses are not known and, due to the novelty of our products, there is no long-term data regarding patient outcomes beyond our clinical trials or investigations. The results of short-term clinical experience of our products do not necessarily predict long-term clinical outcomes.
The long-term clinical outcomes of the use of our products for their FDA-cleared uses are not known and, due to the novelty of our products, there is no long-term data regarding patient outcomes beyond our clinical trials or investigations. The results of short-term clinical experience of our products do not necessarily predict long-term clinical outcomes.
If we are forced to lower the price we charge for our products or add more components to our products, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business. We may be unable to manage the anticipated growth of our business.
If we are forced to lower the price we charge for our products or add more components to our products, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business. 39 We may be unable to manage the anticipated growth of our business.
We compete, or may compete in the future, against other companies which have longer, more established operating histories and significantly greater financial, technical, marketing, sales, distribution and other resources, which may prevent us from achieving significant market penetration or improved operating results.
Furthermore, we compete, or may compete in the future, against other companies which have longer, more established operating histories and significantly greater financial, technical, marketing, sales, distribution and other resources, which may prevent us from achieving significant market penetration or improved operating results.
In order to grow, we need to expand our commercial team, and general and administrative infrastructure. In addition to the need to scale our organization, future growth will impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees.
In order to grow, we need to expand our commercial team and general and administrative infrastructure. In addition to the need to scale our organization, any future growth will impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees.
Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited. 48 Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products.
Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited. Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products.
Doing business internationally involves a number of risks, including: • Difficulties in staffing and managing our international operations; 45 • Multiple, conflicting and changing laws and regulations such as tax laws, privacy laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • Reduced or varied protection for intellectual property rights in some countries; • Obtaining regulatory clearance, certification or approval where required for our products in various countries; • Requirements to maintain data and the processing of that data on servers located within such countries; • Complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • Limits on our ability to penetrate international markets if we are required to manufacture our products locally; • Financial risks, such as longer payment cycles, difficulty collecting accounts receivable, foreign tax laws and complexities of foreign value-added tax systems, the effect of local and regional financial pressures on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • Restrictions on the site-of-service for use of our products and the economics related thereto for physicians, providers and payors; • Changes in foreign currency exchange rates and costs associated with hedging against such changes; • Natural disasters, political and economic instability, including wars, such as the current military conflict between Russia and Ukraine, terrorism, political unrest, outbreak of disease, boycotts, curtailment of trade and other market restrictions; and • Regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the United States Foreign Corrupt Practices Act of 1977 ("FCPA"), U.K.
Doing business internationally involves a number of risks, including: • Difficulties in staffing and managing our international operations; • Multiple, conflicting and changing laws and regulations such as tax laws, privacy laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • Reduced or varied protection for intellectual property rights in some countries; • Obtaining regulatory clearance, certification or approval where required for our products in various countries; • Requirements to maintain data and the processing of that data on servers located within such countries; • Complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems; • Limits on our ability to penetrate international markets if we are required to manufacture our products locally; • Financial risks, such as longer payment cycles, difficulty collecting accounts receivable, foreign tax laws and complexities of foreign value-added tax systems, the effect of local and regional financial pressures on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • Restrictions on the site-of-service for use of our products and the economics related thereto for physicians, providers and payors; • Changes in foreign currency exchange rates and costs associated with hedging against such changes; • Natural disasters, political and economic instability, including wars, such as the current military conflict between Russia and Ukraine and the crisis in the Middle East, terrorism, political unrest, outbreak of disease, boycotts, curtailment of trade and other market restrictions; and 46 • Regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the United States Foreign Corrupt Practices Act of 1977 ("FCPA"), U.K.
Any further modification to these products or their intended uses may require us to submit new regulatory filings, including new 510(k) premarket notifications to obtain clearance, or PMA submissions to obtain FDA approval prior to implementing the change.
Any further modification to these products or their intended uses may require us to submit new regulatory filings, including new 510(k) premarket notifications to obtain 52 clearance, or PMA submissions to obtain FDA approval prior to implementing the change.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their 49 greater financial resources and more mature and developed intellectual property portfolios.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios.
The process of identifying and qualifying alternative manufacturing facilities for any other reason could be time-consuming and expensive, may result in interruptions in our operations and product delivery, and could affect the performance specifications of our products.
The process of identifying and qualifying alternative manufacturing facilities for any other reason could be time-consuming and expensive, may result in interruptions in our operations and product delivery, and could affect the 34 performance specifications of our products.
Moreover, if future results and experience by us, our competitors or other third parties, indicate that our products cause unexpected or serious complications or other unforeseen negative effects, we could be subject to mandatory or voluntary product recalls, suspension or withdrawal of FDA, European Commission or other governmental clearance or approval or certifications, significant legal liability or harm to 34 our business reputation, which could have a material adverse effect on our business, financial condition and results of operations.
Moreover, if future results and experience with our products by us, our competitors or other third parties, indicate that our products cause unexpected or serious complications or other unforeseen negative effects, we could be subject to mandatory or voluntary product recalls, suspension or withdrawal of FDA, European Commission or other governmental clearance or approval or certifications, significant legal liability or harm to our business reputation, which could have a material adverse effect on our business, financial condition and results of operations.
For example, the OECD is leading work on proposals, commonly referred to as “BEPS 2.0,” which, if and to the extent implemented, would make important changes to the international tax system.
For example, the OECD is leading work on proposals, commonly referred to as “BEPS 2.0,” which, if and to the extent implemented, 47 would make important changes to the international tax system.
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.
Further, other devices or treatments that compete with our products may be more widely covered or subject to different 30 co-pay policies and requirements, which could impact demand for our products.
Unfavorable or inconsistent clinical data from existing or future clinical trials or investigations conducted by us, our competitors or other third parties, the interpretation of our clinical data or findings of new or more frequent adverse events, could subject us to mandatory or voluntary product recalls, suspension or withdrawal of FDA or other clearance, certification or approval, significant legal liability or harm to our business reputation and could have a material adverse effect on our business, financial condition and results of operations.
In addition, unfavorable or inconsistent clinical data from existing or future clinical trials or investigations conducted by us, our competitors or other third parties, the interpretation of our clinical data or findings of new or more frequent adverse events, could subject us to mandatory or voluntary product recalls, suspension or withdrawal of FDA or other clearance, certification or approval, significant legal liability or harm to our business reputation and could have a material adverse effect on our business, financial condition and results of operations.
The EU MDR includes significant additional premarket and post-market requirements, and manufacturers of medical devices are required by the EU MDR to collect post-marketing clinical data in relation to their CE marked medical devices.
The EU MDR includes significant additional premarket and post-market requirements, and manufacturers of medical devices are required by the EU MDR to collect post-marketing 32 clinical data in relation to their CE Marked medical devices.
In addition, notwithstanding their subsequent withdrawal in late December 2023, the publication of the Draft LCDs, as amended, by five of the seven MACs in June 2023, which would have rendered canaloplasty followed by trabeculotomy (ab interno), a procedure associated with our OMNI technology, investigational and thus non-covered in these MAC jurisdictions, adversely affected our business and prospects and resulted in a substantial decline in the market price of our common stock.
In addition, notwithstanding their subsequent withdrawal in late December 2023, the publication of the Prior LCDs, as amended, by five of the seven MACs in June 2023, which would have rendered canaloplasty followed by trabeculotomy (ab interno), a procedure associated with our OMNI technology, investigational and thus non-covered in these MAC jurisdictions, adversely affected our business and prospects and resulted in a substantial decline in the market price of our common stock.
We compete, or plan to compete, with medical device and pharmaceutical companies that develop and commercialize products for eye conditions, including Glaukos, AbbVie/Allergan, Novartis, Alcon, Johnson & Johnson, Nova Eye Medical, and New World Medical.
We compete, or plan to compete, with medical device and pharmaceutical companies that develop and commercialize products for eye conditions, including Glaukos, AbbVie, Novartis, Alcon, Johnson & Johnson, Nova Eye Medical, and New World Medical.
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, private commercial insurance companies, health maintenance organizations and other healthcare-related organizations, and then bill patients for any applicable deductibles or co-payments.
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.
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.
Further, commercial payors may from time to time make “no coverage” 29 or similar determinations with respect to our TearCare product that could hamper our efforts to drive broad commercial adoption of TearCare.
We are also subject to numerous other risks relating to our reliance on third parties, including potential quality issues at our suppliers' manufacturing facilities with respect to our products, and our potential inability to renew or extend contracts and arrangements with such third parties or renew any such contracts or arrangements on terms that are favorable to us, and price fluctuations due to a lack of long-term supply agreements with certain of our suppliers.
We are also subject to numerous other risks relating to our reliance on third parties, including potential quality issues at our suppliers' manufacturing facilities with respect to our products or logistics operations, and our potential inability to renew or extend contracts and arrangements with such third parties or renew any such contracts or arrangements on terms that are favorable to us, and price fluctuations due to a lack of long-term supply agreements with certain of our suppliers.
You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K, before investing in our common stock.
You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K, before investing in our common stock.
In order to generate future growth, we plan to continue to significantly expand and leverage our commercial infrastructure to increase our customer base and increase adoption by existing customers to drive our growth.
In order to generate future growth, we plan to continue to expand and leverage our commercial infrastructure to increase our customer base and increase adoption by existing customers to drive our growth.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • The level of demand for our products which may vary significantly; • Changes in coverage and reimbursement policies with respect to the procedures in which our products and our competitors' products are used, and potential future products that compete with our products; 36 • Results of clinical trials or investigations involving the use of our products; • Regulatory decisions or announcements, including product recalls, and reimbursement determinations; • Expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • Sales and marketing efforts and expenses; • Pricing pressures; • The rate at which we grow our sales force and the speed at which newly hired salespeople become effective; • The degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; • Positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry; • The timing of customer orders or medical procedures using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, the mix of products sold and the geographic mix of where products are sold; • The timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our products, which may change from time to time; • The costs of enforcing and defending our intellectual property rights, whether through litigation or otherwise; • The cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers; and • Future accounting pronouncements or changes in our accounting policies.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including the following: • The level of demand for our products which may vary significantly; • Changes in coverage and reimbursement policies with respect to the procedures in which our products and our competitors' products are used, and potential future products that compete with our products; • Results of clinical trials or investigations involving the use of our products; • Regulatory decisions or announcements, including product recalls, and product labeling and reimbursement determinations; • Expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • Sales and marketing efforts and expenses; • Pricing pressures; • The rate at which we grow our sales force and the speed at which newly hired salespeople become effective; 38 • The degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; • Positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry; • The timing of customer orders or medical procedures using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, the mix of products sold and the geographic mix of where products are sold; • The timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our products, which may change from time to time; • The costs of enforcing and defending our intellectual property rights, whether through litigation or otherwise; • The cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers; and • Future accounting pronouncements or changes in our accounting policies.
Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory. While we seek to maintain sufficient levels of inventory in order to protect ourselves from supply interruptions, we keep limited components, sub-assemblies, materials and finished products on hand.
Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory. While we seek to maintain sufficient levels of inventory to protect ourselves from supply interruptions, we keep limited components, sub-assemblies, materials and finished products on hand.
In addition, in the past, stockholders have instituted securities class action litigation against issuers following periods of stock price volatility. After we announced in September 2023 a reduction in our full-year 2023 revenue guidance, several plaintiff’s class action firms announced the commencement of investigations pertaining to our compliance with securities laws.
In addition, in the past, stockholders have instituted securities class action litigation against issuers following periods of stock price volatility. For instance, after we announced in September 2023 a reduction in our full-year 2023 revenue guidance, several plaintiff’s class action firms announced the commencement of investigations pertaining to our compliance with securities laws.
Certain of the jurisdictions in which our products are sold have experienced and could continue to experience unfavorable general economic conditions, such as a recession or economic slowdown, including as a result of political instability and military hostilities in certain geographies, concerns over the potential downgrade of U.S. sovereign debt and continued sovereign debt, monetary and financial uncertainties in Europe and other geographies, and domestic and global inflationary trends, any of which could negatively affect the affordability of, and consumer demand for, our products.
Certain of the jurisdictions in which our products are manufactured or sold have experienced and could continue to experience unfavorable general economic conditions, such as a recession or economic slowdown, including as a result of political instability and military hostilities in certain geographies, trade disputes, concerns over the potential downgrade of U.S. sovereign debt and continued sovereign debt, monetary and financial uncertainties in Europe and other geographies, and domestic and global inflationary trends, any of which could negatively affect the affordability of, and consumer demand for, our products.
The notified body will then assess the planned changes and verify whether they affect the products’ ongoing conformity with the EU MDR.
The notified body will then 53 assess the planned changes and verify whether they affect the products’ ongoing conformity with the EU MDR.
Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for pricing concessions in the future. Additionally, GPOs, IDNs and large single accounts may continue to use their market power to consolidate purchasing decisions for hospitals.
Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which has and may create additional requests for pricing concessions in the future. Additionally, GPOs, IDNs and large single accounts may continue to use their market power to consolidate purchasing decisions for hospitals.
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, and to $608 in 2024.
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, and to $600 in 2025.
If the long-term data does 32 not meet ECPs’ expectations, or if the long-term data indicates that our products are not as safe or effective as other treatment options or as current short-term data would suggest, physicians may recommend alternative treatments for their patients and our products may not become widely adopted, which will negatively affect our business, financial condition and results of operations.
If the nature and quality of the long-term data does not meet ECPs’ expectations, or if the long-term data indicates that our products are not as safe or effective as other treatment options or as current short-term data would suggest, physicians may recommend alternative treatments for their patients and our products may not become widely adopted, which will negatively affect our business, financial condition and results of operations.
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or product improvements or the generation of significant future revenues.
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or product improvements or the generation of significant future revenue.
Bribery Act of 2010 ("Bribery Act)", and comparable laws and regulations in other countries. Any of these factors could significantly harm our future international expansion and operations and, consequently, have a material adverse effect on our business, financial condition and results of operations. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
Bribery Act of 2010 ("Bribery Act”), and comparable laws and regulations in other countries. Any of these factors could significantly harm our international business operations and, consequently, have a material adverse effect on our business, financial condition and results of operations. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
These risks are likely to be exacerbated by our limited experience with our current products and manufacturing processes. As demand for our products increases, we will have to invest additional resources to manage the manufacturing process.
These risks are likely to be exacerbated by our limited experience with our current products and manufacturing processes. If demand for our products increases, we will have to invest additional resources to manage the manufacturing process.
In particular, these collaborations may not result in the development of products that achieve commercial success or viable product improvements or result in significant revenues and could be terminated prior to developing any products.
In particular, these collaborations may not result in the development of products that achieve commercial success or viable product improvements or result in significant revenue and could be terminated prior to developing any products.
These companies, or other entrants into the market, may have or develop competing technologies, other products that are in or that enter clinical trials, new devices or additional indications for existing devices that could demonstrate better safety, effectiveness, clinical results, lower costs or greater ECP and market acceptance than our products.
These companies, or other entrants into the market, may have or develop competing technologies, other products that are in or that enter clinical trials, new devices or additional indications for existing devices that could demonstrate better safety, effectiveness, clinical results, ease of use, lower costs or greater ECP and market acceptance than our products.
Our business is dependent upon the broad adoption of our products by eyecare professionals and patients. ECPs, including ophthalmologists and optometrists, have limited awareness of, and experience with, our products and brand.
Our business is dependent upon the broad adoption and continued use of our products by eyecare professionals and patients. ECPs, including ophthalmologists and optometrists, have limited awareness of, and experience with, our products and brand.
Compliance with these requirements is a prerequisite to be able to affix the European Conformity, or CE, mark to our products, without which they cannot be sold or marketed in the EU.
Compliance with these requirements is a prerequisite to be able to affix the CE mark to our products, without which they cannot be sold or marketed in the EU.
For example, the services of Paul Badawi, our Chief Executive Officer, David Badawi, our Chief Technology Officer, and Alison Bauerlein, our Chief Financial Officer, are essential to driving innovation and adoption of our products, executing on our corporate strategy and ensuring the continued operations and integrity of financial reporting within our company.
For example, the services of Paul Badawi, our Chief Executive Officer, David Badawi, our Chief Technology Officer, Alison Bauerlein, our Chief Financial Officer, and Matthew Link, our Chief Commercial Officer, are essential to driving innovation and adoption of our products, executing on our corporate strategy and ensuring the continued operations and integrity of financial reporting within our company.
However, such insurance will not necessarily cover all costs and impacts related to these risks. The planned international expansion of our business will expose us to market, legal, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.
However, such insurance will not necessarily cover all costs and impacts related to these risks. Our international business operations expose us to market, legal, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.
Development of our products for expanded indications depends upon positive clinical data, and the safety and efficacy of our products for the intended uses for which we intend to seek clearance, certification or approval are not yet supported by long-term clinical data, which could delay or prevent clearance by the FDA (or other foreign authorities or notified bodies) or limit sales if cleared, certified or approved and our products might therefore prove to be less safe or effective than initially thought.
Development of our products for expanded indications depends upon positive clinical data, and the safety and efficacy of our products for the intended uses for which we intend to seek clearance, certification or approval are not yet supported by long-term clinical data, which could delay or prevent clearance by the FDA (or other foreign authorities or notified bodies) or limit sales, and our products might prove to be less safe or effective than initially thought.
In the United States, the AMA generally assigns specific billing codes for procedures under a coding system known as Current Procedure Terminology, or CPT, which surgeons use to bill third-party payors and receive reimbursement.
In the United States, the AMA generally assigns specific billing codes for procedures under a coding system known as Current Procedure Terminology (“CPT”), which surgeons use to bill third-party payors and receive reimbursement.
It is possible that one or more MACs will publish new or updated LCDs or other determinations in the future that could characterize procedures associated with our products as non-covered, or as covered under more limited 27 parameters. The publication and effectiveness of any such future determinations would adversely affect our business and results of operation.
Moreover, it is possible that one or more MACs will publish new or updated LCDs or other determinations in the future that could characterize procedures associated with our products as non-covered, or as covered under more limited parameters. The publication and effectiveness of any such future determinations would adversely affect our business and results of operations.
In the U.S., before we can market a new medical device, or a new use of, new claim for or significant modification to an existing product, we must first receive either clearance under Section 510(k) of the FDCA, or 510(k), or approval of a pre-market approval application, or PMA, from the FDA, unless an exemption from pre-market review applies.
In the U.S., before we can market a new medical device, or a new use of, new claim for or significant modification to an existing product, we must first receive either clearance under Section 510(k) of the FDCA (“510(k)”), or approval of a pre-market approval application (“PMA”) from the FDA, unless an exemption from pre-market review applies.
Also, even if competitor products do not have indications for use or clinical data that are comparable to ours, ECPs can still choose these competitor products for a variety of reasons, including those set forth above.
Also, even if competitor products do not have indications for use or clinical data that are comparable to ours, ECPs can still choose these competitor products for a variety of reasons, including those discussed above.
Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our limited historical commercial experience, rapid growth, material changes in product reimbursement, failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our products, our failure to accurately forecast customer acceptance and adoption of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our limited historical commercial experience, rapid growth, material changes in product reimbursement, failure to accurately manage our expansion strategy, product introductions by competitors, unanticipated increases or decreases in customer demand for our products, our failure to accurately forecast customer acceptance and adoption of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
We may not receive, or may be delayed in receiving, the necessary clearances, certifications or approvals for our future products or modifications to our current products, and failure to timely obtain necessary clearances, certifications or approvals for our future products or modifications to our current products would adversely affect our ability to grow our business.
We may not receive, or may be delayed in receiving, necessary clearances, certifications or approvals for our future products or modifications to our current products, and failure to timely obtain or retain such clearances, certifications or approvals would adversely affect our ability to grow our business.
If we are unable to meet our demand requirements on a timely basis, we may not have a sufficient number of our products available for delivery to support ECPs that utilize our products as part of their treatment.
If we are unable to meet our demand requirements on a timely basis, we may not have enough of our products available for delivery to support ECPs that utilize our products as part of their treatment.
The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QSR and, subject to transitional provisions, the EU MDR, both of which are complex regulatory schemes that cover the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QSR and, subject to transitional provisions, the EU Medical Device Regulation (“EU MDR”), both of which are complex regulatory schemes that cover the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
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. The market for our products is highly competitive.
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.
Our long-term growth depends on our ability to enhance our products, maintain appropriate product reimbursement, expand our indications and develop and commercialize additional products in a timely manner. If we fail to identify, acquire and develop other products, we may be unable to grow our business.
Our long-term growth depends on our ability to continue to capture market share, enhance our products, maintain appropriate product reimbursement, expand our indications and develop and commercialize additional products in a timely manner. If we fail to identify, acquire and develop other products, we may be unable to grow our business.
In the process of obtaining PMA approval, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data.
In the process of obtaining PMA approval, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including technical, preclinical, clinical trial, manufacturing and labeling data.
If patients are not willing to pay for procedures in which TearCare is used, or if third-party payors continue to refuse to provide coverage and reimbursement, or provide insufficient levels of coverage and reimbursement, it could have a negative impact on ECPs’ adoption of TearCare and sales of TearCare, which could adversely affect our business.
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

236 edited+112 added−33 removed104 unchanged
Biggest changeConsolidated Statem ents of Cash Flows (in thousands) Years Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 55,547 ) $ ( 86,242 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 614 710 Accretion of debt discount and amortization of debt issuance costs 614 657 Stock-based compensation expense 14,581 12,963 Provision for credit losses 198 402 Provision for excess and obsolete inventories 418 614 Noncash operating lease cost 1,006 542 Loss on disposal of property and equipment 66 85 Changes in operating assets and liabilities: Accounts receivable 661 ( 6,841 ) Inventory ( 2,156 ) ( 3,253 ) Prepaid expenses and other current assets 812 751 Other noncurrent assets ( 470 ) ( 10 ) Accounts payable ( 883 ) ( 694 ) Accrued compensation ( 2,823 ) 1,364 Accrued and other current liabilities ( 4,605 ) 2,634 Other noncurrent liabilities 330 353 Net cash used in operating activities ( 47,184 ) ( 75,965 ) Cash flows from investing activities: Purchases of property and equipment ( 791 ) ( 970 ) Net cash used in investing activities ( 791 ) ( 970 ) Cash flows from financing activities: Proceeds from exercise of common stock options 395 576 Taxes paid on net settlement of restricted stock units ( 224 ) — Proceeds from employee stock purchase plan purchases 933 672 Net cash provided by financing activities 1,104 1,248 Net change in cash and cash equivalents ( 46,871 ) ( 75,687 ) Cash and cash equivalents at beginning of period 185,000 260,687 Cash and cash equivalents at end of period $ 138,129 $ 185,000 Supplemental disclosure of cash flow information Cash paid for interest $ 4,267 $ 3,252 Supplemental disclosure of non-cash investing and financing information Acquisition of property and equipment included in accounts payable and accrued liabilities $ 60 $ 103 The accompanying notes are an integral part of these consolidated financial statements. 81 SIGHT SCIENCES, INC.
Biggest changeConsolidated Statem ents of Cash Flows (in thousands) Years Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 51,507 ) $ ( 55,547 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 712 614 Accretion of debt discount and debt issuance costs 753 614 Stock-based compensation expense 17,077 14,581 Allowance for credit losses ( 42 ) 198 Provision (benefit) for excess and obsolete inventories ( 106 ) 418 Noncash operating lease cost 646 1,006 Loss on disposal of property and equipment 23 66 Noncash loss on debt extinguishment 1,033 — Change in fair value of common stock warrants 60 — Changes in operating assets and liabilities: Accounts receivable 3,545 661 Inventory 1,630 ( 2,156 ) Prepaid expenses and other current assets 299 812 Other noncurrent assets ( 51 ) ( 470 ) Accounts payable 336 ( 883 ) Accrued compensation 5,151 ( 2,823 ) Accrued and other current liabilities ( 347 ) ( 4,605 ) Other noncurrent liabilities ( 1,563 ) 330 Net cash used in operating activities ( 22,351 ) ( 47,184 ) Cash flows from investing activities: Purchases of property and equipment ( 385 ) ( 791 ) Net cash used in investing activities ( 385 ) ( 791 ) Cash flows from financing activities: Net proceeds from Hercules Loan Agreement 39,526 — Repayment of MidCap Loan Agreement ( 35,375 ) — Debt issuance costs ( 238 ) — Proceeds from exercise of common stock options 255 395 Taxes paid on net settlement of restricted stock units ( 23 ) ( 224 ) Proceeds from employee stock purchase plan purchases 819 933 Net cash provided by financing activities 4,964 1,104 Net change in cash and cash equivalents ( 17,772 ) ( 46,871 ) Cash and cash equivalents at beginning of period 138,129 185,000 Cash and cash equivalents at end of period $ 120,357 $ 138,129 Supplemental disclosure of cash flow information Cash paid for interest $ 4,262 $ 4,267 Supplemental disclosure of non-cash investing and financing information Acquisition of property and equipment included in accounts payable and accrued liabilities $ 169 $ 60 Common stock warrants issued upon execution of Hercules Loan Agreement $ 687 $ — The accompanying notes are an integral part of these consolidated financial statements. 82 SIGHT SCIENCES, INC.
The non-cash charges primarily consisted of $14.6 million related to stock-based compensation, $0.6 million of depreciation, $0.6 of accretion of debt discount and amortization of debt issuance costs, and $1.0 million of noncash operating lease expense.
The non-cash charges primarily consisted of $14.6 million related to stock-based compensation, $0.6 million of depreciation, $0.6 million of accretion of debt discount and amortization of debt issuance costs, and $1.0 million of noncash operating lease expense.
While our indebtedness to Lenders remains outstanding, we are required to use commercially reasonable efforts to grant to Lenders the option to invest up to $3.0 million in our next round of equity financing, if any, broadly marketed to multiple investors on the same terms, conditions and pricing offered to investors in such subsequent equity financing.
While our indebtedness to the Lenders remains outstanding, 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, broadly marketed to multiple investors on the same terms, conditions and pricing offered to investors in such subsequent equity financing.
The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.
The amount of variable consideration included in the transaction price may be constrained and is included only to the extent it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.
Shipping and handling costs incurred for the delivery of goods to customers are included in cost of goods sold. In cases where the Company bills shipping and handling cost to customers, the Company classifies those amounts in net revenue.
Shipping and handling costs incurred for the delivery of goods to customers are included in cost of goods sold. In cases where the Company bills shipping and handling costs to customers, the Company classifies those amounts in net revenue.
The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, which determine the fair value of share-based awards, including the option’s expected term, expected volatility of the underlying stock, risk-free interest rate and expected dividend yield.
The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, which determine the fair value of share-based awards, including the stock option’s expected term, expected volatility of the underlying stock, risk-free interest rate and expected dividend yield.
We believe that our existing facilities are adequate to meet our business requirements in the near-term, and that additional space will be available on commercially reasonable terms, if required. Ite m 3. Legal Proceedings. On September 16, 2021, we filed suit in the U.S. District Court for the District of Delaware (C.A.
We believe that our existing facilities are adequate to meet our business requirements in the near-term, and that additional space will be available on commercially reasonable terms, if required. 63 Ite m 3. Legal Proceedings. On September 16, 2021, we filed suit in the U.S. District Court for the District of Delaware (C.A.
As a practical expedient, the Company recognizes the incremental costs of obtaining contracts, such as sales commissions, as an expense when incurred since the amortization period of the asset we otherwise would have recognized is one year or less. Sales commissions are recorded within selling, general, and administrative expenses in the consolidated statements of operations and comprehensive loss.
As a practical expedient, the Company recognizes the incremental costs of obtaining contracts, such as sales commissions, as an expense when incurred since the amortization period of the asset the Company otherwise would have recognized is one year or less. Sales commissions are recorded within selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.
We believe that these use cases have very little overlap with the use cases for our 68 OMNI device. Our ability to establish SION as a product with differentiated ease of use, safety and efficacy will be an important driver of SION’s commercial growth and success.
We believe that these use cases have very little overlap with the use cases for our OMNI device. Our ability to establish SION as a product with differentiated ease of use, safety and efficacy will be an important driver of SION’s commercial growth and success.
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 37 months from the commencement date.
In determining the lease term, the Company includes all renewal options that are reasonably probable to be executed. 91 The Company leases its corporate headquarters in Menlo Park, California. The lease commenced in August 2021 and was originally for a term of 37 months from the commencement date.
Our business philosophy is grounded in the following principles: • comprehensively understanding disease physiology; • developing products that are intended to preserve, protect, and restore natural physiological functionality to diseased eyes; • developing and marketing products with proven clinical evidence that achieve superior effectiveness versus current treatment paradigms while minimizing complications or side effects; • providing intuitive, patient-friendly, interventional solutions to ophthalmologists and optometrists (together, "ECPs"); and • delivering compelling economic value to all stakeholders, including patients, providers and third-party payors such as Medicare and commercial insurers.
Our business philosophy is grounded in the following principles: • comprehensively understanding disease physiology; • developing transformative technologies that are intended to preserve, protect and restore natural physiological functionality to diseased eyes; • developing and marketing products with proven clinical evidence that achieve superior effectiveness versus current treatment paradigms while minimizing complications or side effects; • providing intuitive, patient-friendly, interventional solutions to ophthalmologists and optometrists (together, "ECPs"); and • delivering compelling economic value to all stakeholders, including patients, providers and third-party payors such as Medicare and commercial insurers.
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; options granted as merit awards generally vest in 48 equal monthly installments following the grant date.
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.
Item 1C. Cybersecurity We recognize the critical importance of protecting our information technology ("IT") systems and the data of our employees, customers, and partners. We have an enterprise-wide cybersecurity program designed to identify, detect, investigate, protect, and respond to cybersecurity risks.
Item 1C. Cybersecurity We recognize the critical importance of protecting our information technology ("IT") systems and the data of our employees, customers, patients, and partners. We have an enterprise-wide cybersecurity program designed to identify, detect, investigate, protect, and respond to cybersecurity risks.
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.
The three levels of the fair value hierarchy are as follows: 88 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.
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 unit awards ("RSUs"). Options under the 2021 Plan can typically be granted for periods of up to ten years.
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 RSUs. Stock options under the 2021 Plan can typically be granted for periods of up to ten years.
Clinical studies have demonstrated that treating MGD by liquefying and removing clogged meibum is the most effective method to eliminate obstructions and restore the lipid layer of tear film, thereby preventing premature evaporation of tears.
Clinical studies have demonstrated that treating MGD by liquefying and removing clogged meibum is the most effective method to eliminate obstructions and restore the lipid layer 69 of tear film, thereby preventing premature evaporation of tears.
Impairment of Long-Lived Assets The Company assesses long-lived assets, including property and equipment, whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.
Impairment of Long-Lived Assets The Company assesses long-lived assets, including property and equipment, whenever events or changes in business circumstances indicate that the carrying amount of such assets may not be fully recoverable.
Please also see the section of this Annual Report on Form 10-K titled “Special Note Regarding Forward-Looking Statements.” Overview S ight 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.
Please also see the section of this Annual Report on Form 10-K titled “Special Note Regarding Forward-Looking Statements.” 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.
District Court for the District of Delaware (C.A. No. 1:21-cv-01317) alleging that Ivantis, Inc. directly and indirectly infringes 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.
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.
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 our TearCare products to ECPs.
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 sales of our TearCare products to ECPs.
While our significant accounting policies are more fully described in Note 2 to our financial statements included elsewhere in this Annual Report on Form 10-K, we believe the following discussion addresses our most critical accounting estimates, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.
While our significant accounting policies are more fully described in Note 2 to our financial statements included in this Annual Report on Form 10-K, we believe the following discussion addresses our most critical accounting estimates, which 75 are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.
Our Security Operations Center provides comprehensive, around the clock, cyber threat detection and response capabilities. • Third-Party Software Risk Assessment: We complete security audits on all third-party platforms prior to selection. • Incident Response Plan: Our Incident Response Plan includes the investigation steps and notifications required on all actual and suspected information security incidences • Cybersecurity Training Programs: Our training program is multi-faceted and focused on awareness of new techniques that threat actors utilize both in the corporate environment, as well as their personal lives.
Our Security Operations Center provides comprehensive, around the clock, cyber threat detection and response capabilities. • Third-Party Software Risk Assessment: W e complete security audits on all third-party platforms prior to selection. • Incident Response Plan: Our Incident Response Plan includes the investigation steps and notifications required on all actual and suspected information security incidences • Cybersecurity Training Programs: Our training program is multi-faceted and focused on awareness of new techniques that threat actors utilize both in the corporate environment, as well as their personal lives.
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Sight Sciences, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Sight Sciences, Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").
Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. The Company did no t record any impairment of long-lived assets for the years ended December 31, 2023 and 2022.
Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. The Company did no t record any impairment of long-lived assets for the years ended December 31, 2024 and 2023.
Cost of Goods Sold The Company purchases its components and products from third-party suppliers and manufacturers. Cost of goods sold consists primarily of costs related to materials, manufacturing overhead costs, reserves for excess, and obsolete and non-sellable inventories. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs, such as shipping and handling costs.
Cost of Goods Sold The Company purchases products, components, accessories, and materials from third-party suppliers and manufacturers. Cost of goods sold consists primarily of costs related to materials, manufacturing overhead costs, reserves for excess, and obsolete and non-sellable inventories. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs, such as shipping and handling costs.
On August 1, 2022, the Company filed an amended complaint alleging that Alcon Inc., Alcon Vision, LLC and Alcon Research, LLC 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.
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.
Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that as of December 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level. Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level. Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
The Company does not recognize lease ROU assets or lease liabilities for short-term leases, if any, having initial terms of 12 months or less at lease commencement as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term for these types of leases.
The Company does not recognize lease ROU assets or lease liabilities for short-term leases, if any, having initial terms of 12 months or less at lease commencement as an accounting policy election. The Company recognizes rent expense on a straight-line basis over the lease term for these short-term leases.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America .
Our gross margin has been and we believe it will continue to be, affected by a variety of factors, including differences in segment gross margins, changes in average selling prices, product sales mix, production and ordering volumes, manufacturing costs, product yields, and headcount.
Our gross margin has been, and we believe it will continue to be, affected by a variety of factors, including differences in segment gross margins, changes in average selling prices, changes in product reimbursement rates, product sales mix, production and ordering volumes, manufacturing costs, product yields, and headcount.
The Company also had a $2.2 million increase in inventory to support the planned growth in operations. These were partially offset by $0.8 million decrease in prepaid expenses and other current assets due to lower insurance premiums, as well as a $0.7 million decrease in accounts receivable.
The Company also had a $2.2 million increase in inventory to support its planned growth in operations. 73 These were partially offset by $0.8 million decrease in prepaid expenses and other current assets due to lower insurance premiums, as well as a $0.7 million decrease in accounts receivable.
We also lease approximately 2,000 square feet of office space, which is primarily used by our commercial team, in Southlake, Texas, pursuant to a lease that commenced on April 30, 2019 and expires on May 15, 2024.
We also lease approximately 2,000 square feet of office space, which is primarily used by our commercial team, in Southlake, Texas, pursuant to a lease that commenced on April 30, 2019 and expires on May 15, 2026.
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. 69 We calculate gross margin as gross profit divided by revenue.
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. Gross Profit and Gross Margin 70 We calculate gross margin as gross profit divided by revenue.
Stock-Based Compensation We maintain an equity incentive plan that permits the grant of share-based awards, such as stock options and restricted stock units (RSUs), to employees and directors. We recognize equity-based compensation expense for awards of equity instruments based on the grant date fair value of those awards.
Stock-Based Compensation We maintain an equity incentive plan that permits the grant of stock-based awards, such as stock options and restricted stock units ("RSUs"), to employees, directors, and consultants. We recognize equity-based compensation expense for awards of equity instruments based on the grant date fair value of those awards.
As the Company reported a net loss for the years ended December 31, 2023 and 2022, 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.
As the Company reported a net loss for the years ended December 31, 2024 and 2023, 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.
Use of Estimates The preparation of 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.
Use of Estimates The preparation of 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 revenue and expense during the reporting period.
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.
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.
Based upon the balance outstanding, a hypothetical 1.0% (100 basis points) change in interest rates would not have a material impact on our financial statements. 75 Ite m 8. Financial Statements and Supplementary Data.
Based upon the balance outstanding, a hypothetical 1.0% (100 basis points) change in interest rates would not have a material impact on our financial statements. 76 Ite m 8. Financial Statements and Supplementary Data.
Equity Incentive Plans 2011 Stock Option Plan and 2021 Equity Incentive Plan In 2011, the Company established its 2011 Stock Option Plan (the “2011 Plan”) that provided for the granting 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”).
Equity Incentive Plans 2011 Stock Option Plan and 2021 Equity Incentive Plan In 2011, the Company approved the 2011 Stock Option Plan (the “2011 Plan”) that provided for the granting 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”).
As of December 31, 2023, 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.
As of December 31, 2024, 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.
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. 91 Accordingly, the Company has not recognized any liabilities relating to these obligations as of December 31, 2023 and 2022. Note 7.
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 December 31, 2024 and 2023. Note 7.
Our TearCare customers typically purchase a TearCare System which consists of one or more TearCare SmartHubs TM (“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 years ended December 31, 2023 and 2022.
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 years ended December 31, 2024 and 2023.
Liquidity and Capital Resources Sources of Liquidity 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 IPO, and revenue from the sale of our products.
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.
The Company regularly reviews inventory quantities in consideration of actual loss experiences, projected future demand, and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.
The Company regularly reviews inventory quantities in consideration of its actual inventory loss experiences, projected future demand for its products, and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.
Lease ROU assets and lease obligations are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company currently does not have any finance leases.
Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company currently does not have any finance leases.
As of December 31, 2023, a full valuation allowance for deferred tax assets was recorded as management believes it is not more likely than not that all of the deferred tax assets will be realized.
As of December 31, 2024, a full valuation allowance for deferred tax assets was recorded as management believes it is not more likely than not that all of the deferred tax assets will be realized.
Our Surgical Glaucoma segment consists of sales of the OMNI® Surgical System ("OMNI") and the SION® Surgical Instrument ("SION"), while our Dry Eye segment includes 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.
Our Surgical Glaucoma revenue consists of sales of the OMNI® Surgical System ("OMNI") 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.
Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. It em 9B.
Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID Number 34 ) 77 Consolidated Balance Sheets as of December 31, 2023 and 2022 78 Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2023 and 2022 79 Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2023 and 2022 80 Consolidated Statements of Cash Flows for the Years ended December 31, 2023 and 2022 81 Notes to Consolidated Financial Statements 82 76 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Sight Sciences, Inc.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID Number 34 ) 78 Consolidated Balance Sheets as of December 31, 2024 and 2023 79 Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2024 and 2023 80 Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2024 and 2023 81 Consolidated Statements of Cash Flows for the Years ended December 31, 2024 and 2023 82 Notes to Consolidated Financial Statements 83 77 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Sight Sciences, Inc.
The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact of adopting this ASU on its disclosures.
The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact of adopting this ASU on its financial statements and related disclosures.
The Company ’s incremental borrowing rate 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.
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.
The Company uses its judgment, based on the best available facts and circumstances, and records a provision against amounts due to reduce the receivable to the amount that is expected to be collected. These specific provisions are reevaluated and adjusted as additional information is received that impacts the amount reserved. To date, the Company has not experienced material credit-related losses.
The Company uses its reasonable judgment, based on the available information, and records a provision against amounts due to reduce the receivable to the amount that is expected to be collected. These specific provisions are reevaluated and adjusted as additional information is received that impacts the amount reserved. To date, the Company has not experienced material credit-related losses.
The Company’s cash and cash equivalents are deposited with a high-quality financial institution. Deposits at this institution may, at times, exceed federally insured limits. Management believes that this financial institution is financially sound and, accordingly, that minimal credit risk exists. The Company has not experienced any losses on its deposits of cash and cash equivalents.
The Company’s cash and cash equivalents are deposited with a high-quality financial institution. Deposits at this institution may, at times, exceed federally insured limits. Management believes that this financial institution is financially sound and, that minimal credit risk exists with respect to these deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents.
Employees undergo regular training on information security best practices, including interactive training to confirm understanding and test employee skills. • Compliance Policy: Mandatory compliance with all cybersecurity programs, including applicable legislative and regulatory requirements. • Third-Party Cybersecurity Plan Assessment: We regularly engage with cybersecurity professionals in reviewing our cybersecurity plan. It em 2. Properties.
Employees undergo regular training on information security best practices, including interactive training to confirm understanding and test employee skills. • Compliance Policy: Mandatory compliance with all cybersecurity programs, including applicable legislative and regulatory requirements. • Third-Party Cybersecurity Plan Assessment: We regularly engage with cybersecurity professionals in reviewing our cybersecurity plan.
We are presently unable to predict the outcome of this lawsuit, or to reasonably estimate the potential financial impact of the lawsuit on the Company, if any.
We are presently unable to predict the outcome of this lawsuit or to reasonably estimate the potential financial impact of the lawsuit on us, if any.
The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally 85 equal to the vesting period and uses the straight- line method to recognize stock-based compensation, and accounts for forfeitures as they occur.
The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, which is generally equal to the vesting period and uses the straight- line method to recognize stock-based compensation, and accounts for forfeitures as they occur.
Of the Company's federal net operating loss carryovers, $ 14.8 million was generated before January 1, 2018 and is subject to a 20-year carryforward period. The remaining $ 220.7 million can be carried forward indefinitely but is subject to an 80 % taxable income limitation.
Of the Company's federal net operating loss carryovers, $ 14.8 million was generated before January 1, 2018 and is subject to a 20-year carryforward period. The remaining $ 254.4 million can be carried forward indefinitely but is subject to an 80 % taxable income limitation.
The Company's cash equivalents include U.S. treasury securities that are classified as held-to-maturity and recorded at amortized cost in the financial statements. The Company states accounts receivable, accounts payable, and accrued and other current liabilities at their carrying value, which approximates fair value due to the short time to the expected receipt or payment.
The Company's cash equivalents are comprised of U.S. treasury securities that are classified as held-to-maturity and recorded at amortized cost in the financial statements, and money market accounts. The Company states accounts receivable, accounts payable, and accrued and other current liabilities at their carrying value, which approximates fair value due to the short time to the expected receipt or payment.
As of December 31, 2023, no dividends have been declared. Each share of common stock is entitled to one vote.
As of December 31, 2024, no dividends have been declared. Each share of common stock is entitled to one vote.
The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows (in thousands): December 31, 2023 2022 Tax at statutory federal rate 21 % 21 % State tax, net of federal benefit 5 % 5 % Research and development credit 2 % 1 % Change in valuation allowance ( 25 )% ( 26 )% Other ( 3 )% ( 1 )% Effective tax rate — — 96 A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax assets will not be realized.
The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows (in thousands): December 31, 2024 2023 Tax at statutory federal rate 21 % 21 % State tax, net of federal benefit 5 % 5 % Research and development credit 3 % 2 % Compensation ( 5 )% ( 2 )% Change in valuation allowance ( 22 )% ( 25 )% Other ( 2 )% ( 1 )% Effective tax rate — — A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax assets will not be realized.
We believe this philosophy and model not only enable us to differentiate our products and company from competitors, but also expand 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 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.
The carrying amount of the Company’s short-term debt approximates its fair value as the effective interest rate approximates market rates currently available to the Company. Concentration of Credit Risk Financial instruments that subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable.
The carrying amount of the Company’s debt approximates its fair value as the effective interest rate approximates market rates currently available to the Company. Concentration of Credit and Supply Chain Risk Financial instruments that subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable.
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, cash equivalents and short-term investments. In January 2024, we terminated our credit agreement with MidCap Financial Services and entered into an agreement with Hercules Capital.
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, cash equivalents and short-term investments. In January 2024, we entered into a credit agreement with Hercules Capital.
Since our inception through December 31, 2023, we have raised an aggregate of approximately $402.4 million in net proceeds from sales of our redeemable convertible preferred stock and common stock and borrowed $32.9 million of net proceeds under our term loans.
Since our inception through December 31, 2024, we have raised an aggregate of approximately $402.4 million in net proceeds from sales of our redeemable convertible preferred stock and common stock and borrowed an aggregate of approximately $37.9 million of net proceeds under our term loans.
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, which expires October 31, 2026.
It em 2. Properties. Our corporate headquarters are 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, which expires October 31, 2026.
The pre-2018 federal and certain state net operating losses will begin to expire in 2031 and 2032, respectively, if not utilized . As of December 31, 2023 and 2022, the Company has federal research and development income tax credit carryforwards of approximately $ 1.9 million and $ 1.5 million, respectively.
The pre-2018 federal and certain state net operating losses will begin to expire in 2031 and 2032, respectively, if not utilized. As of December 31, 2024 and 2023, the Company has federal research and development income tax credit carryforwards of approximately $ 2.8 million and $ 1.9 million, respectively.
The change in our net operating assets and liabilities was primarily due to a $7.4 million decrease in accrued and other current liabilities and accrued compensation. This was due to a decline in sales commissions and incentive compensation, as well as reduced purchasing of inventory due to the impacts of the Draft LCDs in the fourth quarter of 2023.
The change in our net operating assets and liabilities was primarily due to a $7.4 million decrease in accrued and other current liabilities and accrued compensation. This was due to a decline in sales commissions and incentive compensation, as well as reduced inventory purchases following the publication of the Draft LCDs in the fourth quarter of 2023.
As of December 31, 2023 and 2022, the Company has business interest expense carryforwards of $ 0.8 million and $ 0.4 million, respectively. Business interest expense can be carried forward indefinitely.
As of December 31, 2024 and 2023, the Company has business interest expense carryforwards of $ 0.0 million and $ 0.8 million, respectively. Business interest expense can be carried forward indefinitely.
Currently, there is no meaningful reimbursement coverage by Medicare or private payors for meibomian gland disease ("MGD") procedures, including TearCare, and patients typically pay out-of-pocket for TearCare, although some payors may agree to provide case-based coverage outside of a formal policy.
Currently, there is no meaningful reimbursement coverage by Medicare or private payors for DED procedures, including TearCare, and patients typically pay out-of-pocket for TearCare, although some payors may agree to provide case-based coverage outside of a formal policy.
The following table summarizes the activity related to the unrecognized tax benefits (in thousands): December 31, 2023 2022 Unrecognized tax benefits at the beginning of the year $ 741 $ 580 Additions based on tax positions related to the current year 162 161 Additions for tax positions of prior years — — Unrecognized tax benefits at the end of the year $ 903 $ 741 The Company does not have any material uncertain tax positions as of December 31, 2023 and does not expect any significant change to such balances in the next twelve months.
The following table summarizes the activity related to the unrecognized tax benefits (in thousands): December 31, 2024 2023 Unrecognized tax benefits at the beginning of the year $ 903 $ 741 Additions based on tax positions related to the current year 376 162 Additions for tax positions of prior years — — Unrecognized tax benefits at the end of the year $ 1,279 $ 903 The Company does not have any material uncertain tax positions as of December 31, 2024 and does not expect any significant change to such balances in the next twelve months.
With a portion of these net proceeds (our December 31, 2023 cash and equivalents was $138.1 million), we have developed and commercially launched two clinically differentiated products, funded multiple completed and ongoing clinical trials, and built our management team and company infrastructure to support the continued growth of our business.
With a portion of these net proceeds (our December 31, 2024 cash and equivalents was $120.4 million), we have developed and commercially launched two clinically differentiated products, funded multiple completed and ongoing clinical trials, and built our management team and company infrastructure to support the continued growth of our business.
As of December 31, 2023, the unrecognized stock-based compensation associated with unvested RSUs was $ 16.2 million, which is expected to be recognized over a weighted-average period of 2.9 years. Employee Stock Purchase Plan In July 2021, the board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”).
As of December 31, 2024, the unrecognized stock-based compensation associated with unvested RSUs was $ 19.2 million, which is expected to be recognized over a weighted-average period of 2.6 years. Employee Stock Purchase Plan In July 2021, the board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”).
We sell OMNI in several other countries through distributors. We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, such as ambulatory service centers ("ASCs") and hospital outpatient departments (" HOPDs"), which are typically reimbursed by Medicare or private payors for procedures using our products. We sell TearCare to ECPs.
We also sell OMNI 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.
These agreements were amended and restated in November 2020, providing for a maximum $40.0 million credit facility consisting of a $35.0 million senior secured term loan (the "2020 Term Loan") and a $5.0 million revolving loan (the "2020 Revolver” and together with the 2020 Term Loan, the “MidCap Credit Facility”). In July 2023, we terminated the 2020 Revolver.
These agreements were amended and restated in November 2020, providing for a maximum $40.0 million credit facility consisting of a $35.0 million senior secured term loan (the "2020 Term Loan") and a $5.0 million revolving loan (the "2020 Revolver” and together with the 2020 Term Loan, the “MidCap Credit Facility”).
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.
Accounting Standards Not Yet 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 provision for credit losses was $ 1.2 million and $ 1.0 million as of December 31, 2023 and 2022, respectively. Inventory, net Inventory represents raw materials and finished goods purchased from third-party suppliers and manufacturers. Inventory is valued at the lower of cost or net realizable value.
The allowance for credit losses was $ 0.7 million and $ 1.2 million as of December 31, 2024 and 2023, respectively. 84 Inventory, net Inventory represents raw materials and finished goods purchased from third-party suppliers and manufacturers. Inventory is valued at the lower of cost or net realizable value.
In December 2023, the Company entered into an amendment to the lease, extending the lease term an additional 26 months. Upon signing the amendment, the Company recorded an aggregate lease right-of-use ("ROU") asset and lease liability of $ 1.2 million. The lease ROU asset and corresponding lease liability were estimated using a weighted-average incremental borrowing rate of 11.40 %.
In December 2023, the Company entered into an amendment to the lease, extending the lease term an additional 26 months. Upon signing the amendment, the Company recorded an aggregate lease ROU asset and lease liability of $ 1.2 million. The lease ROU asset and corresponding lease liability were estimated using a weighted-average IBR of 11.40 %.
We plan to continue to utilize third party contract manufacturers for our products and any related components. 66 Revenue in our Surgical Glaucoma segment for the years ended December 31, 2023 and 2022 was $74.3 million and $65.6 million, respectively, with gross margins for the same periods of 88.1% and 87.4%, respectively.
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 years ended December 31, 2024 and 2023 was $75.9 million and $74.3 million, respectively, with gross margins for the same periods of 87.6% and 88.1%, respectively.
Accounts Receivable and Provision for Credit Losses Accounts receivable are stated at invoiced amounts, net of estimated provisions for credit losses. The Company’s provision for credit losses methodology for receivables is developed using its historical collection experience, current and future economic market conditions, and a review of the current aging status and financial condition of its customers.
Accounts Receivable and Provision for Credit Losses Accounts receivable are stated at invoiced amounts, net of estimated allowance for credit losses. The Company’s provision for credit losses methodology for accounts receivables is developed using its historical collection experience, current and anticipated future macroeconomic conditions, and a review of the current aging status and financial condition of its customers.
The total amount of uncertain tax positions ("UTP") on research and development tax credits is $ 0.9 million and $ 0.7 million as of December 31, 2023 and 2022, respectively. The Company does not expect any significant change to the UTP balances in the next 12 months.
The total amount of uncertain tax positions ("UTP") on research and development tax credits is $ 1.3 million and 98 $ 0.9 million as of December 31, 2024 and 2023, respectively. The Company does not expect any significant change to the UTP balances in the next 12 months.

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