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01/11 16:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals mixed signals: the company reports declining dry eye revenue and gross margins, alongside a net loss. However, they also demonstrate strong performance in the Surgical Glaucoma segment, reduced operating expenses, and positive cash flow. The Q&A highlights confidence in reimbursement for TearCare and market share gains in MIGS, but uncertainties in reimbursement timing and competitive dynamics persist. These factors, coupled with stable guidance, suggest a neutral stock price movement over the next two weeks.
Total Revenue $19.6 million, an 8% decrease year-over-year. The decline was attributed to a decrease in Surgical Glaucoma and Dry Eye revenue.
Surgical Glaucoma Revenue $19.2 million, a 5% decrease year-over-year. The decline was primarily due to an 11% decrease in account utilization, impacted by Medicare LCD coverage restrictions, partially offset by a higher number of ordering accounts and higher average selling prices.
Dry Eye Revenue $0.3 million, a decrease from $1.1 million year-over-year. The decline was due to fewer SmartLids sales, as the company focused on achieving reimbursed market access for TearCare procedures.
Gross Margin 85%, down slightly from 86% year-over-year. Surgical Glaucoma gross margin was 86% (down from 88%) due to higher overhead costs, tariff costs, and product sales mix, partially offset by higher average selling prices. Dry Eye gross margin was 38% (down from 47%) due to product sales mix and higher overhead costs.
Operating Expenses $28.3 million, a 9% decrease year-over-year, primarily due to lower legal fees. Adjusted operating expenses were $24.4 million, an 8% decrease year-over-year.
Net Loss $11.9 million or $0.23 per share, compared to a net loss of $12.3 million or $0.25 per share year-over-year. The improvement was due to reduced operating expenses.
Cash and Cash Equivalents $101.5 million, with $7.3 million cash used in the quarter, compared to $9.1 million cash used in the prior year.
OMNIEdge: Launched as the latest evolution of the OMNI platform, designed to meet diverse surgeon preferences and patient needs. Surgeons have responded positively, achieving strong outcomes.
TearCare: Continued focus on achieving reimbursed market access. Published 24-month results of the SAHARA RCT, demonstrating long-term clinical benefits for dry eye disease treatment. Also published a cost utility analysis showing cost-effectiveness compared to cyclosporine.
Surgical Glaucoma: Revenue of $19.2 million, showing resilience despite Medicare coverage restrictions. Record high ordering accounts, up 6% sequentially. Focus on standalone OMNI procedures for pseudophakic patients.
Dry Eye: Revenue of $0.3 million, down from $1.1 million due to fewer SmartLids sales. Efforts concentrated on achieving reimbursed market access for TearCare.
Revenue Guidance: Raised full-year 2025 revenue guidance to $72 million to $76 million.
Gross Margin: Achieved 85% gross margin, with Surgical Glaucoma at 86% and Dry Eye at 38%.
Operating Expenses: Adjusted operating expenses decreased by 8% to $24.4 million.
Manufacturing Expansion: Plans to expand manufacturing lines to additional locations, starting with OMNIEdge in Q1 2026.
Patent Litigation: Awaiting final ruling on patent infringement case against Alcon. Alcon has filed for reexamination of patents.
Medicare LCDs coverage restrictions: The new Medicare LCDs coverage restrictions limit performing multiple MIGS procedures in combination with cataract surgery, impacting the MIGS market and resulting in an 11% decrease in account utilization.
Dry Eye revenue decline: Dry Eye revenue decreased significantly from $1.1 million to $0.3 million due to fewer SmartLids sales and the focus on achieving reimbursed market access for TearCare procedures.
Tariff costs: Tariff costs on imported products are increasing the cost of goods sold for the Surgical Glaucoma segment, with an estimated impact of $1 million to $1.5 million for full year 2025.
Patent litigation uncertainty: The ongoing patent infringement case against Alcon and the reexamination of patents by the USPTO create uncertainty regarding the collection of past damages and ongoing royalties.
Reimbursement delays for TearCare: Delays in achieving reimbursement coverage and/or payment decisions for TearCare are limiting revenue growth in the Dry Eye segment.
Higher overhead costs: Higher overhead costs per unit are negatively impacting gross margins in both the Surgical Glaucoma and Dry Eye segments.
Revenue Guidance for 2025: The company raised its full-year 2025 revenue guidance to $72 million to $76 million, up from the prior guidance of $70 million to $75 million. This includes approximately $1 million in revenue from the Dry Eye segment. The guidance does not account for potential reimbursement coverage or payment decisions for TearCare in 2025.
Surgical Glaucoma Revenue Outlook: Surgical Glaucoma revenue for Q3 2025 is expected to decline by mid-single digits compared to the same period in the prior year. The company anticipates tariff exposure to increase the cost of goods sold by $1 million to $1.5 million for the full year 2025, down from the prior estimate of $3.5 million to $4.5 million.
Dry Eye Segment Revenue and Reimbursement: Dry Eye revenue is expected to remain modest at approximately $1 million for 2025 until sufficient reimbursed market access for TearCare is achieved. The company remains confident in securing reimbursement for TearCare, supported by recent clinical and economic data.
Manufacturing Expansion: The company plans to expand its manufacturing lines to additional third-party locations, with production of the OMNIEdge product line expected to begin in Q1 2026.
Adjusted Operating Expenses for 2025: The company reaffirmed its adjusted operating expenses guidance for 2025 at $101 million to $105 million, representing a 0% to 4% increase compared to 2024. This includes investments in pseudophakic standalone Surgical Glaucoma market development, TearCare market access, and focused R&D projects.
The selected topic was not discussed during the call.
The company has shown improved financial performance with reduced operating expenses and net loss. Raised revenue guidance and strategic focus on TearCare's growth potential indicate optimism. Despite some uncertainties in the Q&A, the engagement and expansion plans for TearCare and the MIGS market suggest positive sentiment. The market's reaction is likely to be positive, considering the strategic initiatives and financial improvements.
The earnings call reveals mixed signals: the company reports declining dry eye revenue and gross margins, alongside a net loss. However, they also demonstrate strong performance in the Surgical Glaucoma segment, reduced operating expenses, and positive cash flow. The Q&A highlights confidence in reimbursement for TearCare and market share gains in MIGS, but uncertainties in reimbursement timing and competitive dynamics persist. These factors, coupled with stable guidance, suggest a neutral stock price movement over the next two weeks.
The earnings call reveals a challenging environment with decreased revenues, competitive pressures, and regulatory issues. The lack of reimbursement coverage for TearCare and declining MIGS utilization are concerning. Despite a slight decrease in net loss, the company faces tariff impacts and lacks a share repurchase program. The Q&A section highlights management's evasive responses on key issues, adding to uncertainty. Overall, the negative factors outweigh any positives, leading to a negative sentiment rating.
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