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01/11 11:27
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Third Quarter Revenue $19.9 million, a 1% decrease year-over-year. The decline was attributed to fewer SmartLids sales in the Dry Eye segment as the company focused on achieving reimbursed market access for TearCare procedures.
Surgical Glaucoma Revenue $19.7 million, an increase of 6% year-over-year. Growth was driven by an increase in both ordering accounts and average selling prices, partially offset by lower account utilization.
Dry Eye Revenue $0.2 million, a decrease from $1.5 million year-over-year. The decline was in line with expectations due to fewer SmartLids sales as the company focused on achieving reimbursed market access for TearCare procedures.
Gross Margin 86%, up from 84% year-over-year. Surgical Glaucoma gross margin remained flat at 87%, while Dry Eye gross margin decreased to 38% from 48%, primarily due to higher overhead costs per unit.
Total Operating Expenses $25.1 million, a decrease of 11% year-over-year. The reduction was primarily due to lower stock-based compensation, personnel-related expenses, and research and development expenses.
Adjusted Operating Expenses $19.8 million, a decrease of 17% year-over-year. The reduction was attributed to cost-saving measures, including a reduction in force announced in August.
Net Loss $8.2 million or $0.16 per share, compared to a net loss of $11.1 million or $0.22 per share year-over-year. The improvement was due to reduced operating expenses and restructuring efforts.
Cash and Cash Equivalents $92.4 million at the end of the quarter, with $40 million of debt. Cash used during the quarter was $9.1 million, including $1.5 million of restructuring costs.
OMNI Surgical Glaucoma technology: Achieved $19.9 million in Q3 revenue, driven by adoption of OMNI technology. Sequential growth of 3% and 6% year-over-year growth in Surgical Glaucoma revenue.
TearCare system: Secured fee schedules for CPT code 0563T in two MAC regions, covering 10.4 million Medicare lives. Payment rate set at $1,142 for participating providers. Early customer interest and reengagement noted.
Market expansion for TearCare: Focused on Medicare-covered regions with 10.4 million lives. Targeting 6,500 eye care providers nationwide, with 200 already using TearCare in these regions.
UnitedHealthcare coverage for OMNI: OMNI included in UnitedHealthcare's expanded coverage for glaucoma surgical treatments, effective October 2025.
Operational efficiencies: Reduced adjusted operating expenses by 17% year-over-year. Achieved $12 million in annualized savings from August reduction in force.
Manufacturing expansion: Plans to expand manufacturing outside China by Q1 2026 to mitigate tariff costs.
Management restructuring: Promoted Ali Bauerlein to COO and Jim Rodberg to CFO to enhance operational and financial leadership.
Strategic priorities: Focused on securing reimbursement for TearCare, accelerating MIGS and Dry Eye commercialization, and advancing clinical and economic evidence for broader adoption.
Tariff Costs: The company faces tariff costs on its Surgical Glaucoma products, which have impacted gross margins and cost of goods sold. This creates financial pressure and uncertainty due to the dynamic nature of tariff rates.
Manufacturing Relocation: The company is working to relocate manufacturing outside of China to mitigate tariff exposure. However, this transition involves costs and operational challenges, with new facilities expected to start production in 2026.
Dry Eye Revenue Decline: Revenue from the Dry Eye segment has significantly decreased due to a strategic focus on achieving reimbursed market access for TearCare procedures, which may delay revenue recovery.
Reimbursement Coverage Challenges: While progress has been made in securing reimbursement for TearCare, the company still faces challenges in achieving broader coverage and payment decisions from other MACs and commercial payers.
Reduction in Force: The company implemented a reduction in force in August, which, while reducing costs, may impact operational capacity and employee morale.
Patent Infringement Case: The company has not yet received monetary damages from its successful patent infringement case against Alcon, which could impact financial planning.
Market Competition: The company operates in a competitive market for glaucoma and dry eye treatments, which could impact its ability to capture market share and sustain growth.
Economic Uncertainty: General economic uncertainties could impact customer purchasing behavior and the adoption of the company's products.
2025 Revenue Guidance: Raised to $76 million to $78 million, up from the prior guidance of $72 million to $76 million.
Adjusted Operating Expense Guidance: Lowered to $90 million to $92 million, representing a decrease of 9% to 11% compared to 2024.
Dry Eye Segment Revenue: Expected to be $0.5 million to $1 million for the fourth quarter of 2025.
Surgical Glaucoma Segment Revenue: Fourth quarter revenue growth expected to be in low single digits at the midpoint of the range versus the fourth quarter of 2024.
Manufacturing Expansion: Additional third-party manufacturing locations outside of China expected to begin producing volumes for OMNI Edge and TearCare SmartLids product lines in the first quarter of 2026.
Dry Eye Gross Margin: Expected to expand significantly with higher volumes associated with broader reimbursed market access as commercialization ramps up.
Reduction in Force Savings: Expected to generate approximately $12 million in annualized personnel-related savings.
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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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