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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.06pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.06pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-
Not scored
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
restructuring+7
adversely+6
litigation+5
delays+5
negatively+4
Positive rising
improve+4
better+4
efficiencies+4
improvements+3
profitability+3
Risk Factors (Item 1A)
55,248 words
Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. 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. The risks and uncertainties described below are not the only ones we face. Additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. 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
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
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.
We have incurred annual net losses since our formation in 2010. For the years ended December 31, 2025 and 2024, we had net losses of $38.4 million and $51.5 million, respectively. As of December 31, 2025, we had an accumulated deficit of $384.7 million. To date, we have financed our operations primarily through equity and debt financings and from product sales. Our net losses and accumulated deficit have primarily been due to the substantial investments we have made to develop our products, costs related to our sales and marketing efforts, general research and development expenses, including costs related to clinical trials and regulatory initiatives to obtain marketing clearance, and infrastructure improvements, and costs related to intellectual property development, protection and enforcement, including our ongoing litigation intellectual property litigationagainst Alcon Inc., Alcon Vision, LLC and their affiliates (collectively “Alcon”). In addition, as a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
Accordingly, we expect to continue to incur losses for the foreseeable future and we cannot assure you that we will ever achieveprofitability or that, if we do become profitable, we will sustain profitability. Our failure to achieve and sustain profitability in the future would make it more difficult to finance our business and accomplish our strategic objectives, which would have a material adverse effect on our business, financial condition and results of operations. In addition, failure of our products to significantly penetrate our target markets would negatively affect our business, financial condition and results of operations.
We are highly dependent on revenue from the sales of our products, and our inability to successfully execute our growth strategy could negatively affect our results of operations and financial condition.
We began selling VISCO360 and TRAB360, commercial predicate devices to OMNI, in 2015, TearCare in 2019 and SION in 2022, and therefore do not have a long history operating as a commercial company. Currently, we are highly dependent on the success of OMNI and TearCare. We derive revenue from sales of OMNI and SION, our commercially available Interventional Glaucoma products, and our TearCare system and related accessories, which comprise our commercial Interventional Dry Eye products, and we expect substantially all of our revenue in at least the next 12 months to be derived from the sale of these OMNI, SION and TearCare products. We believe that OMNI sales will continue to account for the majority of our revenue over the next twelve months. In the longer term, our growth strategy is dependent in large upon expanding adequate and sustainable reimbursement for TearCare to help drive Interventional Dry Eye revenue growth. Because we devote substantially all of our resources to developing, marketing and selling these products and rely on the sale of our products as our sole source of revenue, any factors that negatively impact our products, particularly factors negatively affecting OMNI or TearCare revenue growth or appropriately reimbursed access to our TearCare procedure, could have a material adverse effect on our business, financial condition and results of operations.
In November 2023, for instance, five of the seven Medicare Administrative Contractors (“MACs”) published proposed local coverage determinations (the “Prior LCDs”) that identified certain non-implantable MIGS procedures as investigational and not reasonable and necessary in the jurisdictions where these MACs administer Medicare Part B benefits, including adult canaloplasty in combination with trabeculotomy (ab interno), a procedure performed with OMNI and for which it is indicated. The Prior LCDs may also have categorized our SION technology as investigational and thus non-covered with respect to goniotomy procedures. The Prior LCDs were withdrawn in late December 2023 prior to becoming effective, and replaced with updated LCDs (the “Final LCDs”) that became effective in November 2024. The Final LCDs allow for continued coverage of canaloplasty and goniotomy procedures performed with our OMNI and SION technologies in these five MAC
jurisdictions. However, each of the Final LCDs adopted a non-coverage policy when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy, at the same time in the same patient eye. This non-coverage policy has resulted in a reduction in overall MIGS claims volumes, which has adversely impacted our business, revenue and prospects. If the remaining two MACs also publish LCDs with the same coverage restriction, we expect an even further decline in MIGS claims volumes. Moreover, it is possible that one or more payors will publish new or updated policies or other determinations in the future that could (i) characterize procedures associated with our products as non-covered, or as covered under more limited parameters; or (ii) establish lower reimbursement for procedures performed with our products. The publication and effectiveness of any such future determinations would adversely affect our business and results of operations.
Over the next several years, we expect to continue to devote substantial resources to expand our commercialization efforts, drive increased adoption of our products and continue to develop new and improved products. Our limited commercialization experience and number of products make it difficult to evaluate our current business and predict our future prospects. For example, we believe OMNI procedures can be highly effective in reducing IOP in adult POAG patients when performed on a standalone basis without concomitant cataract surgery (“Standalone Procedure”). However, we have limited commercial experience with the standalone procedure market segment, and the extent to which we are able to penetrate and grow this market is unknown. If we and other market participants are unable to effectively drive the use of MIGS devices in Standalone Procedures, then our total addressable market will be significantly reduced, which will adversely affect our sales and growth strategy. In addition, a number of factors, including some outside of our control, may render our products less competitive, economically impracticable or obsolete and contribute to fluctuations in our financial results, including:
Our ability to obtain and maintain reimbursement coverage for procedures in which our products are used;
Changes in reimbursement rates or coverage restrictions instituted by government or commercial payors, such as the coverage limitations on multiple MIGS procedures done at the same time as a cataract surgery included in the Final LCDs, or coverage limitations on our TearCare procedure;
The results of our clinical trials or investigations, including perceived inadequacy or insufficiency of evidence supporting the clinical benefits or cost-effectiveness of our products, and the publication of any long-term clinical data that may suggest or conclude that our products are less safe or effective than initially thought;
Positive or negative media coverage, or public, patient and/or physician perception, of our products or competing products and treatments;
Safety or effectiveness concerns that arise regarding our products’ currently authorized uses or uses for which we are developing our products;
The effectiveness of our marketing and sales efforts, including our ability to have a sufficient number of qualified sales representatives to sell our products;
Unanticipateddelays in product development or launches;
Our ability to raise additional capital on acceptable terms, or at all, to support the commercialization of our products;
Our ability to achieve and maintain compliance with legal and regulatory requirements applicable to our products;
Our ability, and the ability of our licensors, to obtain, maintain, protect and enforce our intellectual property rights;
Our third-party manufacturers’ ability to supply our products in a timely manner, in accordance with our specifications, and in compliance with applicable regulatory requirements; and
Introduction of new products or alternative treatments that compete with our products.
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. Our future growth and profitability largely depend on our ability to increase ECP and patient awareness of our products and their willingness to adopt our products. ECPs may not adopt our products unless they believe they will receive appropriate compensation for such use and are able to determine, based on experience, clinical data, medical society and association recommendations and other analyses, that our products are clinically differentiated from, or otherwise preferable to, available alternatives. Even 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 adversely affect coverage for Interventional Glaucoma and Interventional Dry Eye procedures;
Availability of lower-priced competitive products, especially competitive products with equivalent or superior reimbursement;
Unwillingness to alter historical practice patterns to incorporate OMNI use in Standalone Procedures into their practices;
Lack of experience with our products;
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, coding and coverage tactics, and negative selling efforts from providers of equivalent or 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 Interventional Glaucoma and Interventional Dry Eye products.
To effectively market and sell our products, we will need to continue to educate the medical community about the safety, efficacy, necessity and efficiency of our products and about the patient populations that would potentially benefit from the use of our products. For example, if first-line ECPs or primary care physicians that serve as the early point of contact for patients are not made aware of our OMNI products, they may not refer patients to ECPs who utilize our products, and those patients may be treated with alternative procedures or treatments. Further, we have experienced recent declines in the numbers of surgeons we are training on the use of OMNI to perform MIGS procedures, and if we are unable to increase ECP training rates, our business and results of operations may suffer.
In addition, some physicians may choose to utilize our products on only a subset of their total patient population or may not adopt our products at all. Further, if procedures in which our products are used do not receive and maintain favorable third-party reimbursement coverage, particularly as compared to procedures in which competitive products are used, adoption of our products by ECPs and patients may be slower or more limited than expected. Similarly, if competitive products are priced significantly lower than our products or are considered to offer greater ease of use than our products, then ECPs may elect to use these competitive products, even if we believe that other considerations such as clinical efficacy favor our
products. Also, if ECPs prioritize alternative ophthalmic procedures to the procedures in which our products are currently used, whether for clinical, reimbursement or other reasons, then there will be less available surgical capacity to perform procedures using our products. We cannot assure you that our products will achieve broad market acceptance among payors, physicians and patients. Any failure of our products to satisfy demand or to achieve meaningful market acceptance and penetration will harm our future prospects and have a material adverse effect on our business, financial condition and results of operations.
We may not be able to secure or maintain adequate levels of third-party coverage and reimbursement for procedures in which our Interventional Glaucoma or Interventional Dry Eye products are used, and third parties may rescind or modify their coverage or delay payments related to these products, which would adversely affect our business, financial condition, and results of operations.
We derive revenue from sales of OMNI and SION to physicians, ASCs, and HOPDs, which typically bill all or a portion of the costs and fees associated with our products to various third-party payors, including Medicare, Medicaid, foreign governmental payors, private commercial insurance companies, health maintenance organizations and other healthcare-related organizations, and then bill patients for any applicable deductibles or co-payments. Historically, we have sold our TearCare system components to customers on a limited basis to drive customer awareness and acceptance in advance of reimbursement. We are pursuing broad reimbursement coverage for TearCare so that ECPs can bill all or a portion of the costs and fees associated with this product to a larger swath of 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. Only recently have payors started establishing more appropriate payment values for CPT code 0563T, the code associated with TearCare procedures. ECPs have begun to receive individual claim-by-claim reimbursements for TearCare services. As a result, access to adequate coverage and reimbursement for procedures in which our Interventional Glaucoma and Interventional Dry Eye products are used by third-party payors is essential to their broad acceptance and adoption by patients and ECPs.
Internationally, medical reimbursement systems vary significantly from country to country, with some countries limiting medical centers’ spending through fixed budgets, regardless of levels of patient treatment, and other countries requiring application for, and approval of, government or third-party reimbursement. For example, in the third quarter of 2024, certain reimbursement advice published by the United Kingdom’s National Health Service (NHS) had rendered untenable the code that had previously been relied upon as applicable to procedures performed with our OMNI technology. This shift has resulted in reduced reimbursement for OMNI procedures as compared to historic reimbursement levels, which in turn has affected our business, results of operations and prospects in the United Kingdom. Though we are working to establish appropriate reimbursement by NHS for the OMNI procedure, there is no guarantee that we will be successful in addressing this or other reimbursement challenges that we may encounter in the United Kingdom or other international markets in which we market and sell our products.
These third-party payors continually review new and existing technologies for possible coverage and can deny or reverse coverage for new or existing products and procedures, and there can be no assurance that third-party payor policies provide coverage, or will continue to provide coverage, for procedures in which OMNI or our other products are used. For example, in the U.S., the Centers for Medicare & Medicaid Services (“CMS”), MACs or commercial payors could require or issue coverage policies that could restrict or eliminate coverage for the patient populations eligible for treatment with our products, or that are otherwise unfavorable to our business. In June 2023, for instance, five MACs published the Prior LCDs, which identified certain non-implantable MIGS procedures as investigational and not reasonable and necessary in the jurisdictions where these MACS administer Medicare Part B benefits, including but not limited to adult canaloplasty in combination with trabeculotomy ab interno, a procedure performed with OMNI and for which it is indicated. The Prior LCDs may also have categorized our SION technology as investigational and thus non-covered with respect to goniotomy procedures. Although the Prior LCDs were withdrawn in late December 2023 and replaced with the now-effective Final LCDs which allow for continued coverage of standalone canaloplasty and goniotomy procedures performed with our OMNI and SION technologies in these five MAC jurisdictions, in the future, governmental or private payors may issue coverage policies or guidance that may establish non-coverage, materially restrict coverage, or reduce reimbursement levels for one or more procedures involving our products. Any such policies, determinations or guidance could in turn influence coverage determinations by other third-party payors.
In addition, the Final LCDs’ non-coverage policies when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure at the same time in the same patient eye has also adversely affected the market for MIGS devices, including our products. . If the remaining two MACs also publish LCDs with the same coverage restriction, we expect an even further decline in MIGS claims volumes. Adverse coding, coverage or payment determination such as these are not within our control. If we are not successful in reversing any proposed non-coverage policies, or if third-party payors that
currently cover or reimburse procedures in which our products are used reverse or limit their coverage in the future, or if other third-party payors issue similar policies negatively impacting reimbursement for our products, it could have a material adverse effect on our business, financial condition, and results of operations. Moreover, any uncertainty with respect to coverage or coding may impact management’s ability to accurately forecast results.
We also derive revenue from sales of TearCare to ECPs and eye care clinics, which bill all or a portion of the costs and fees associated with treatments and products to third-party payors. We believe that access to adequate coverage and reimbursement for procedures in which TearCare is used by third-party payors is important to the broad acceptance and adoption of TearCare. Currently, two MACs, FCSO and Novitas, have established fee schedules for code 0563T that more closely reflect the cost and value of the TearCare procedure. There is no guarantee that other MACs will establish similar fee schedule amounts, or that FCSO and Novitas will maintain their fee schedules for CPT code 0563T at their current levels. Further, MACs from time to time may include, and we are currently aware of two MACs that have included low payment rates for TearCare procedures in their fee schedules. If these low payment rates are not removed or increased to what we believe is an appropriate reimbursement level, they could adversely impact our efforts to achieve reimbursement for TearCare that is sufficient to support its broad commercial growth and adoption. While we will continue to engage with those MACs that currently maintain low fee schedules for the TearCare procedure, there is no guarantee that these MACs will remove these low payment values and replace them with payment values that are sufficient to support widespread customer adoption. It may not be commercially feasible for us to market and sell TearCare in those jurisdictions where reimbursement is not sufficient for TearCare adoption, which in turn would adversely affect our business and results of operations.
Further, commercial payors may from time to time may deny coverage for our TearCare product, which could hamper our efforts to drive broad commercial adoption of TearCare. These determinations could be made with reference to a variety of factors, including our legacy TearCare commercial practices, perceived clinical efficacy compared to other treatment alternatives, and similar considerations. We are pursuing a comprehensive, long-term market development and patient access plan for TearCare and focusing our efforts on partnering with key strategic accounts to pursue prior authorization approvals and reimbursement claims for procedures in which TearCare is used, but there is no guarantee that we will be successful. This strategy is dependent, among other things, on ECPs’ willingness to submit, and their success in submitting, accurate TearCare procedure claims that support appropriate reimbursement, as well as their success in appealing denied or underpaidclaims with payors, as needed. If patients are not willing to pay for procedures in which TearCare is used, or if third-party payors other than FCSO and Novitas continue to decline to provide coverage and reimbursement, or provide insufficient levels of 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. Further, though CPT code 0563T specifically describes the procedure enabled by the TearCare technology, it is possible that competitors could seek to use, promote for use, or encourage providers to bill under this code with competitive technology. In addition, the code could subsequently be modified or interpreted in a manner to allow competitive products to be billed thereunder, which could adversely affect our business and results of operations.
Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, no uniform policy of coverage and reimbursement for procedures using our products exists among third-party payors. Therefore, coverage and reimbursement for procedures using our products can differ significantly from payor to payor. Obtaining and maintaining coverage and reimbursement can be a time-consuming process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products. We may not be able to provide data sufficient to satisfy governmental and third-party payors that procedures using our products should be covered and reimbursed. The majority of potential TearCare patients are insured by commercial payors, If the Company is unsuccessful in establishing formal coverage policies with adequate reimbursement for the TearCare procedure, reimbursed market access for TearCare will be materially limited. With regard to our international sales efforts, even if and as we succeed in bringing our products to market in foreign countries, uncertainties regarding future healthcare policy, legislation and regulation, as well as private market practices, could affect our ability to sell our products in commercially acceptable quantities at acceptable prices.
In the United States, the American Medical Association (“AMA”) generally assigns specific billing codes for procedures under a coding system known as Current Procedural Terminology (“CPT”), which surgeons use to bill third-party payors and receive reimbursement. Once a permanent CPT code ("Category I CPT code") is established for a service, CMS establishes national payment levels under Medicare, while other payors may establish rates and coverage rules independently. Canaloplasty followed by trabeculotomy procedures using OMNI are typically billed using the Category I CPT code 66174, which describes canaloplasty. ECPs may also bill for procedures in which our OMNI product is used under Category I CPT Code 65820, which describes goniotomy procedures. Coding for ophthalmic surgical procedures is complex, and changes to the codes used to report services performed with our products may result in significant changes in reimbursement, which
could negatively impact our revenue. For example, the RVS Update Committee ("RUC") of the AMA has regularly reevaluated the physician work associated with CPT code 66174. As a result of these RUC reviews and further conversion factor reductions, CMS has reduced the Medicare Physician Fee Schedule amount associated with this service multiple times from approximately $950 in 2021 to $545 in 2026. These reductions in physician reimbursement have made the use of CPT code 66174 less attractive to ECPS, which in turn has adversely affected our business and results of operation. Many of the factors considered by the RUC, and many of the factors evaluated by payors and other payor advisory bodies, in assessing the costs of, and payments with respect to, procedures associated with our products are not within our control. For instance, with respect to determination of hospital, ASC and physician payment associated with CPT code 66174, evaluation of procedure costs may include the costs of competitive products that are priced well below our products and may also reflect reduced physician work with respect to procedures that are less comprehensive than the procedures performed with OMNI. This, in turn, may adversely affect our ability to obtain and maintain adequate and appropriate levels of reimbursement for the comprehensive procedure enabled by our OMNI technology, which could adversely affect our financial condition and results of operations. Further, if and to the extent that CPT code 65820 or another code describing a goniotomy procedure is established, modified, or revalued by the RUC so as to reduce the payment amount associated with goniotomy procedures, our business and results of operation may be adversely affected.
The AMA maintains a subset of temporary CPT codes ("Category III CPT codes") used for new and emerging technologies. For example, TearCare was assigned a Category III CPT code effective beginning January 1, 2020. Coverage for Category III CPT codes is often limited. Medicare does not generally establish national payment rates for Category III CPT codes on the Medicare Physician Fee Schedule ("MPFS"). As a result, individual Medicare contractors and private payors may establish their own payment rates for services described by Category III CPT codes, as has been the case with TearCare. These payment rates are subject to change, may be variable across Medicare contractors, or may be materially below the reimbursement rates that we are currently targeting for code 0563T. Payors may also determine not to reimburse any services described by Category III CPT codes in the absence of a formal, positive coverage policy for a specific service.
Further, we believe that future coverage and reimbursement may be subject to increased restrictions, such as additional prior authorization requirements, both in the United States and in international markets. Third-party coverage and reimbursement for procedures using our products or any of our products in development for which we may receive regulatory clearance, certification or approval may not be available or adequate in either the United States or international markets. Further, other devices or treatments that compete with our products may be more widely covered, paid at more favorable rates, or subject to different co-pay policies and requirements, which could impact demand for our products. If hospital, surgical center, ECP and/or patient demand for our products is adversely affected by third-party reimbursement policies and decisions, it could have a material adverse effect on our business, financial condition and results of operations.
The market for our products is highly competitive and could grow increasingly competitive as new glaucoma and dry eye technologies are introduced in our industry. Our competitors may have longer operating histories, more established products and distribution networks, lower product prices or greater resources than we do, and may be able to develop or market products that are safer, more effective or gaingreater acceptance in the marketplace than our products.
The medical device industry is highly competitive, subject to rapid change and significantly affected by the introduction of new products and technologies and the other activities of industry participants. 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, Iantrek, Nova Eye Medical, and New World Medical. 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. For example, there have been intermittent increases in ECP trialing of new, alternative products, some of which are offered at lower prices than OMNI. This trialing has led in certain instances to adoption of these alternatives products which we believe has adversely impacted utilization of OMNI and OMNI revenue growth.
We cannot guarantee that OMNI utilization will return to high growth in the future pursuant to our strategic initiatives. Sustained increases in ECP use of alternative MIGS devices could result in reduced OMNI sales and revenue growth or even loss of market share, which would adversely impact our competitive position, business and results of operations.
In addition, despite what we believe to be the strong safety profile of our products for their intended uses, patients may experience adverse events following canaloplasty or trabeculotomy with OMNI, including hyphema, mild anterior chamber inflammation and spikes in intraocular pressure. Similarly, patients may experience adverse events following use of the SION surgical instrument, including anterior chamber shallowing and prolonged or persistent intraocular inflammation, or application of localized heat with TearCare, including discomfort, pain or erythema of the eyelids. Any failure to meet
customer and patient expectations and any resulting negative perceptions or publicity could harm our reputation and future sales and therefore adversely affect our business, financial condition and results of operations.
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. These companies may enjoy several competitive advantages, including:
Established treatment patterns pursuant to which prescription medications, selective laser trabeculoplasty, 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-associated DED;
Established relationships with key stakeholders, industry associations, including hospital outpatient departments, ambulatory surgery centers, optometrists and ophthalmologists, general practitioners and administrators;
Greater financial and human capital resources;
Significantly greater name recognition;
“First mover” advantages with respect to certain products, technologies and therapeutic offerings such as sustained release glaucoma treatments;
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.
One of the major hurdles to adoption of our Interventional Glaucoma products will be overcoming established treatment patterns, which will require educating ECPs and supportive clinical data. For instance, we believe strongly in the efficacy of OMNI in Standalone Procedures, but concerted ongoing ECP education on the benefits of this approach is needed to alter surgeon perceptions and to convince them of the benefits of performing a MIGS procedure other than in conjunction with cataract surgery. Because of the size of the market opportunity for devices used in procedures to address MIGS and MGD, especially with the recent establishment of the FCSO and Novitas fee schedules with respect to CPT code 0563T, we believe current and potential future competitors may dedicate significant resources to promote their products or develop new products or treatments. Our Interventional Glaucoma products compete with products such as Glaukos’ iStent® technologies and iDose® TR intraocular implant; Alcon’s Hydrus® MicroStent; Iantrek’s C-Rex and Alloflo, various canaloplasty devices including Nova Eye’s iTrack Advance and New World’s Streamline® and Via360 surgical systems. TearCare competes with numerous DED product offerings, including J&J’s Lipiflow® Thermal Pulsation System and numerous other treatment alternatives.
Whereas OMNI has historically competed in the MIGS marketplace against stent technologies, such as the iStent family of products and the Hydrus® MicroStent, our Interventional Glaucoma product offerings are also facing competition from other microcatheter systems marketed for canaloplasty and goniotomy, and this competition may increase in the future. We also expect TearCare to face increasing competition from DED competitors, who may attempt to challenge, destabilize or take advantage of our increasing reimbursement traction, or undertake or enhance their own reimbursement activities to compete with TearCare. For instance, it is possible that DED competitors may develop products that they seek to position as reimbursable under CPT code 0563T, the procedure code associated with and initially created for the TearCare procedure, or that ECPs may seek reimbursement under CPT code 0563T from FCSO and Novitas (and any other payors who subsequently establish sufficient payment values for procedures billed under this code) for procedures performed using products and treatments other than TearCare.
In addition, new treatment options may be developed that could compete more effectively with our products due to the prevalence of glaucoma and MGD-associated DED, and the research and technological progress that exist within the market. 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. For instance, competitors may price their products significantly below ours or bundle their products in a manner that is attractive to ECPs, which may result
in decreased use or adoption of our products by ECPs, notwithstanding that our products may offer superior safety and efficacy.
Adoption of our products depends upon appropriate physician training, practice and patient selection.
The success of our products depends in part on the skill of the ECPs utilizing and administering products to treat patients and on their adherence to our stated patient selection criteria and the proper techniques that we provide in training sessions. We train ECPs on the correct use of our Interventional Glaucoma products. However, ECPs rely on their previous medical training and experience when performing ophthalmic surgical procedures and may deviate from the techniques we provide in training sessions. Furthermore, we cannot guarantee that all such ECPs who use our Interventional Glaucoma products will have the necessary skills or experience to safely and effectively perform these procedures. We have experienced recent declines in the number of ECPs undergoing training on the use of OMNI, which means that fewer physicians are being trained regarding appropriate patient selection and OMNI surgical techniques. If we are not able to stabilize and return our physician training rates to a robust growth trajectory, our business could suffer. Similarly, though we train ECPs to ensure correct use of our Interventional Dry Eye products, including placement of TearCare SmartLids on patients’ eyelids and the expression of the patients' meibomian glands, we cannot guarantee that all such ECPs will have the necessary skills or experience to safely and effectively use these devices. If ECPs utilize our products in a manner that is inconsistent with our labeled indications or with components that are not part of our products, the patient outcomes may be negative. This could negatively impact the perception of patient benefits and safety associated with our products and limit their adoption, which would have a material adverse effect on our business, financial condition and results of operations.
Development of our products for expanded indications depends upon positive clinical data, and applicable regulatory authorities may determine that 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.
The products that we market in the United States are regulated as medical devices by the FDA. OMNI and TearCare have received premarket clearance under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (“FDCA”). In the 510(k) clearance process, before a device may be marketed the FDA must determine that a proposed device is “substantially equivalent” to a legally marketed “predicate” device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device that was originally on the U.S. market pursuant to an approved PMA application and later down-classified, or a 510(k)-exempt device. This process is typically shorter and generally requires the submission of less supporting documentation than the FDA’s PMA process and does not always require long-term clinical studies. SION is registered with the FDA as a Class I 510(k) exempt device.
In the European Economic Area (“EEA”), a single regulatory approval process exists, and conformity with its requirements is required by its member states and countries to affix a European Conformity (“CE”) mark to our medical devices, without which they cannot be marketed or sold in the EEA. We originally received CE marking for OMNI in 2017. To obtain a CE mark, defined products must meet minimum standards of performance, safety, and quality, and then, according to their classification, undergo a conformity assessment procedure. Except for low-risk medical devices, a conformity assessment procedure requires the intervention of a third-party organization designated by the competent authorities of an EEA country, known as a Notified Body. The competent authorities of the EU countries separately regulate the clinical research for medical devices and the market surveillance of products once they are placed on the market. A revised regulation, the EU MDR was published by the EU in 2017 and became effective on May 26, 2021. Medical devices marketed in the EEA require certification according to these requirements. 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. Post-market surveillance includes the conduct of post-market clinical follow-up studies permitting manufacturers to gather information concerning quality, safety or performance of medical devices after they have been placed on the market in the EU. All information collected as part of the post-market surveillance process must be reviewed, investigated and analyzed on a regular basis in order to determine whether trending conclusions can be made concerning the safety or performance of the medical device and decisions must be taken in relation to the continued marketing of medical devices currently on the market. We expect to incur ongoing costs to comply with these post-market clinical obligations in EU markets for so long as we continue to market and sell products in those markets, as well as in the EEA markets.
We are conducting and intend to continue conducting additional clinical trials or investigations to develop our pre-commercial and commercial devices for new or expanded indications.. Historical clinical results, including interim results,
are not necessarily predictive of future clinical results, and we cannot assure you that the results reported in these studies will be consistent with, or better than, currently available clinical data. In addition, our competitors and other third parties may conduct clinical trials of our products without our participation. If future patient studies or clinical testing do not support our belief that our products are advantageous for their intended uses, market acceptance of our products could fail to increase or could decrease and our business could be harmed.
Moreover, the outcomes and updates resulting from these studies, including interim results, may be compared to the results of other products and treatments for these same patient populations, and if the comparisons are not favorable, it may limit the ability to obtain clearance, certification or approval of the devices for the expanded indications for which we intend to seek clearance, certification or approval, as well as adoption of our products for their current authorized uses. 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. Moreover, if future results and experience with our products by us, our competitors or other third parties, indicate that our products cause unexpected or seriouscomplications or other unforeseennegative 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.
Our products will be adopted and compete, in part, based on long-term data regarding patient outcomes and the risk of our products relative to other treatment options. We believe ECPs and third-party payers will compare the rates of long-term clinical outcomes for procedures using our products for their authorized uses against alternative procedures and treatment options. We also believe that ECPs and payers will give added weight to outcomes data derived from randomized controlled trials, which are considered to be the “gold standard” for proving efficacy of a treatment or intervention; while our TearCare SAHARA trial is an RCT, we have not completed an RCT for our OMNI technology, which can be a reimbursement and competitive disadvantage as compared to competitive products with positive RCT data. 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 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. Further, if we choose to, or are required to, conduct additional studies, equivocal or unfavorable results from such studies or experience could lead to a reduction in the rate of coverage and reimbursement by both public and private third-party payors for procedures that are performed with our products, slow market adoption of our products by ECPs, significantly reduce our ability to achieve expected revenue and prevent us from being profitable.
We rely on third parties to manufacture and supply all of our products, and a substantial portion of our products and components are manufactured in China. A number of our suppliers are also single-source providers. We are subject to numerous risks relating to our reliance on such third-party suppliers, including the impact of tariffs on products imported from China.
Our business strategy depends on our ability to manufacture our current and future products in sufficient quantities, on terms acceptable to us, and on a timely basis to meet customer demand, while adhering to product quality standards, complying with regulatory requirements, and managing manufacturing and import costs. We do not have, and do not currently intend to develop, any internal manufacturing capabilities or infrastructure, and we rely on a limited number of third-party manufacturers, many of which are single-source suppliers, for the components, accessories, materials and assembly that we utilize in our products. Specifically, most of our OMNI and SION products, as well as our TearCare SmartLids, are currently produced and assembled by a single Taiwan-based manufacturer in China. These commercial products comprise substantially all of our current revenue. Our suppliers may be unwilling or unable to supply products or components to us reliably and at the levels we anticipate or that are required by our customers, or we may be unable to purchase these items on terms that are acceptable to us, or at all. In an effort to diversify our manufacturing footprint and have product readily available from multiple manufacturing facilities, we are expanding our manufacturing to include additional facilities outside of China in 2026.
Our suppliers must be able to provide us with products and components in compliance with regulatory requirements, including the FDA’s QMSR and other applicable laws or regulations, in accordance with agreed-upon specifications, at acceptable costs and on a timely basis. If our suppliers are unable or unwilling to meet our demand requirements, we may not have enough of our products available for delivery to support ECPs that utilize our products as part of their treatment. For instance, if the supply of our products and components from our manufacturer in China was interrupted or suspended for
any significant period, we may be unable to meet customer demand for these products during that time. Our ability to obtain products and components in sufficient quantities and on a timely basis from our suppliers may be limited for several reasons, including quality issues at their manufacturing facilities, damage to their manufacturing equipment or facilities, problems with their own suppliers, inability to obtain components required for our products, their financial difficulties, our relative importance as a customer to each supplier, or prohibitive cost increases associated with importing items from certain regions where our suppliers are located. Any shortfall in the supply of our products may result in lower adoption and utilization rates of our products by ECPs, as well as harm to our reputation, either of which could have a material adverse effect on our business, financial condition and results of operations.
Geopolitical tensions between the U.S. and China, and between the U.S. and other countries, have created considerable political and economic unrest and uncertainty that may adversely impact our business. As discussed above, most of our products are currently produced and assembled at a manufacturing facility in China, and we are expanding manufacturing to include additional facilities outside of China in 2026. There is currently significant uncertainty about the relationship between the U.S. and China with respect to a number of geopolitical issues, including trade policies, government regulations and tariffs, and we expect this uncertainty will continue in future periods.
Commencing in February 2025, the U.S. imposed a significant new tariff on products imported from China. The tariff rate has fluctuated significantly since its inception and may continue to vary materially in the future depending on a number of factors, including the regulatory regime under which the current U.S. administration seeks to apply the tariff. This tariff applies to all of our products and product components imported from China. China has responded with certain retaliatory tariffs, and the U.S. and China could implement additional retaliatory tariffs. The U.S. tariff on China exports has increased the cost of our products and components and will likely have a negative impact on our gross margins for as long as it remains in effect. There can be no assurance that U.S. tariff rate on products imported from China will not increase or materially and adversely affect our cost of goods sold in the future. Any further escalation in the use of retaliatory trade tariffs between the U.S. and China could cause a further increase in the cost of our products and components. There is also the risk that new tariffs could be implemented with other U.S. trading partners. These tariffs may cause supply chain disruptions and will also likely increase the shipping and other logistical costs involved in importing our products and components, which would further adversely impact our gross margins.
In September 2025, the U.S. Department of Commerce Bureau of Industry and Security announced that a Section 232 investigation was initiated to assess the effects on national security of imports of personal protective equipment, medical consumables, and medical equipment, including devices. If this investigation concludes that there is a national security risk associated with these imports, the President could impose trade restrictions or tariffs on these imports, including our products, which could further increase the cost of our products and components. The imposition of tariffs or other restrictions as a result of this Section 232 investigation could cause supply chain disruptions and would also likely increase the shipping and other logistical costs involved in importing our products and components, which would further adversely impact our gross margins, if enacted. Further, as a result of the United States Supreme Court’s February 2026 decision finding that the tariffs issued by the U.S. administration under the International Emergency Economic Powers Act are unconstitutional, the administration has turned to other legal and regulatory regimes to support the continued implementation of the tariffs, including initial reliance on Sections 122 and 301 of the of the Trade Act of 1974. This has created additional uncertainty regarding the U.S. administration’s execution of its tariff strategy.
To partially mitigate these risks, we are evaluating additional manufacturing locations to produce and assemble our products and are in the process of establishing additional manufacturing lines outside of China. However, at least through 2026, we expect the substantial majority of our products will continue to be manufactured in China, and will therefore continue to be subject to the prevailing tariff rates. In addition, the additional third-party manufacturing locations we have identified are also located in countries subject to U.S. tariffs on imports from those countries, which could adversely impact our gross margins.
The process of identifying and qualifying additional manufacturing facilities could be time-consuming and expensive, result in interruptions in our operations, cause delays in the supply of our products, or affect the quality or performance specifications of our products. We cannot assure you that we will be able to identify and engage additional contract manufacturers on terms similar to our current arrangements or that are otherwise favorable to us. In addition, we cannot guarantee that the costs associated with obtaining products and components from an additional manufacturer, including any associated tariffs, will be lower than the costs associated with obtaining products from our current manufacturers, or that any reduction in the costs will be sufficient to offset the cost of adding new manufacturers. Furthermore, any change in our manufacturers could require us to complete another qualification process at the manufacturer’s facility, and there is no guarantee the facility would pass our quality audit. The occurrence of any of these events could increase our operating costs
or harm our ability to meet the demand for our products in a timely manner, either of which could have a material adverse effect on our business, financial condition and results of operations.
We do not typically enter into long-term supply agreements with our third-party manufacturers and do not anticipate doing so in the near term. Accordingly, we will continue to be subject to the risk that our suppliers can cancel our agreements on relatively short notice, or that we will be unable to renew or extend contracts and arrangements with such third parties on terms that are favorable to us, or at all. These risks are likely to be exacerbated by our limited experience manufacturing our current products and negotiating agreement terms with third-party manufacturers.
If demand for our products increases, we will have to invest additional resources to manage the manufacturing process. If we fail to secure increased production capacity efficiently, we may not be able to respond to customer demand on a timely basis, our sales may not increase in line with our expectations, and our operating margins could fluctuate or decline. In addition, the manufacture of future products may require modification of our current production processes, the identification of new suppliers for specific components, sub-assemblies and materials, or the development of new manufacturing processes or technologies. It may not be possible for our current third-party manufacturers to produce these products at a cost or in quantities sufficient to make these products commercially viable or to maintain current operating margins, all of which could have a material adverse effect on our business, financial condition and results of operations.
Uncertainty in current global economic and political conditions could adversely affect our ability to predict product demand and costs and impact our financial results, and makes it more likely that our results will differ materially from expectations.
Our operations and performance depend in part on worldwide economic and political conditions. 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. Under difficult economic conditions, consumers may seek to modify spending priorities and reduce discretionary spending by delaying purchases of our products, which could reduce our profitability and could negatively affect our overall financial performance. Other financial uncertainties in our major markets and unstable political conditions in certain markets, including civil unrest and governmental changes, could undermine global consumer confidence and reduce consumers’ purchasing power, thereby reducing demand for our products. We cannot predict the reoccurrence of any economic slowdown or the strength or sustainability of the economic recovery, worldwide, in the United States, or in our industry. These and other economic factors could have a material adverse effect on our business, financial condition, and results of operations.
We may provide inadequate training, fail to maintain effective sales and marketing capabilities or fail to develop broad brand awareness in a cost-effective manner.
In the United States, we currently rely on our direct sales force and any failure to maintain and grow our sales force could harm our business. In Europe, we currently rely on a combination of direct sales personnel and independent distributors to sell our OMNI product, and we intend to grow our international sales through a combination of direct and distributor sales. In order to generate future growth, we plan to expand and leverage our commercial infrastructure to increase our customer base and increase adoption by existing customers to drive our growth. Identifying and recruiting qualified sales and marketing professionals and training them on our products, on applicable federal and state laws and regulations and on our internal policies and procedures requires significant time, expense and attention. Our direct sales force may subject us to higher fixed costs than those of companies with competing products or treatments that rely more heavily on independent third parties, placing us at a competitive disadvantage. Our business may be harmed if our efforts to expand and train our sales force and distribution chain do not generate a corresponding increase in product sales and revenue, and our higher fixed costs may slow our ability to reduce costs in the face of a sudden decline in demand for our products. Any failure to hire, develop and retain effective sales personnel, to identify and train distributors and independent sales representatives in targeted international territories, to achievedesired productivity levels in a reasonable period of time or timely reduce fixed costs, could have a material adverse effect on our business, financial condition and results of operations.
Our ability to increase our customer base and achieve broader market acceptance of our products will depend, to a significant extent, on our ability to maintain and expand effective sales and marketing and educational efforts. We plan to dedicate significant resources to our sales and marketing initiatives, and educational programs through leading medical publications and at large industry and scientific meetings, both directly and through key opinion leaders. Our business may be harmed if these efforts and expenditures do not generate a corresponding increase in revenue. Further, our sales results are dependent in large part on the efforts and effectiveness of our sales and marketing personnel, and underperformance in
these functions, whether though sub-optimal marketing campaigns, problematic sales representative performance or otherwise, may adversely impact our product sales and reputation. In addition, we believe that developing and maintaining broad awareness of our brand in a cost-effective manner is critical to achieving broad acceptance of our products and reaching new ECPs and patients. Brand promotion activities may not impact ECP or patient awareness or increase revenue, and even if they do, any increase in revenue may not offset the costs and expenses we incur in building our brand. If we fail to successfully promote, maintain and protect our brand, we may fail to attract or retain the market acceptance necessary to realize a sufficient return on our brand building efforts, or to achieve the level of brand awareness that is an important factor for the broad adoption of our products.
We have limited experience in training ECPs on, and marketing and selling, our TearCare products, which could adversely affect customer perceptions and adoption of our TearCare products.
We have sold our TearCare products since 2019. We do not have experience selling TearCare with a large sales force and concerted sales initiatives. Thus, the number of eligible ECPs trained on TearCare remains relatively modest. If we are unable to expand and enhance our training efforts to target and effectively train existing and new ECP customers on our TearCare products, adoption of TearCare will be adversely impacted. Further, we have limited experience with marketing TearCare. Our marketing and sales campaigns have been limited in scope and have continued to evolve as we better understand the needs and preferences and knowledge gaps of our existing and prospective TearCare customers, and as we expand our library of clinical evidence supporting the TearCare procedure’s safety and efficacy, but these efforts may not be successful in driving TearCare adoption.
Further, we have limited experience marketing and selling TearCare for use in procedures that are reimbursed by Medicare and other governmental payers. If we are unable to effectively train our personnel on, and to otherwise comply with, laws, regulations and guidelines applicable to federally reimbursed products, including regulations pertaining to kickbacks, falseclaims, interactions with ECPs and direct-to-consumer advertising, our business may suffer.
Our products are designed to be used in a limited number of procedures, and there is a limited total addressable market for our products. The sizes of the potential and actual markets for our current products have not been established with precision and may be smaller than we estimate, which could adversely impact our results of operations and our growth expectations.
The total addressable markets for our products are subject to change and may be limited by various factors, including FDA or other regulatory restrictions or more narrowly defined indications, ECP practice preferences, and governmental and private payor reimbursement practices, any of which could have a material adverse effect on our business, financial condition and results of operations.
Further, our estimates of the total addressable markets for our products are based on a number of internal and third-party assumptions and estimates, including, without limitation, the number of patients with POAG and MGD, and the assumed prices at which we can sell our products in markets that have not yet been fully established. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual total addressable market for our current products may prove to be incorrect. If the actual number of patients who would benefit from our products or the price at which we can sell our products is smaller than we have estimated, it may impair our sales growth and negatively affect our business, financial condition and results of operations.
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. To ensure adequate inventory supply and manage our operations with our third-party suppliers, we forecast anticipated materials requirements and demand for our products in order to predict inventory needs and then place orders with our suppliers based on these predictions. 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.
Inventory levels in excess of customer demand may result in a portion of our inventory becoming obsolete or expiring, as well as inventory write-downs or write-offs, which would negatively impact our gross margins and impair the strength of
our brand. Conversely, if we underestimate customer demand for our products or our own requirements for components, sub-assemblies and materials, our third-party suppliers may not be able to deliver components, sub-assemblies and materials to meet our requirements, which could result in inadequate inventory levels or interruptions, delays or cancellations of deliveries to our customers, any of which would damage our reputation, customer relationships and business. In addition, several components, sub-assemblies and materials incorporated into our products require lengthy order lead times, and additional supplies or materials or additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all, and our third-party suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet customer demand for our products and our business, financial condition and results of operations.
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 as needed, we may be unable to grow our business.
The markets for our products are highly competitive, dynamic, and marked by rapid and substantial technological development and product innovation. New entrants or existing competitors could attempt to develop products that compete directly with ours. Demand for our products and future related products could be diminished by equivalent or superior products and technologies offered by competitors, by competitive products offered at lower prices, or by material changes in reimbursement affecting our products. Our continued growth will be driven in large part by growth of TearCare revenues in reimbursed jurisdictions, and capture of market share from our competitors through a combination of factors, including competitive positioning, increasing ECP acceptance and use of OMNI for Standalone Procedures, re-engagement of customer accounts that decrease or cease utilization of our products, engagement of new customer accounts, and robust ECP training on our products to drive product awareness and acceptance. If we are unable to execute on these initiatives, our ability to increase our market share may be compromised, which would adversely affect our business and results of operations. Also, if we are unable to innovatesuccessfully or offer our products at prices that are deemed competitive by our customers, our products could become obsolete and our revenue would decline as our customers purchase our competitors’ products. Developing and improving products is expensive and time-consuming and could divert management’s attention away from our existing products. 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;
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.
If we are unable to develop or improve products, applications or features due to constraints, such as insufficient cash resources, high employee turnover, inability to hire personnel with sufficient technical skills or a lack of other research and development resources, we may not be able to maintain our competitive position compared to other companies. Furthermore, many of our competitors devote a considerably greater amount of funds to their research and development programs than we do, and those that do not may be acquired by larger companies that could allocate greater resources to research and
development programs. Our failure or inability to devote adequate research and development resources or compete effectively with the research and development programs of our competitors could harm our business.
In addition, we may choose to focus our efforts and resources on potential products or indications that ultimately prove to be unsuccessful, or to license or purchase marketed products that do not meet our financial expectations. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other potential products or other diseases that may later prove to have greater commercial potential, or relinquishvaluable rights to such potential products through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to retain sole development and commercialization rights, which could adversely impact our business, financial condition and results of operations.
Our quarterly and annual results may fluctuate significantly and may not fully reflect the underlying performance of our business.
Our quarterly and annual results of operations, including our revenue, may vary significantly in the future, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance or of the results for the year in which such quarter or period occurs. 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;
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.
Cost-containment efforts of our customers, purchasing groups and governmental organizations could have a material adverse effect on our sales and results of operations. Consolidation in the healthcare industry or group purchasing organizations could lead to demands for price concessions, which may affect our ability to sell our products at prices necessary to support our current business strategies.
In an effort to reduce costs, many clinics and hospitals in the United States, including some of our customers, are members of Group Purchasing Organizations ("GPOs") and Integrated Delivery Networks ("IDNs"). GPOs and IDNs negotiate pricing arrangements with medical device companies and distributors and then offer these negotiated prices to affiliated hospitals and other members. GPOs and IDNs typically award contracts on a category-by-category basis through a competitive bidding process. Bids are generally solicited from multiple providers with the intention of driving down pricing or reducing the number of vendors. Due to the highly competitive nature of the GPO and IDN contracting processes, we may not be able to obtain new, or maintain existing, contract positions with major GPOs and IDNs. Furthermore, the increasing leverage of organized buying groups may reduce market prices for our products, thereby reducing our revenue and margins.
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. 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. Accordingly, the members of such groups may choose to purchase alternative products due to the price or quality offered by other companies, which could result in a decline in our sales volumes and revenue.
Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payors. 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. We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our customers, which may exert further downward pressure on the prices of our products. Any decline in the amount that payors reimburse our customers for procedures that use our Interventional Glaucoma products or in the amount that customers are willing to pay or that payors reimburse for procedures that use TearCare in the future, could make it difficult for customers to continue using, or to adopt, our products and could create additional pricing pressure for us. 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, including anticipated growth in our Interventional Dry Eye business.
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. Rapid expansion in personnel could mean that less experienced people market and sell our products, which could result in inefficiencies and unanticipated costs, reduced quality and disruptions to our operations. In addition, rapid and significant growth may strain our administrative and operational infrastructure. Our ability to manage our business and growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. For example, we are in the process of scaling our TearCare commercial infrastructure in response to the establishment by FCSO and Novitas of jurisdiction-wide pricing for procedures billed under CPT code 0563T, the code that describes the procedure performed by TearCare. If we are unable to identify, hire and train enough personnel to educate and train customers in these jurisdictions on use and clinical benefits of TearCare, and to otherwise increase our commercial infrastructure capacity to support anticipated growth, we may not be able to fully realize the attendant revenue opportunities. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business could be harmed.
As demand for our current products or any of our future products increases, we will need to continue to expand customer service, billing and systems processes and enhance our internal quality assurance program. We cannot assure you that any increases in scale, related improvements and quality assurance will be successfully implemented or that appropriate personnel will be available to facilitate the growth of our business. Failure to implement necessary procedures, transition to new processes or hire the necessary personnel could result in higher costs of processing data or inability to meet increased demand.
Performance issues, service interruptions or price increases by our shipping carriers and distributors could negatively affect our business, financial condition and results of operations and harm our reputation and the relationship between us and the ECPs we work with.
Expedited, reliable shipping is essential to our operations. We rely heavily on providers of transport services for reliable and secure point-to-point transport of our products to our customers and for tracking of these shipments. Should a carrier encounter delivery performance issues such as loss, damage or destruction of any systems, it would be costly to replace such
systems in a timely manner and such occurrences may damage our reputation and lead to decreased demand for our solutions and increased cost and expense to our business. In addition, any significant increase in shipping rates could adversely affect our operating margins and results of operations. Similarly, strikes, severe weather, natural disasters or other service interruptions affecting delivery services we use would adversely affect our ability to process orders for our products on a timely basis. These factors could negatively affect our business, financial condition and results of operations and harm our reputation and the relationship between us and the ECPs we work with.
Our products may become obsolete in the future.
The medical device industry is characterized by rapid and significant change. There can be no assurance that other companies will not succeed in developing or marketing devices or products that are more effective than our products or that would render our products obsolete or noncompetitive. Additionally, new surgical procedures, medications and other therapies could be developed that replace or reduce the importance of our products. Accordingly, our success will depend in part on our ability to respond quickly to medical and other changes through the development and introduction of new products. Product development involves a high degree of risk, and there can be no assurance that our new product development efforts will result in any commercially successful products.
We may need additional funding to finance our planned operations, and may not be able to raise capital on acceptable terms, if at all, which could force us to delay, reduce or eliminate our product development programs and commercialization efforts.
Since inception, we have incurred significant net losses and expect to continue to incur net losses for the foreseeable future. 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. As of December 31, 2025, we had $92.0 million in cash and cash equivalents, and an accumulated deficit of $384.7 million. Based on our current planned operations, we expect that our cash and cash equivalents and additional borrowings available under our credit facility (subject to satisfaction of certain conditions precedent) will enable us to fund our operations for at least the next 12 months. We have based these estimates on assumptions that may prove to be wrong, including our assumptions that our Interventional Dry Eye revenues will begin to ramp in 2026, Interventional Glaucoma revenue will grow, procedures in which our OMNI and SION technologies are used will continue to be adequately reimbursed, s, our TearCare procedure will continue to be reimbursed in the FCSO and Novitas jurisdictions at the initially established payment values, and payors in addition to FCSO and Novitas will establish equitable reimbursement for the TearCare procedure . If one or more of these assumptions are not met, we could utilize our available capital resources sooner than we expect.
We expect to continue to invest in clinical trials or investigations that are designed to provide clinical evidence of the safety and efficacy of our products, the growth of our sales and marketing organization, and research and development of product improvements and future products, including certain pharmaceutical product candidates, which will continue to increase our expenses. Accordingly, our future capital requirements will depend on many factors, including:
The degree and rate of market acceptance of our products and procedures, as well as the revenue generated by sales of our products and the gross profits and gross margin we realize from such sales;
Whether we obtain and maintain reimbursement sufficient to drive continued use and adoption of our products and procedures;
The scope and timing of investment in our sales force and expansion of our commercial organization;
The scope, rate of progress and cost of our current or future clinical trials or investigations and registries;
The cost of our medical device and pharmaceutical research and development activities;
The cost and timing of additional regulatory clearances, certifications or approvals;
The costs of attaining, defending, protecting and enforcing our intellectual property rights, including our ability to preserve or enhance the damages awarded to us as the result of the April 2024 positive jury trial verdict in our patent litigation with Alcon;
Repayment of debt;
Whether we acquire third-party companies, products or technologies;
The terms and timing of any other collaborative, licensing and other arrangements that we may establish;
The emergence of competing technologies or other adverse market developments;
Our ability, and our competitors’ ability, to obtain and maintain favorable reimbursement for our products; and
The performance of our international business.
As a result of these and other factors, we may seek to raise additional capital through equity offerings or debt financings, and such additional financing may not be available to us on acceptable terms, or at all. In addition, any additional equity or debt financing that we raise may contain terms that are not favorable to us or our stockholders. For example, if we raise funds by issuing equity or equity-linked securities, the issuance of such securities could result in dilution to our stockholders. Any equity securities issued may also provide for rights, preferences or privileges senior to those of holders of our common stock. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline, and the price per share at which we sell additional shares of our common stock, or securities convertible into or exercisable or exchangeable for shares of our common stock, in future transactions may be higher or lower than the price per share paid by investors in the initial public offering of our common stock.
In addition, the terms of debt securities issued or borrowings could impose significant restrictions on our operations including restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to pay dividends, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct our business. In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms, such as relinquishment or licensing of certain technologies or products that we otherwise would seek to develop or commercialize ourselves, or reserve for future potential arrangements when we might otherwise be able to achieve more favorable terms. In addition, we may be forced to work with a partner on one or more of our products or market development programs, which could lower the economic value of those programs to us.
If we are unable to obtain adequate financing on terms satisfactory to us when we require it, we may terminate or delay the development of one or more of our products, delay clinical trials or investigations necessary to market our products, or delay establishment of sales and marketing capabilities or other activities necessary to commercialize our products. If this were to occur, our ability to grow and support our business and to respond to market challenges could be significantly limited, which could have a material adverse effect on our business, financial condition and results of operations
We bear the risk of potential warranty claims on our products.
We provide limited warranties regarding our products, including warranties pertaining to freedom from defects and conformance to specifications. We are generally obligated under our sales contracts to repair, replace or credit or refund the purchase price of defective products. As a result, we bear the risk of potential warranty claims on our products. In the event that we attempt to recover some or all of the expenses associated with a warranty claim against us from our suppliers or vendors, we may not be successful in claiming recovery under any warranty or indemnity provided to us by such suppliers or vendors and any recovery from such vendor or supplier may not be adequate. In addition, warranty claims brought by our customers related to third-party components may arise after our ability to bring corresponding warranty claimsagainst such suppliers expires, which could result in costs to us.
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.
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, partnerships or other arrangements to develop new products or product improvements and to pursue new markets. Other companies, including those with substantially greater financial, marketing, sales, technology or other business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. 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.
Additionally, we may not be in a position to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals. It is possible that conflicts may arise with our collaborators, such as conflicts concerning the achievement of performance
milestones, or the interpretation of significant terms under any agreement, such as those related to financial obligations or the ownership or control of intellectual property developed during the collaboration. If any conflicts arise with any future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us. In addition, we may have limited control over the amount and timing of resources that any future collaborators devote to our or their future products.
Disputes between us and any collaborators we may have in the future may result in litigation or arbitration which would increase our expenses and divert the attention of our management. Further, these transactions and arrangements will be contractual in nature and will generally be terminable under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium. If we enter into in-bound intellectual property license agreements, we may not be able to fully protect the licensed intellectual property rights or maintain those licenses. Future licensors could retain the right to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of our licensors to obtain, maintain and enforce intellectual property protection for the licensed intellectual property. These licensors may determine not to pursue litigationagainst other companies or may pursue such litigation less aggressively than we would. Further, entering into such license agreements could impose various diligence, commercialization, royalty or other obligations on us. Future licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license and/or seek damages arising out of the allegedbreach, which could adversely affect our competitive business position and harm our business prospects.
We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees will negatively affect our business, financial condition and results of operations.
Our success depends largely on the continued services of key members of our executive management team and others in key management positions. For example, the services of Paul Badawi, our Chief Executive Officer, David Badawi, our Chief Technology Officer and Alison Bauerlein, our Chief Operating 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. In addition, the services of our commercial leadership and sales professionals are critical to driving the growth in sales of our products. Any of our employees may terminate their employment with us at any time. We currently maintain a key person life insurance policy on Paul Badawi and David Badawi. If we lose one or more key employees, we may experience difficulties in competing effectively, developing our technologies and implementing our business strategy, which in turn would negatively affect our business.
In addition, our research and development programs, clinical and quality operations and sales efforts depend on our ability to attract and retain highly skilled engineers and sales professionals, as well as experienced regulatory, quality and clinical professionals. We may not be able to attract or retain qualified professionals in the future due to the competition for qualified personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we do. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages.
In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived benefits of our stock awards decline, either because of unfavorable fluctuations or declines in our stock price or for other reasons, it may harm our ability to recruit and retain highly skilled employees. Many of our employees have become or will soon become vested in a substantial amount of our common stock or a number of common stock options. Our employees may be more likely to leave us if the market price of our common stock approaches or falls below the exercise price of their vested and unvested option shares. Substantial declines in the market price of our common stock will also reduce the effectiveness of any restricted stock unit or other equity incentive awards in attracting and retaining employees, especially within the current highly competitive labor market. Our future success also depends on our ability to continue to attract and retain additional executive officers and other key employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, it will negatively affect our business, financial condition and results of operations.
The use, misuse or off-label use of our products may result in injuries that lead to product liability suits, which could be expensive, divert management’s attention and harm our reputation and business. We may not be able to maintain adequate product liability insurance.
Our products are cleared or authorized by the FDA and certified in the EU to be marketed for certain specific intended uses. If physicians elect to use our products in manners outside of the intended uses that have been cleared, authorized, or
certified, then such off-label use of our products may result in outcomes and adverse events that are sight threatening, necessitate medical or surgical intervention to preclude permanent impairment of vision, or result in a permanent impairment of vision, potentially leading to product liability claims. 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. In addition, we cannot guarantee that physicians are trained by us or their peers prior to utilizing our products. Complications resulting from the use of our products off-label or use by physicians who have not been trained appropriately, or at all, may not effectively treat the applicable conditions and may expose us to product liability claims or litigation by our customers or their patients and may harm our reputation.
In addition, if our products are defectively designed, manufactured or labeled, contain defective components or are misused, we may become subject to costlylitigation initiated by hospitals, surgical centers, ECPs or patients. Product liability claims are especially prevalent in the medical device industry and could harm our reputation, divert management’s attention from our core business, attract negative publicity, be expensive to defend and may result in sizable damage awards against us. Although we maintain product liability insurance, we may not have sufficient insurance coverage for future product liability claims. We are not able to obtain insurance in amounts or scope sufficient to provide us with adequate coverage against all potential liabilities. Any product liability claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuing coverage, harm our reputation, significantly increase our expenses, and reduce product sales. Product liability claims could cause us to incur significant legal fees and deductibles and claims in excess of our insurance coverage would be paid out of cash reserves, harming our financial condition and operating results.
We have a significant amount of debt, which may affect our ability to operate our business and secure additional financing in the future.
In January 2024, we entered into a Loan and Security Agreement (the “Hercules Loan Agreement”) with Hercules Capital, Inc. (“Hercules”) and certain affiliates of Hercules (collectively with Hercules, the “Lenders”), which provides for a senior secured term loan facility in the aggregate principal amount of up to $65.0 million (the “Term Loan”). An initial tranche of $35.0 million and a second tranche of $5.0 million were funded under the Hercules Loan Agreement in January 2024 and December 2024, respectively, and up to an additional $25.0 million of borrowings are available subject to the Lenders approval. There is no guarantee that we will be able to borrow additional amounts under the Hercules Loan Agreement. The Term Loan accrues interest at a floating annual rate based on the greater of (i) 10.35% or (ii) the Wall Street Journal prime rate (the "Prime Rate") plus 2.35%. Accrued interest on the Term Loan is payable monthly in arrears. Upon an event of default under the Hercules Loan Agreement, the interest rate will automatically increase by an additional 3.0% per annum. As of December 31, 2025 we had an aggregate of approximately $40.0 million in principal borrowings outstanding. Our interest payments under Hercules Loan Agreement have diverted and will continue to divert resources from our operations and other activities. We incurred an aggregate interest expense of $5.1 million and $4.7 million in the years ended December 31, 2025 and 2024, respectively.
Our obligations under the Hercules Loan Agreement are collateralized by a security interest in substantially all of our assets. The Hercules Loan Agreement contains customary representations and warranties, affirmative covenants, negative covenants, financial covenants, events of default and other provisions and conditions. The affirmative covenants, among over things, require us to undertake various reporting and notice requirements and an obligation to maintain and enforce certain rights, approvals and assets. 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. The negative covenants also restrict our ability to change our fiscal year, repay certain indebtedness, engage in certain affiliate transactions, or enter into, amend or terminate any other agreements that has the impact of restricting our ability to make loan repayments under the Hercules Loan Agreement. In addition, we are subject to certain financial covenants under the loan agreement pertaining to minimum cash and minimum revenue thresholds. The covenants related to the Hercules Loan Agreement, as well as any future financing agreements into which we may enter, may restrict our ability to finance our operations and engage in, expand or otherwise pursue our business activities and strategies. Our ability to draw down further amounts under our Hercules Loan Agreement is contingent upon us meeting certain conditions precedent. Any failure to meet these conditions could prevent us from accessing non-dilutive capital under the Hercules Loan Agreement if needed, which could require us to seek additional funding from other sources, which additional capital may not be available or may only be available on terms less favorable than those that would otherwise be available under the agreement.
While we believe that we have not previously breached and are not currently in breach of these or any other covenants contained in the Hercules Loan Agreement, there can be no guarantee that we will not breach these covenants in the future. Our ability to comply with these covenants may be affected by events beyond our control, and future breaches of any of these covenants could result in a default under the Hercules Loan Agreement. If not waived, future defaults could cause all of the outstanding indebtedness under the agreement to become immediately due and payable and terminate commitments to extend further credit and foreclose on the collateral granted to it to collateralize such indebtedness. If we do not have or are unable to generate sufficient cash available to repay our debt obligations when they become due and payable, either upon maturity or in the event of a default, our assets could be foreclosed upon and we may not be able to obtain additional debt or equity financing on favorable terms, if at all, which may negatively impact our ability to operate and continue our business as a going concern.
In order to service this indebtedness and any additional indebtedness we may incur in the future, we need to generate cash from our operating activities. Our ability to generate cash is subject, in part, to our ability to successfully execute our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control. We cannot assure you that our business will be able to generate sufficient cash flow from operations or that future borrowings or other financings will be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs. To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our business, industry and in the economy generally. This may place us at a competitive disadvantage compared to our competitors that have less indebtedness or greater financial resources to service their debt.
We may seek to grow our business through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect on us.
From time to time, we expect to consider opportunities to acquire or make investments in other technologies, products, and businesses that may enhance our capabilities, complement our current products, or expand the breadth of our markets or customer base. 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.
We have no current commitments with respect to any acquisition or investment. Under the Hercules Loan Agreement, we are restricted in our ability to pursue certain mergers, acquisitions, amalgamations or consolidations that we may believe to be in our best interest. We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired business, product, or technology into our business or retain any key personnel, suppliers, or distributors. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete, and integrate suitable target businesses and to obtain any necessary financing. These efforts could be expensive and time consuming, and may disrupt our ongoing business and prevent management from focusing on our operations. If we are unable to successfully integrate any acquired businesses, products, or technologies effectively, our business, results of operations, and financial condition will be materially adversely affected.
Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or our customer’s patients, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.
In the ordinary course of our business, we may become exposed to, or collect and store, sensitive data, including procedure-based information and legally protected health information, credit card, and other financial information, insurance information, and other potentially personally identifiable information. We also store sensitive intellectual property and other proprietary business information. We take measures to implement and update policies and procedures designed to ensure compliance with applicable data security and privacy-related laws and regulations and protect sensitive information from unauthorized access or disclosure. However, our information technology ("IT"), and infrastructure, and that of our third-party billing and collections provider and other technology partners and providers, may be vulnerable to cyber-attacks by hackers or viruses or breaches due to employee error, malfeasance or other disruptions. We rely extensively on IT systems, networks and services, including internet sites, data hosting and processing facilities and tools, physical security systems and other hardware, software and technical applications and platforms, including artificial intelligence (AI) tools, some of which are managed, hosted, provided and/or used by third parties or their vendors, to assist in conducting our business. A significant breakdown, invasion, corruption, destruction or interruption of critical information technology systems or infrastructure, by our workforce, others with authorized access to our systems or unauthorized persons could negatively impact operations.
As the result of certain reimbursement and similar services that we provide to our customers, we may from time to time have access to personal health information, or PHI, as defined under the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, which we collectively refer to as HIPAA, and related state laws, rules and regulations. When we perform these services, we enter into a Business Associate Agreement with such customers, and are deemed to be a “Business Associate” as defined under HIPAA. As a Business Associate, we are subject to enforcement by the U.S. Department of Health and Human Services Office of Civil Rights, or OCR, which may impose significant penalties on a Business Associate for a failure to comply with an applicable requirement of HIPAA. Penalties may include civil monetary penalties, criminal monetary penalties and imprisonment. The U.S. Department of Justice, or the DOJ, is responsible for criminalprosecutions under HIPAA. State attorneys general also have the right to prosecute HIPAA violations committed against residents of their states. While HIPAA does not create a private right of action that would allow individuals to sue in civil court for HIPAA violations, its standards have been used as the basis for the duty of care in state civil suits, such as those for negligence or recklessness in misusing individuals’ health information. Furthermore, in the event of a breach as defined by HIPAA, we may be required to comply with specific reporting requirements under HIPAA regulations, including notifying affected individuals, our customers, and governmental authorities, which could result in significant costs, reputational harm, and regulatory authority.
The ever-increasing use and evolution of technology, including cloud-based computing and AI and machine learning, creates opportunities for the unintentional dissemination or intentionaldestruction of confidential information stored in our or our third-party providers’ systems, portable media or storage devices. For example, companies continue to experience increases in phishing and social engineering attacks from third parties, including increasing use of AI-driven tools. We could also experience a business interruption, theft of confidential information or reputational damage from industrial espionage attacks, malware or other cyber-attacks, which may compromise our system infrastructure or lead to data leakage, either internally or at our third-party providers. Further, our own use of AI may increase the attack surface for our data. If our AI models are poisoned (adversarial attacks) or if the sensitive data used to train our AI models is breached, it could exacerbate the loss of intellectual property and, or, unauthorized disclosure of our confidential information Although the aggregate impact on our operations and financial condition has not been material to date, we have been the target of events of this nature and expect them to continue as cybersecurity threats have been rapidly evolving in sophistication and becoming more prevalent in the industry. We are investing in protections and monitoring practices of our data and IT to reduce these risks and continue to monitor our systems on an ongoing basis for any current or potential threats. There can be no assurance, however, that our efforts will prevent breakdowns or breaches to our or our third-party providers’ databases or systems, and such breakdowns or breaches could adversely affect our business, financial condition and reputation. We also have partially mitigated these risks by purchasing cybersecurity insurance. However, such insurance will not necessarily cover all costs and impacts related to these risks.
Also, as we increasingly incorporate AI and machine learning into our internal business processes, our cybersecurity risk may evolve and grow. If these AI tools are inefficient, defective, or produce inaccurate results (e.g., 'hallucinations'), our operational efficiency, decision-making, and financial results could be negatively impacted. Furthermore, our reliance on third-party AI models or cloud service providers may subject us to service interruptions or performance issues outside of our control.
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.
Our current international presence is focused in the United Kingdom and the European Union, and we may seek to expand our international operations in the future. Our international business strategies have historically included securing additional regulatory and reimbursement approvals in targeted countries outside the United States, and establishing a direct or indirect commercial presence in such countries. These strategies may include establishing and maintaining physician outreach and education capabilities outside of the United States, developing and expanding our relationships with international payors, and creating targeted commercial strategies relevant to each target market. 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
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. 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.
Under current law, federal net operating losses (“NOLs”) incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to federal tax laws. As of December 31, 2025, we had accumulated federal and state NOL carryforwards of approximately $323.3 million, and $266.9 million, respectively. Of the total federal NOL carryforwards, approximately $308.5 million were generated after January 1, 2018, and therefore do not expire under current law but can only be utilized to offset 80% of future taxable income. The remaining federal NOL carryforwards of $14.8 million will begin to expire in 2031, and state tax loss carryforwards continue to expire.
In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change in its equity ownership value over a three-year period, the corporation’s ability to use its pre-change NOL and research credit carryforwards may be subject to substantial limitations, which could cause U.S. federal income taxes to be paid earlier than would be paid if such limitations were not in effect and could cause NOL carryforwards to expire unused. We believe we experienced at least one ownership change that significantly reduced our ability to utilize our pre-2018 NOL and research credit carryforwards before they expire. Additionally, future ownership changes under Section 382 may also limit our ability to fully utilize any remaining tax benefits.
Uncertainties in the interpretation and application of existing, new and proposed tax laws and regulations could materially affect our tax obligations and effective tax rate.
The tax regimes to which we are subject or under which we operate are unsettled and may be subject to significant change. 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. To the extent that such changes have a negative impact on us, including as a result of related uncertainty, these changes may adversely impact our business, financial condition, results of operations, and cash flows.
The amount of taxes we pay in different jurisdictions depends on the application of the tax laws of various jurisdictions, including the United States, to our international business activities, tax rates, new or revised tax laws, or interpretations of tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions pursuant to our intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations. Our financial statements could fail to reflect adequate reserves to cover such a contingency. Similarly, a taxing authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
On July 4, 2025, the United States enacted federal tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures and other changes to the U.S. taxation of profits derived from foreign operations. Future guidance from the Internal Revenue Service with respect to OBBBA may affect us.
Our tax obligations and effective tax rate in the jurisdictions in which we conduct business could increase, including as a result of the base erosion and profit shifting (“BEPS”) project that is being led by the Organization for Economic Co-operation and Development (“OECD”), and other initiatives led by the OECD or the European Commission. 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. These proposals are based on two “pillars,” involving the reallocation of taxing rights in respect of certain multinational enterprises above a fixed profit margin to the jurisdictions in which they carry on business (subject to certain revenue threshold rules which we do not currently meet but may meet in the future) (referred to as “Pillar One”) and imposing a minimum effective corporate tax rate on certain multinational enterprises (referred to as “Pillar Two”). A number of countries in which we conduct business, including through our European subsidiaries, have enacted with effect from January 1, 2024, or are in the process of enacting, core elements of the Pillar Two rules. Based on our current understanding of the minimum revenue thresholds contained in the Pillar Two proposal, we do not expect to fall within the scope of its rules in the short-to-medium term. We continue to monitor developments and evaluate the potential impacts and applicability of these new rules on our business.
We could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws, anti-boycott and anti-money laundering laws and export regulations, and the outcome of any investigation, by government agencies of possible violations by us of these laws and regulations could have a material adverse effect on our business.
The FCPA prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business. Other anti-corruption or anti-bribery laws, such as the Bribery Act, prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business in foreign countries. The FCPA also imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of slush funds from which such improper payments can be made. Because of the predominance of government-sponsored healthcare systems around the world, many of our customer relationships outside of the U.S. are with governmental entities and are therefore subject to such anti-bribery laws. Our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, and result in a material adverse effect on our business, results of operations, and financial condition. We also could sufferseverepenalties, including criminal and civil penalties, disgorgement, and other remedial measures,
including further changes or enhancements to our procedures, policies, and controls, as well as potential personnel changes and disciplinary actions.
Furthermore, we are subject to anti-boycott laws, anti-money laundering laws, and the export controls and economic embargo rules and regulations of the U.S., including the Export Administration Regulations and trade sanctions againstembargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department of Commerce. These regulations limit our ability to market, sell, distribute, or otherwise transfer our products or technology to prohibited countries or persons. A determination that we have failed to comply, whether knowingly or inadvertently, may result in substantial penalties, including fines and enforcement actions and civil and/or criminal sanctions, the disgorgement of profits, and the imposition of a court-appointed monitor, as well as the denial of export privileges, and may have an adverse effect on our business and reputation.
Epidemic diseases, or the perception of their effects, have and may have an adverse effect on our business, financial condition, results of operations, and cash flows.
Outbreaks of infectious diseases could divert medical resources and priorities towards the treatment of that disease. An outbreak of an infectious disease could also negatively affect the decision by ECPs to perform (and by patients to undergo) elective surgery or office-based procedures, which could decrease demand for procedures using our products and cause other disruptions to our business. Business disruptions could include disruptions or restrictions on our ability to travel or to distribute our products, government orders suspending the performance of elective surgical procedures, inability of our customers to meet their financial commitments due to strain on the healthcare system, as well as temporary closures of our facilities or the facilities of our suppliers and their contract manufacturers, and a reduction in the business hours of ambulatory surgery centers and optometrists’ offices. Any disruption of our suppliers and their contract manufacturers or our customers would likely impact our sales and operating results. In addition, a significant outbreak of an infectious disease in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products. Any of these events could negatively impact the number of procedures using our implants that are performed and have a material adverse effect on our business, financial condition, results of operations, or cash flows.
Risks Related to Our Intellectual Property
Our success will depend on our, and our licensors’, ability to obtain, maintain and protect our intellectual property rights.
Our commercial success depends in part on our ability to obtain and maintain patent and other intellectual property protection in the United States and other countries. We rely on patent protection, as well as a combination of copyright, trade secret and trademark laws, to protect the proprietary aspects of our technology and our brands, and to prevent others from developing and commercializing products that violate our intellectual property rights. However, these means may afford only limited protection and may not prevent our competitors from duplicating our products, prevent our competitors from gaining access to our proprietary information and technology, or permit us to gain or maintain a competitive advantage.
We have filed numerous patent applications seeking protection of products and other inventions originating from our research and development. Our patent applications may not result in issued patents, and any patents that are issued may not provide meaningful protection against competitors or competitive technologies. Further, the examination process may require us to narrow the claims for our pending patent applications, which may limit the scope of patent protection that may be obtained if these applications issue. The scope of a patent may also be reinterpreted after issuance. The rights that may be granted under our future issued patents may not provide us with the proprietary protection or competitive advantages we are seeking. It is also possible that we will fail to identify patentable aspects of inventions made in the course of our development and commercialization activities before it is too late to obtain patent protection on them. In addition, the patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely manner.
Additionally, while software and other of our proprietary works may be protected under copyright law, we have chosen not to register any copyrights in these works, and instead, primarily rely on protecting our software as a trade secret. In order to bring a copyright infringement lawsuit in the United States or obtain statutory damages, the copyright must be registered. 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.
Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. In 2011, the Leahy-Smith America Invents Act ("Leahy-Smith
Act") was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and also may affect patent litigation. These also include provisions that switched the United States from a first-to-invent system to a first-to-file system, allow third-party submission of prior art to the USPTO during patent prosecution and set forth additional procedures to attack the validity of a patent by the USPTO administered post grant proceedings. Under a first-to-file system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier.
In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of our patents and applications. Furthermore, the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, foreign courts have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S. and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.
For example, in Europe, a new unitary patent system took effect June 1, 2023, which significantly impacts European patents, including those granted before the introduction of such a system. Under the unitary patent system, European applications have the option, upon grant of a patent, of becoming a Unitary Patent which will be subject to the jurisdiction of the Unitary Patent Court ("UPC"). As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty of any litigation. Patents granted before the implementation of the UPC will have the option of opting out of the jurisdiction of the UPC and remaining as national patents in the UPC countries. Patents that remain under the jurisdiction of the UPC will be potentially vulnerable to a single UPC-based revocationchallenge that, if successful, could invalidate the patent in all countries who are signatories to the UPC. We cannot predict with certainty the long-term effects of any potential changes.
We are party to, and may in the future become a party to intellectual property litigation or administrative proceedings that can be costly, time-consuming, unsuccessful, and could interfere with our ability to sell and market our products.
Competitors may infringe our patents or trademarks, or we may be required to enforce our patents or trademarks to protect our technology, customer goodwill and product branding. We may also be required to file suit to protect our trade secrets or may be involved in litigationdefendingagainstclaims of infringement of the rights of others. In addition, our patents and trademarks also may become involved in inventorship, priority or validity disputes. To counter or defendagainst such claims can be expensive and time-consuming and could divert our attention from other functions and responsibilities. In an infringement proceeding, a court may decide that a patent or trademark owned by us is invalid or unenforceable. Furthermore, even if our patents and trademarks are found to be valid and infringed, a court may refuse to grant injunctive relief against the infringer and instead grant us monetary damages and/or ongoing royalties. Such monetary compensation may be insufficient to adequately offset the damage to our business caused by the infringer’s competition in the market. Adverse determinations against us in defendingagainstinfringement could subject us to significant liabilities to third parties, require us to seek licenses from third parties, prevent us from using the infringing trademark in our business, or prevent us from manufacturing, selling or using the infringing product, any of which could severelyharm our business. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our management and other personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on our common stock price. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. 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. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Any of the foregoing could have a material adverse effect on our business, financial condition or results of operations.
On September 16, 2021, we filed suit in the U.S. District Court for the District of Delaware (C.A. No. 1:21-cv-01317) (the “Court”) alleging that Ivantis, Inc. (“Ivantis”) directly and indirectly infringes our 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. Our complaint sought money damages and injunctive relief. On January 24, 2022, Ivantis asserted counterclaims requesting declaratory judgments that our asserted patents-in-suit are not infringed and/or invalid. On August 1, 2022, we filed an amended complaintalleging that Alcon Inc., Alcon Vision, LLC and Alcon Research, LLC (collectively, “Alcon”) infringe the four originally asserted patents by making, using, selling, and offering for sale the Hydrus® Microstent, and that all defendants also infringe U.S. Patent No. 11,389,328. The defendants asserted counterclaims requesting declaratory judgments that our asserted patents-in-suit are not infringed and/or are invalid. In September 2022, Ivantis and Alcon filed petitions with the U.S. Patent Office seeking inter partes review of U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 (IPR2022-01529, IPR2022-01530, IPR2022-01533, IPR2022-01540), each of which the U.S. Patent Office denied for raising prior art references and invalidityarguments that were cumulative of those previously considered by the U.S. Patent Office. On April 26, 2024, at the conclusion of a five-day jury trial, we were awarded a positive jury trial verdict of $34 million, comprised of $5.5 million in lost profits damages and $28.5 million in royalty damages for commercial sales of the Hydrus Microstent for the period between its commercial launch through trial. The patents at issue were U.S. Patent Nos. 8,287,482, 9,370,443, and 11,389,328. In December 2024, the Court held an in-person hearing to brief the parties’ oral arguments on their post-trial briefings at the conclusion of which, the Court ordered the parties to engage in non-binding mediation. In early March 2025, we and Alcon informed the Court that we had not resolved our dispute through mediation and asked the Court to decide the parties’ post-trial motions and enter a judgment, which judgment will be subject to appeal. It is possible that the jury verdict that was rendered in our favor may be reduced, limited or vacated by the Court or by the appellate court if appealed. 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. In June 2025, Alcon filed petitions with the U.S. Patent Office for ex parte reexaminations of the three patents that we asserted at trial, challenging the validity of each of these patents based on prior art patents and publications. In September 2025, the Central Reexamination Unit (CRU) of the U.S. Patent Office decided to proceed with the reexaminations and this reexamination process, which may include multiple levels of appeals, is currently underway, It is possible that the April 2024 jury verdict in the Company’s favor, including its ability to collect past damages and ongoing royalties, may be materially and adversely impacted if the reexamination proceedings result in final, non-appealable determinations that the asserted claims of the patents-in-suit are either invalid or must be amended, in either case before a final, non-appealable judgment is entered by the Court in the separate patent infringementlitigation.
If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed.
In addition to seeking patent protection for our products, we also rely upon unpatented trade secrets, know-how and continuing technological innovation to develop and maintain a competitive position. 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. Additionally, despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegallydisclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor or other third party, our competitive position would be materially and adverselyharmed. Furthermore, we expect these trade secrets, know-how and proprietary information to over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology and the movement of personnel from academic to industry scientific positions.
We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems to limit access to employees, partners, and service providers who have a need to know the information and who are bound by confidentiality obligations regarding such information. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known, or be independently discovered by, competitors.
We may be subject to claims that we or our employees have misappropriated the intellectual property of a third party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors.
Many of our employees and consultants were previously employed at or engaged by other medical device, biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees and consultants may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information of these former employers or competitors or other third parties. 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 defendagainst these claims. There is no guarantee of success in defending these claims, and even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees as described above.
We may be subject to claimschallenging the inventorship or ownership of our patents and other intellectual property.
We may also be subject to claims that former employees, collaborators, or other third parties have an ownership interest in our current or future patents, patent applications, or other intellectual property, including as an inventor or co-inventor. We may be subject to ownership or inventorship disputes in the future arising, for example, from conflicting obligations of consultants, contractors or others who are involved in developing our products. Although it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and litigation may be necessary to defendagainst these and other claimschallenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may losevaluable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property, and other owners may be able to license their rights to other third parties, including our competitors. Such an outcome could have a material adverse effect on our business. Even if we are successful in defendingagainst such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Additionally, we may be subject to claims from third parties challenging our ownership interest in intellectual property we regard as our own, based on claims that our employees or consultants have breached an obligation to assign inventions to another employer, to a former employer, or to another person or entity. Litigation may be necessary to defendagainst any other claims, and it may be necessary or we may desire to enter into a license to settle any such claim; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all. If our defense to those claimsfails, in addition to paying monetary damages, a court could prohibit us from using technologies or features that are essential to our products, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. 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 losevaluable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products, which could have an adverse effect on our business, financial condition and results of operations.
If our trademarks and tradenames are not adequately protected, then we may not be able to build name recognition in our markets and our business may be adversely affected.
Our trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be violating or infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners and customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement or dilution claims brought by owners of other trademarks. For instance, we are currently involved in trademark litigation in the United Kingdom and the European Union that was initiated by another party regarding the use of our OMNI trademark. If we do not prevail in this litigation, we may be required to abandon the use of the OMNI trademark in the United Kingdom and Europe, which could adversely affect our business in these markets Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names or other intellectual property may be ineffective, could result in substantial costs and diversion of resources and could adversely affect our business, financial condition and results of operations.
Risks Related to Government Regulation
Our products, business practices, and operations are subject to extensive government regulation and oversight in the United States and elsewhere.
Our products are regulated as medical devices by the FDA and foreign regulatory authorities. We and our products are subject to extensive regulation in the United States and elsewhere, including by state agencies, the FDA and the FDA’s foreign counterparts. 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 seriousinjuries and malfunctions that, if they were to recur, could lead to death or seriousinjury; post-market studies; and product import and export.
The law and regulations to which we are subject are complex, burdensome to understand and apply and have tended to become more stringent over time. Legal and regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales. The FDA and foreign regulatory authorities enforce these regulatory requirements through, among other means, periodic (unannounced) inspections and periodic reviews of public marketing and promotion materials. We do not know whether we will be found compliant in connection with any future FDA or foreign inspections or reviews. Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as: warning letters; untitled letters; fines; injunctions; civil penalties; termination of distribution; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future clearances, approvals, or certifications; withdrawals or suspensions of current approvals or certifications, resulting in prohibitions on sales of our products; and in the most serious cases, criminalpenalties.
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.
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. 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. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices.
In the U.S., we have obtained clearance from the FDA of OMNI and TearCare through the 510(k) clearance process and SION is registered with the FDA as a Class I 510(k) exempt device. 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. Specifically, any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design or manufacture, requires a new 510(k) clearance or, possibly, approval of a PMA. The FDA requires every manufacturer to make this determination in the first instance, but the FDA may review any manufacturer’s decision. If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or PMA applications for modifications to our products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties. Both the PMA approval and the 510(k) clearance process can be expensive, lengthy and uncertain. The 510(k) clearance process usually takes from three to 12 months, whereas the process of obtaining a PMA generally takes from one to three years, or even longer, from the time the application is submitted to the FDA. In addition, government shutdowns could delay the submission process, requiring us to postpone product launches. Further, despite the time, effort and cost, a device may not be approved or cleared by the FDA. If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, product introductions or modifications could be delayed or canceled, which could adversely affect our ability to grow our business. We have experienced clearance delays in the past as the result of FDA feedback and direction regarding 510(k) submissions for both our OMNI and TearCare product iterations. These clearance delays have required us to postpone product launches, which in turn have adversely affected our business. In addition, as the result of FDA feedback, we have also in the past been required to materially alter or abandon proposed product enhancements or new product development. While these types of regulatory delays are common for medical device manufacturers that interact with the FDA, these delays introduce product
development and clearance risk that can negatively affect our business. Further, regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some customers from using our products and adversely affect our reputation and the perceived safety or efficacy of our products. In addition, even if we are granted regulatory clearances or approvals, they may include significant limitations on the indicated uses for the device, which may limit the market for the device.
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 unexpectedadverse 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.
Subject to the transitional provisions and in order to sell our products in EU member states, our products must comply with the general safety and performance requirements of the EU MDR, which repeals and replaces the Medical Devices Directive. 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. All medical devices placed on the market in the EU must meet the general safety and performance requirements laid down in Annex I to the EU MDR including the requirement that a medical device must be designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose. Medical devices must be safe and effective and must not compromise the clinical condition or safety of patients, or the safety and health of users and – where applicable – other persons, provided that any risks which may be associated with their use constitute acceptable risks when weighed against the benefits to the patient and are compatible with a high level of protection of health and safety, taking into account the generally acknowledged state of the art. To demonstrate compliance with the general safety and performance requirements, we must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification. A conformity assessment procedure generally requires the intervention of a notified body. The notified body would typically audit and examine the technical file and the quality system for the manufacture, design and final inspection of our devices. If satisfied that the relevant product conforms to the relevant general safety and performance requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity. The manufacturer may then apply the CE mark to the device, which allows the device to be placed on the market throughout the EU. If we fail to comply with applicable laws and regulations, we would be unable to affix the CE mark to our products, which would prevent us from selling them within the EU.
We must inform the notified body that carried out the conformity assessment of the medical devices that we market or sell in the EU and the EEA of any planned substantial changes to our quality system or substantial changes to our medical devices that could affect compliance with the general safety and performance requirements laid down in Annex I to the MDR or cause a substantial change to the intended use for which the device has been CE Marked. The notified body will then assess the planned changes and verify whether they affect the products’ ongoing conformity with the EU MDR. If the assessment is favorable, the notified body will issue a new certificate of conformity or an addendum to the existing certificate attesting compliance with the general safety and performance requirements and quality system requirements laid down in the Annexes to the MDR.
On December 5, 2023, we received approval of the OMNI Surgical System family of products under the EU MDR fulfilling these requirements. As a result of the transition towards the new regime, notified body review times have lengthened, and obtaining re-certification of our products, seeking product introductions or modifications could be delayed or canceled, which could adversely affect our ability to grow our business in the EU.
The aforementioned EU rules are generally applicable in the EEA. Non-compliance with the above requirements would also prevent us from selling our products in these three countries.
We may incur significant liability if it is determined that we are promoting off-label uses of our products in violation of federal and state regulations in the United States or elsewhere.
Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition against the promotion of the off-label use of our products or the pre-promotion of unapproved products. Healthcare providers may use our products off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine. However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use or the pre-promotion of an unapproved product, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fines and criminalpenalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties. Although our policy is to refrain from statements that could be considered off-label promotion of our products or pre-promotion of an unapproved product, the FDA or another regulatory agency could disagree and conclude that we have engaged in improper promotional activities. In addition, the off-label use of our products may increase the risk of product liability claims, which are expensive to defend and could result in substantial damage awards against us and harm our reputation.
Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market.
Even though we have obtained clearance from the FDA for OMNI and TearCare and registration for SION in the U.S. and certifications for OMNI in the EU, we are subject to ongoing and pervasive regulatory requirements governing, among other things, the manufacture, marketing, advertising, medical device reporting, sale, promotion, import, export, registration, and listing of devices. In addition, we must maintain an active registration of our facilities and listing of our products in order to legally market them in the United States. If the FDA were to disagree with our product listing or otherwise take issue with our registration and listing compliance, it could result in delisting of our products or other enforcement action resulting in potential inability to market our products. For example, in February 2022, we received communications from the FDA regarding the appropriateness of the marketing and distribution of our legacy TearCare Systems as a 510(k)-exempt device without premarket notification to and authorization from the FDA. We conducted a voluntary recall of our legacy TearCare system because the FDA informed us that the legacy system’s advanced technology made it ineligible for an exemption from 510(k) clearance. Further, this voluntary recall did not involve the new version of the TearCare system, which has received premarket clearance from the FDA and will remain on the market. We provided notice to the FDA in the fourth quarter of 2022 that we had completed all activities associated with the recall and had closed our files.
The regulations to which we are subject are complex and have become more stringent over time. 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. The FDA, state and foreign regulatory authorities have broad enforcement powers. 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
Criminalprosecution.
Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations. In addition, the FDA and foreign regulatory authorities may change their clearance or certification policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay clearance, approval, or certification of our future products under development or impact our ability to modify our currently cleared or certified products on a timely basis. Such policy or regulatory changes could impose additional requirements upon us that could delay our ability to obtain new clearances, approvals, or certifications, increase the costs of compliance or restrict our ability to maintain our clearances and certifications of our current products.
A recall or suspension of our products, or the discovery of serious safety issues with our products, could have a significant negative impact on us.
The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QMSR 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. Furthermore, we are required to maintain, and to verify that our suppliers maintain, facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. Our products are also subject to similar state regulations, various laws and regulations of foreign countries governing manufacturing and a requirement for adherence to industry standards of the International Standards Organization ("ISO") in connection with our medical device operations outside of the United States. Failure by us or one of our third-party suppliers to comply with applicable FDA or foreign requirements or later discovery of previously unknown problems with our products or manufacturing processes could result in, among other things civil penalties, suspension or withdrawal of clearances, seizures or recalls of our products, total or partial suspension of production or distribution, refusal to grant pending or future clearances, approvals, or certifications for our products, clinical holds, refusal to permit the import or export of our products, and criminalprosecution. Furthermore, regulatory authorities have broad discretion to require the recall or suspension of a product or to require that manufacturers alert customers of safety risks. A government-mandated or voluntary recall or suspension by us, one of our distributors or any of our third-party suppliers could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls, suspensions or other notices relating to any products that we distribute would divert managerial and financial resources, and have an adverse effect on our reputation, financial condition and operating results.
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 seriousinjury or death in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to seriousinjury or death. Repeated product malfunctions may result in a voluntary or involuntary product recall or suspension of product sales, which could divert managerial and financial resources, impair our ability to manufacture our products in a cost-effective and timely manner and have an adverse effect on our reputation, financial condition and operating results. If we initiate a correction or removal for our products to reduce a risk to health posed by them or to remedy a violation of law that may present a risk to health, we would be required to submit a report to the FDA and may be required to submit similar notifications to other regulatory authorities. This report could lead to increased scrutiny by the FDA, other foreign regulatory agencies and our customers regarding the quality and safety of our products. Furthermore, the submission of these reports, to the extent made publicly available in accordance with FDA regulations, could be used by competitors against us or otherwise publicized and cause physicians to delay or cancel product orders, which will harm our reputation. Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA or FDA’s foreign counterparts may require, or we may decide, that we will need to obtain new clearances, certifications or approvals for the device before we may market or distribute the corrected device. 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 criminalfines.
We have received ISO 13485:2016 certification for our quality management system. ISO certification generally includes recertification audits every third year, scheduled annual surveillance audits and periodic unannounced audits.
We can provide no assurance that we will be found to remain in compliance with the QMSR or ISO standards upon a regulator’s review. If the FDA, other regulator, or notified body, inspect or audit any of our manufacturers’ facilities and discovers compliance problems, we may have to cease manufacturing and product distribution until we can take the
appropriate remedial steps to correct the audit findings. Any of the actions noted above could significantly and negatively affect supply of our products. Taking corrective action may be expensive, time-consuming and a distraction for management. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs.
If we do not obtain and maintain applicable regulatory registrations, clearances, certifications or approvals for our products, we will be unable to market and sell our products outside of the U.S.
Sales of our products outside of the U.S. are subject to foreign regulatory requirements that vary widely from country to country. In addition, the FDA regulates exports of medical devices from the U.S. While the regulations of some countries may not impose barriers to marketing and selling our products or only require notification, others require that we obtain the clearance or approval of a specified regulatory body. Complying with foreign regulatory requirements, including obtaining registrations, clearances, certifications or approvals, can be expensive and time-consuming, and we may not receive regulatory clearances, certifications or approvals in each country in which we plan to market our products or we may be unable to do so on a timely basis. The time required to obtain registrations, clearances, certifications or approvals, if required by other countries, may be longer than that required for FDA clearance or approval, and requirements for such registrations, clearances, certifications or approvals may significantly differ from FDA requirements. If we modify our products, we may need to apply for regulatory clearances or approvals before we are permitted to sell the modified product.
In addition, we may not continue to meet the quality and safety standards required to maintain the authorizations that we have received. If we are unable to maintain our authorizations in a particular country, we will no longer be able to sell the applicable product in that country.
Regulatory clearance or approval by the FDA does not ensure registration, clearance, certification or approval by regulatory authorities or notified bodies in other countries, and registration, clearance, certification or approval by one or more foreign regulatory authorities or notified bodies does not ensure registration, clearance, certification or approval by regulatory authorities or notified bodies in other foreign countries or by the FDA. However, a failure or delay in obtaining registration or regulatory clearance, certification or approval in one country may have a negative effect on the regulatory process in others.
We are subject to certain federal, state and foreign fraud and abuse laws, health information privacy and security laws and transparency laws that could subject us to substantial penalties. Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.
There are numerous U.S. federal and state, as well as foreign, laws pertaining to healthcare fraud and abuse, including anti-kickback, falseclaims and physician transparency laws. 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. The 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 criminalfalseclaims laws and civil monetary penalties laws, including the federal civil FalseClaims 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 falseclaims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state marketing-compliance and gift-ban laws; 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.
These laws and regulations, among other things, constrain our patient support program, business practices, marketing and other promotional and research activities by limiting the kinds of financial arrangements, including consulting arrangements, reimbursement support, discounts, rebates, or other sales programs, we may have with hospitals, ambulatory surgery centers, physicians or other potential purchasers of our products. Although we structure these relationships and arrangements to comply with applicable legal and regulatory requirements, they could nevertheless be scrutinized or challenged as influencing the purchase or use of our products. Compensation under some of these arrangements includes the provision of stock or stock options. Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws.
To enforce compliance with the healthcare regulatory laws, certain enforcement bodies have increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time and resource-consuming and can divert management’s attention from the business. Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business, financial condition and results of operations. Even an unsuccessfulchallenge or investigation into our practices could cause adverse publicity, and be costly to respond to.
Our activities, including those relating to providing billing, coding, coverage and reimbursement information about procedures using our products to our customers and the sale and marketing of our products, may be subject to scrutiny under these laws. The growth of our business and sales organization and our expansion outside of the United States may increase the potential of violating these laws or our internal policies and procedures. Any action brought against us for violation of these or other laws or regulations, even if we successfullydefendagainst it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business, and could result in a material adverse effect on our reputation. If our operations are found to be in violation of any of the federal, state and foreign laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil, and administrative penalties, damages, fines, exclusion from
participation in government programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputation harm and disgorgement and we could be required to curtail, restructure or cease our operations. Any of the foregoing consequences will negatively affect our business, financial condition and results of operations.
The scope and enforcement of these laws is uncertain and subject to rapid change in the current environment of healthcare reform. Our current or future activities could be subject to challenge under these laws. Any of these challenges could have a material adverse effect on our reputation, business, financial condition and operating results.
If we are found to have violated laws concerning the privacy and security of patient health information or other personal information, we could be subject to civil or criminalpenalties, which could increase our liabilities or harm our reputation or business.
In the conduct of our business, we may at times collect, store, and process personal information, including health-related personal information. The U.S. federal government and various states and regulatory agencies, including the U.S. Department Health and Human Services, have adopted or proposed laws, regulations, guidelines and rules for the collection, distribution, use and storage of personal information, including personal health information, of individuals. These laws include HIPAA and related regulations, as well as the CCPA and similar state privacy and data security laws. In connection with any reimbursement support we provide to customers, we receive, use, and/or disclose health-related personal information. When proving such support, we as a Business Associate under HIPAA and are directly subject to HIPAA’s privacy, security, and breach-notification requirements, as well as the terms of our Business Associate Agreements. In addition, certain state and non-U.S. laws, such as GDPR, govern the privacy and security of personal (including health) data in certain circumstances, some of which are more stringent than U.S. federal law and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminalpenalties and private litigation.
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.
Our employees, consultants, and other commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.
We are exposed to the risk that our employees, consultants, distributors and other commercial partners and business associates may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or other unauthorized activities that violate federal and/or state laws and regulations, such as laws or regulations requiring the reporting of true, complete and accurate information to such regulators, manufacturing standards, healthcare fraud and abuse laws and regulations in the U.S. and internationally or laws that require the true, complete and accurate reporting of financial information or data. 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 fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. It is not always possible to identify and determisconduct by our employees, consultants and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant fines or other sanctions, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of operations, any of which could adversely affect our business, financial condition and results of operations. Whether or not we are successful in defendingagainst such actions or investigations, we could incur substantial costs, including legal fees and reputational harm, and divert the attention of management in defending ourselves against any of these claims or investigations.
Compliance with environmental laws and regulations could be expensive, and the failure to comply with these laws and regulations could subject us to significant liability.
Our research and development operations involve the use of hazardous substances, such as isopropyl alcohol and various adhesives. We are subject to a variety of federal, state, local and foreign environmental laws and regulations relating to the storage, use, handling, generation, manufacture, treatment, discharge and disposal of, hazardous substances. Our products may also contain hazardous substances, and they are subject to laws and regulations relating to labeling requirements and to their sale, collection, recycling, treatment, storage and disposal. Compliance with these laws and regulations may be expensive and noncompliance could result in substantial fines and penalties. Environmental laws and regulations also impose liability for the remediation of releases of hazardous substances into the environment and for personal injuries resulting from exposure to hazardous substances, and they can give rise to substantial remediation costs and to third-party claims, including for property damage and personal injury. Liability under environmental laws and regulations can be joint and several and without regard to fault or negligence, and they tend to become more stringent over time, imposing greater compliance costs and increased risks and penalties associated with violations. We cannot assure you that violations of these laws and regulations, or releases of or exposure to hazardous substances, will not occur in the future or have not occurred in the past, including as a result of human error, accidents, equipment failure or other causes. The costs of complying with environmental laws and regulations, and liabilities that may be imposed for violating them, or for remediation obligations or responding to third-party claims, could negatively affect our business, financial condition and results of operations.
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;
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.
In recent years the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. Broad market and industry factors may significantly affect the market price of our common stock, regardless of our actual operating performance. 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. Although the Prior LCDs were withdrawn before becoming effective, the Final LCDs that became effective in November 2024 contain certain restrictions on billing for MIGS procedures that have had an adverse impact on our OMNI sales results. We believe that past reimbursement determinations by CMS and commercial payors have contributed to ongoing uncertainty among investors and other stakeholders regarding the coverage and reimbursement environment for procedures in which our products are used, which uncertainty continues to adversely affect our business and stock price. If new or updated LCDs, national coverage determinations, or other material coverage or reimbursement updates or determinations are published that could or would adversely affect coverage for procedures involving our OMNI technology, our business and prospects would be further adversely affected and our financial condition and results of operation could suffer.
In addition, in the past, stockholders have instituted securities class action litigationagainst issuers following periods of stock price volatility. We previously have had plaintiff class action firms announce the commencement of investigations pertaining to our compliance with securities laws in the wake of a drop in our stock price following our release of certain revised revenue guidance. Though we have yet to be subject to any securities litigation, the risk of such litigation is heightened at times when our financial performance and stock price are under pressure. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business, results of operations, financial condition and reputation. These factors may materially and adversely affect the market price of our common stock.
If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect investor confidence in our company.
As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. In particular, we must perform system and process evaluations, document our controls and perform testing of our key controls over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. We have incurred significant expense and devoted substantial management effort to complying with the requirements of Section 404 of the Sarbanes-Oxley Act, which we expect will continue. We anticipate hiring additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to support future growth. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act or if we encounter difficulties in the timely and accurate reporting of our financial results, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, our investors could lose confidence in our reported financial information, the market price of our stock may decline and we could be subject to lawsuits, sanctions or investigations by regulatory authorities, which would require additional financial and management resources.
If we identify material weaknesses in our internal controls over financial reporting or fail to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results or report them within the timeframes required by law or stock exchange regulations. Failure to comply with Section 404 could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. If additional material weaknesses exist or are discovered in the future, and we are unable to remediate any such material weaknesses, our reputation, financial condition, and operating results could suffer.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our restated certificate of incorporation and our restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. 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.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law (“DGCL”) of the State of Delaware, which prohibits a person who owns 15% or more of our the outstanding voting stock of a corporation from engaging in any “business combination” (as such term is defined under Section 203 of the DGCL) with us such corporation for a period of three years after the date of the transaction in which the person acquired 15% or more of our the corporation’s outstanding voting stock, unless the business combination is approved in a prescribed manner.
Item 1B. Unresolve d Staff Comments
None.
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 Nominating and Corporate Governance Committee of the Board of Directors oversees our cybersecurity programs and cybersecurity team, which are led by our Vice President of Information Technology. At least semi-annual reviews are presented by the Vice President of Information Technology to the Nominating and Corporate Governance Committee demonstrating the cybersecurity practices and controls, mitigation activities, current threat levels, emerging cybersecurity threats, training initiatives, breaches, and results from any penetration testing. In addition, cybersecurity risk management is part of the enterprise risk management program and is reviewed by the Audit Committee at least annually.
We have developed an information security policy ensuring that our cybersecurity objectives are established and compatible with our strategic direction. The goal of this policy is to protect our informational assets against reasonably foreseeable internal, external, and accidentalthreats. Identifying and assessing cybersecurity risk is integrated into our overall risk management processes. Cybersecurity risks related to our business, operations, privacy, and compliance are identified and managed through third party assessments, internal IT audits, governance, risk and compliance reviews.
Our policies and approach to cybersecurity include several key elements:
Continuous Monitoring and Defense: We work to protect our environments and products from threats through multi-layered defenses. We utilize data analytics to detect anomalies and search for cyber threats. 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. 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.
To date, the Company is not aware of any cybersecurity threats, including any prior cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition. However, as discussed under the heading, “Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or our customer’s patients, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation” in Part I, Item 1A, “Risk Factors,” the Company remains subject to evolving cybersecurity risks that could have adverse impacts.
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. On January 29, 2026, the Company amended this lease to extend the term from October 31, 2026 to December 31, 2028. 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. 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.
The information set forth under Note 6, Commitments and Contingencies, "Legal Proceedings," to our consolidated financial statements included in this Annual Report on Form 10-K is incorporated herein by reference.
It em 4. Mine Safety Disclosures.
Not applicable.
PART II
It em 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market for Common Stock
Our common stock has been listed on The Nasdaq Global Market under the symbol “SGHT” since July 15, 2021. Prior to this date, there was no public market for our common stock.
Holders of Record
As of February 26, 2026, there were approximately 7 holders of record of our common stock. The actual number of stockholders is greater than this number of holders of record and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Use of Proceeds
On July 14, 2021, our registration statement on Form S-1 (File No. 333-257320) relating to our initial public offering ("IPO") of common stock became effective. The IPO closed on July 15, 2021, at which time we issued 11,500,000 shares of our common stock at a price of $24.00 per share.
There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus dated July 14, 2021 and filed with the SEC on July 15, 2021 pursuant to Rule 424(b) under the Securities Act.
Dividend Policy
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and future earnings, if any, to fund the operation, development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination regarding the declaration and payment of dividends will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant.
Stock Performance Graph
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by Item 201(e) of Regulation S-K.
Recent Sales of Unregistered Securities from Registered Securities
There were no sales of unregistered equity securities during the fiscal year ended December 31, 2025 that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Issuer Repurchases of Equity Securities
None.
It em 6. [Reserved.]
It em 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with the information presented in our financial statements and the related notes included in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations, and beliefs that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by these forward-looking statements. 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. Our objective is to develop and market products for use in new treatment paradigms and to create an interventional mindset in eyecare whereby our products may be used in procedures which supplant conventional outdated approaches. Our business philosophy is grounded in the following principles:
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 achievesuperior 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.
O ur initial product development has focused on the treatment of two of the world’s most prevalent and underserved eye diseases, glaucoma and dry eye disease (“DED”). We have commercialized products in each of our two reportable operating segments, Interventional Glaucoma and Interventional Dry Eye. Our Interventional Glaucoma revenue consists of sales of our OMNI® Surgical System family of products (“OMNI”), currently comprised of our Ergo Series OMNI Surgical System and OMNI Edge Surgical System, and the SION® Surgical Instrument (“SION”), while our Interventional Dry Eye revenue consists of sales of the TearCare® System (“TearCare”), and related components and accessories. Each product is primarily sold through a highly involved direct sales model that offers intensive education, training and customer service. We believe this model not only enables us to differentiate our products and company from competitors, but also expands our addressable market by educating ECPs, patients and other stakeholders on our products and evolving treatment paradigms. Outside of the U.S., we have established direct commercial operations in the United Kingdom and Germany. We sell OMNI directly in the United Kingdom and Germany, and indirectly in several other countries in Europe through distributors.
We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, such as ambulatory surgery centers (“ASCs”) and hospital outpatient departments (“HOPDs”), which are typically reimbursed by Medicare (or similar foreign governmental reimbursement entity) or private payors for procedures using our products. We are focused on educating surgeons on the clinical benefits of earlier interventions with the comprehensive OMNI and TearCare procedures, driving TearCare revenue growth in the jurisdictions where appropriate payment values have been established for the TearCare procedure, expanding equitable reimbursed access to the TearCare procedure in other jurisdictions, engagement efforts with accounts, enhanced competitive counter selling, investments in targeted commercial resources including growth of our TearCare commercial infrastructure, and development of the OMNI pseudophakic standalone market.
We sell TearCare to ECPs, where eyecare providers perform evacuation of meibomian glands, using heat-delivered through wearable, open-eye eyelid treatment devices and manual expression, which TearCare is specifically designed for.
We are continuing our TearCare commercial launch while focusing on our comprehensive, clinical data-driven, long-term market development plan that aims to improve awareness and patient access to TearCare. In addition, in the areas where appropriate fee schedules have been established for the TearCare procedure, we are focusing our commercial resources on supporting providers in these specific geographies to drive utilization. Our strategy is focused on driving adoption and utilization through our experienced sales, marketing, and customer support teams who are already dedicated to the dry eye
market, and the ECP customers who have previously purchased TearCare SmartHubs in these states. We are also targeting new ECP customers in these states based on their current treatment approaches to DED and also focus on our Interventional Glaucoma customers in these states who may also benefit from adding TearCare to their treatment offerings.
We have dedicated meaningful resources to execute our commercial strategy, while also seeking to reduce operating expenses and improve cost efficiencies to better align our operating structure for long-term, profitable growth. In the third quarter of 2025, we implemented a targeted restructuring plan in which we reduced our headcount by approximately 20% of our global workforce, and reduced our operating expenses, principally by (i) delaying certain research and development project spend while prioritizing near term pipeline projects, (ii) reducing our selling, general, and administrative operating expenses by implementing measures to limit marketing, travel, and administrative costs, and (iii) not backfilling certain open and planned headcount. As part of this restructuring, we also executed changes to our operations in the United Kingdom (“UK”) which included elimination of three general and administrative and sales management roles.
We do not have, and do not currently intend to develop, any internal manufacturing capabilities or infrastructure, and rely on a limited number of third-party manufacturers, many of which are single source suppliers, for the components, accessories and materials that are utilized in the assembly of our products. We believe the manufacturing capacity provided by our current suppliers will be adequate to meet our current and anticipated manufacturing needs across all of our product lines. However, as part of our long-term manufacturing strategy, we are actively expanding third party manufacturing capacity and options for our products, which we expect to be available to us starting in 2026 for certain products. We plan to continue to utilize third-party contract manufacturers for our products and any related components.
Revenue in our Interventional Glaucoma segment for the years-ended December 31, 2025 and 2024 was $75.7 million and $75.9 million, respectively, with gross margins for the same periods of 86.8% and 87.6%, respectively. Revenue in our Interventional Dry Eye segment for the year-ended December 31, 2025 and 2024 was $1.6 million and $4.0 million, respectively, with gross margins for the same periods of 59.3% and 46.2%, respectively. For the years ended December 31, 2025 and 2024, we generated more than 90% of our revenue from customers in the U.S.
Our Interventional Glaucoma revenue was down slightly for the year ended December 31, 2025 compared to the same period in 2024 due to a number of factors, including reimbursement coverage changes and increased competition from other minimally invasive glaucoma surgery (“MIGS”) devices. These reimbursement changes were primarily restrictions on the performance of multiple MIGS procedures in combination with cataract surgery for Medicare patients in the jurisdictions administered by the five MACs that issued the local coverage determinations (“LCDs”) containing such restrictions. We believe that these restrictions, which became effective in the fourth quarter of 2024, led to a decrease in the number of overall MIGS devices used in procedures that are being performed, including procedures utilizing our OMNI technology.
Our Interventional Dry Eye revenue was down for the year ended December 31, 2025 compared to the same period in 2024 due to lower demand. Lower demand was the result of a shift in strategy to focus on establishing equitable market access for the TearCare procedure, which took effect in the fourth quarter of 2024. While we established pricing with two MACs as of October 2025, there is no guarantee as to the timing of reimbursement decisions or the amount of reimbursement, if any, with other payors. Given the earlier stage of TearCare’s commercial development, we expect our Interventional Dry Eye segment’s gross margins to be lower than our Interventional Glaucoma segment’s gross margins for the near- and medium-term due to the allocation of fixed labor and overhead costs to the segment's cost of goods sold.
We expect Interventional Dry Eye gross margin to improve over time as market access expands, although these improvements may be partially offset by the impact of tariffs.
We believe in the importance of continued strategic investment in initiatives that:
further demonstrate our products’ clinical effectiveness and safety to potential customers, patients, payors and regulators, including (i) establishing OMNI and SION as standards of care of Interventional Glaucoma treatment among MIGS-trained surgeons, (ii) developing a standalone Interventional Glaucoma market segment with a focus on pseudophakic patients whose IOP is not well-controlled on two or more medications and who are at risk of disease progression, and (iii) increasing customer advocacy and pursuing reimbursement including expanding coverage and/or payment for TearCare;
enhance our commercial capabilities and expertise, including resources dedicated to sales, marketing and education;
ensure the broadest possible patient access to the treatment alternatives that our products are cleared to offer;
enhance and improve upon our existing product technologies; and
allow us to create transformational and interventional technology innovation with new products, devices or drugs, in glaucoma and ocular surface disease or in new eye disease areas.
As a result, we intend to continue to invest in product development, market access, sales and marketing, clinical studies, and education initiatives. Because of these and other factors, we expect to continue to incur net losses for at least the next several years, and we may seek additional debt and/or equity financing to fund our operations and planned growth.
Factors Affecting Our Business and Results of Operations
We believe there are several important factors that have impacted and that will continue to impact our business, financial condition, and results of operations. For additional information on risk factors that could impact our results, please refer to the sections entitled “Risk Factors” in this Annual Report on Form 10-K.
These factors affecting our business and results of operations include, but are not limited to:
Product Development
We believe our product development approach is a key differentiator of our team and our company. We are focused on continuous innovation and design and utilize input from our network of expert employees (including ophthalmologists on staff), advisors and customers to rapidly iterate our pre-and post-commercial product designs with the aim of bettersatisfying the needs of our customers and their patients, delivering the most effective, safe, and consistent outcomes, and increasing adoption and utilization of our solutions. We believe it is critical to our product development approach to comprehensively understand the disease physiology, treat the underlying causes with an interventional mindset, and create products with an intuitive design and strong clinical evidence.
Once our products are launched, our customer feedback loop helps us further develop our products. This is particularly evident in the evolution of OMNI, which originated from the combined functionality of two internally developed, commercial predicate devices, each of which had their own multiple commercial iterations. Our future growth is dependent on our ability to continue innovating and applying our expertise of disease physiology to improve existing products and develop new products.
We brought OMNI Edge to the market in the first half of 2025. The addition of OMNI Edge was done to accommodate varying physician preferences and patient needs in today’s evolving MIGS marketplace. OMNI Edge is designed to increase the amount of viscoelastic delivered with our patented motion synchronized delivery system to ensure the consistency, reproducibility, and safety surgeons have come to trust in the OMNI procedure. With this product, we are further advancing procedural intervention and reinforcing our commitment to best serving both our surgeon customers and the patients they care for. The addition of OMNI Edge reflects our ongoing dedication to enhancing outcomes and supporting the evolving needs of the eye care community.
Reimbursement Rates and Coverage
In the U.S., healthcare providers use separate billing codes to report the provision of medical procedures and use of supplies to third-party payors, such as government programs or private insurance, and seek reimbursement for all or a portion of those costs. Physician fee payment rates for products covered by temporary Current Procedural Terminology (“CPT”) codes are set by the multi-state, regional contractors, or Medicare Administrative Contractors (“MACs”), which are responsible for administering Medicare claims. MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.
In November 2024, five of the seven MACs adopted a non-coverage policy when an aqueous shunt or stent procedure is performed with another surgical MIGS procedure, such as canaloplasty or goniotomy, at the same time in the same patient eye. We believe the non-coverage determination for multiple MIGS procedures reduced and may continue to reduce overall MIGS procedure claims volumes, which may adversely impact our business, revenue and prospects. Any updated or new local coverage determinations or other coverage policies that may establish a policy of Medicare non-coverage, or materially restrict coverage, for one or more of our products would have materially and adversely impacted our business, financial condition, and results of operations.
In October 2025, two MACs, Novitas and FCSO, each established jurisdiction-wide pricing, effective retroactively to January 1, 2025, for CPT code 0563T, which is specifically associated with procedures using TearCare. In jurisdictions outside of those covered by Novitas and FCSO, there is still no meaningful reimbursement coverage by Medicare or private payors for DED procedures, including TearCare, and patients are typically paying out-of-pocket for TearCare procedures, although some payors may agree to provide case-based coverage outside of a formal policy. We plan to continue to engage
with other MACs, third-party payors, the clinical societies, and other stakeholders in continued support of patient access for interventional meibomian gland disease procedures performed with the TearCare System; however, there can be no guarantee that other third-party payors, including other MACs, will provide similar reimbursement coverage and/or payment decisions, if at all, for DED procedures, including TearCare
Proper reimbursement for our products is critical to the adoption of our products, and we plan to continue to focus on improving and expanding reimbursement coverage and payment amounts for our Interventional Glaucoma technologies, and establishing and enhancing reimbursement coverage and payment amounts for our Interventional Dry Eye technology.
Market Education and Training on the Benefit of Our Products vis-à-vis Existing Treatment Alternatives
One of the key drivers of our success is educating ophthalmologists, optometrists, patients, and third-party payors about the clinical and safety benefits of our products and of the benefits of more proactive, interventional approach to treating glaucoma and DED. We believe the required market education and development is bestaccomplished through a differentiated, highly involved commercial approach. As such, we devote significant resources to onboarding our sales professionals and to continuously augmenting their knowledge and capabilities. Our sales professionals provide ECPs with the necessary education, training and support to adopt and continue to safely use our products. We believe that increasing acceptance and usage of our products will require continued investment in our sales force and education efforts to ensure ECPs, patients and third-party payors learn more about our products and appreciate our benefits to their target patient populations.
Maximizing Product Usage by Customers
Demand for our products will be highly dependent on our ability to develop their potential addressable markets and maximize the breadth of patients our products can serve. Our ability to establish OMNI as a standard of care for POAG patients by continuing to grow its adoption and utilization in Combination Cataract Procedures and by pioneering the development of the market for interventional Standalone Procedures, with a focus on pseudophakic patients, will have a substantial impact on our future growth.
We introduced our SION Surgical Instrument in 2022. SION satisfies the American Academy of Ophthalmology definition of goniotomy and is registered with the FDA as a Class I 510(k) exempt 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.
TearCare is a unique open-eye heating and expression device designed to melt and remove meibomian gland obstructions. We believe TearCare has a compelling physiological profile to address obstruction from meibomian gland disease ("MGD"), which is the primary cause of evaporative DED, a disease characterized by low quality tears that evaporate prematurely. The current DED treatment market primarily consists of an abundance of OTC and prescription eyedrops that seek to lubricate the ocular surface, alleviate inflammation and/or increase tear production. However, OTC and prescription eyedrops are incapable of clearing obstructions in the meibomian glands and do not address MGD’s eyelid-borne physiology and poor tear quality. MGD is associated with up to 86% of DED cases and is a leading root cause of evaporative DED, which is characterized by low quality tears that evaporate prematurely. 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 preventingpremature evaporation of tears. TearCare was designed to be administered during the course of a routine office visit to an ECP, which makes it convenient for patients, and allows providers to maintain procedural throughput in their practices. Our ability to improve patient access and market education on TearCare and the benefits of proactive MGD treatment will be key drivers of TearCare’s future growth. We believe that sufficiently reimbursed patient access to the TearCare procedure is necessary to drive broad customer acceptance and adoption.
Operational Excellence and Cost Efficiency
We aim to achieve operating and financial milestones with optimal capital efficiency, and focus on our market value relative to invested capital as a key measurement of our performance. Utilizing the capital raised through our equity and debt financings (our December 31, 2025 cash and equivalents was $92.0 million), we have developed and commercially launched multiple 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. We believe this level of operational and commercial progress relative to our total capital investment to date compares favorably to medical technology peers and we seek to design products that can achieveattractive long-term gross margins.
During the year ended December 31, 2025, global and regional economies, as well as the markets we serve, have experienced significant volatility, including as a result of the impacts of macroeconomic conditions, such as tariffs, inflation,
supply shortages, and geopolitical pressures. For example, in February and March 2025, the United States imposed additional tariffs on products from China. A significant portion of our OMNI and SION products, and certain of our TearCare system components, are produced and assembled in China by a Taiwan-based manufacturer. While we plan to diversify our third-party suppliers, these tariffs, as well as any future tariffs, by the United States or other countries could significantly increase the cost of our products and components, and could have a negative impact on our gross margins. However, the impact of any such tariffs will depend upon various factors, including the timing, amount, scope, and nature of the tariffs.
While the impact of these macroeconomic factors is not readily determinable, we have not been materially impacted by these macroeconomic conditions, but there can be no assurance that our business operations and financial condition will not be materially adversely affected in the future. The duration and scope of these conditions cannot be predicted with certainty, and it is uncertain what impacts, if any, these pressures may have on our ability to support the efficient and sustainable growth of our business.
Components of Our Results of Operations
Revenue
We currently derive the majority of our U.S. revenue from the sale of our OMNI and SION products to ASCs and HOPDs and from the sale of our TearCare products to ECPs. To date, the revenue from our Interventional Glaucoma segment has accounted for the vast majority of our total revenue, substantially all of which was generated from sales within the U.S. Our Interventional Glaucoma customers place orders based on their expected procedure volume. 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, 2025 and 2024.
The growth of our revenue is primarily dependent upon the demand for elective surgery and in-office treatment utilizing our products in the United States and Europe, product reimbursement rates and coverage criteria, and competition. Such demand can be subject to seasonality patterns such as lower demand during summer months because of ECP vacations and lower demand in winter months because of fewer business or surgery days due to holidays and adverse weather conditions.
Cost of Goods Sold
Our components and products are produced by third-party suppliers and manufacturers. Our cost of goods sold consists primarily of amounts paid for our products to third-party manufacturers, and our manufacturing overhead costs, which consist primarily of personnel expenses, including salaries, benefits and stock-based compensation, and reserves for excess, obsolete and non-sellable inventory. Cost of goods sold also includes depreciation expenses for production equipment which we provide to our third-party manufacturers, and certain direct costs, such as shipping and handling costs and tariffs on imported products and components.
Gross Profit and Gross Margin
We calculate gross profit as revenue minus cost of goods sold. We calculate gross margin as gross profit divided by revenue. Our gross profit and gross margin have been, and we believe they will continue to be, affected by a variety of factors, including differences in segment gross profit and gross margins, changes in average selling prices, changes in product reimbursement rates, product sales mix, production and ordering volumes, manufacturing, tariff and freight costs, product yields, and headcount. In general, we expect our gross profit to increase over time as our revenue increases, and we expect our gross margins to increase over the long term to the extent our production and ordering volumes increase and as we spread the fixed portion of our overhead costs over a larger number of units produced and sold.
We intend to use our design, engineering and manufacturing know-how and capabilities to further advance and improve the efficiency of our suppliers’ manufacturing processes, which we believe will reduce costs and increase our gross margins.
Our gross margins could fluctuate from quarter to quarter due to a number of factors, including variations in product mix, changes in product reimbursement rates or average selling prices, transitions to new suppliers, introduction of new products by us or our competitors, adoption of new manufacturing processes and technologies, and responses to evolving macroeconomic and geopolitical conditions, including the adoption of new or increased tariffs by the United States, China, and other countries.
Research and Development Expenses
Research and development ("R&D") expenses consist primarily of costs associated with engineering, product development, clinical studies to develop and support our products, including clinical trial design, clinical trial site initiation
and study costs, internal and external costs associated with our regulatory compliance and quality assurance functions, medical affairs, cost of products used for clinical trials and other costs associated with products and technologies that are in development. These expenses also include personnel expenses, including salaries, benefits and stock-based compensation related to R&D functions, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation expenses for equipment and an allocation of IT and facility overhead expenses.
Our R&D expenses as a percentage of revenue may vary over time depending on the level and timing of new product development efforts, as well as clinical development, clinical trial and other related activities. While we expect to continue to make key investments in our R&D initiatives, including active clinical trials, we implemented a targeted plan during the third quarter intended to reduce operating expenses, improve cost efficiencies, and better align our operating structure for long-term profitability growth. This targeted plan is expected to reduce R&D costs in the near term.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation related to selling, marketing and corporate functions, allocation of IT and facility overhead expenses, bad debt expense, finance, legal and human resource costs. Other SG&A expenses include training, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, professional services fees (including external legal, audit, consulting and tax fees), insurance costs, and general corporate expenses.
Our SG&A expenses as a percentage of revenue may vary over time depending on the level and timing of commercial expansion efforts. While we expect to continue to make strategic investments in SG&A expenses, we implemented a targeted plan during the third quarter intended to reduce operating expenses, improve cost efficiencies, and better align our operating structure for long-term profitability growth. This targeted plan is expected to reduce SG&A costs in the near term.
Investment Income
I nvestment income primarily consists of interest and amortization on held-to-maturity investments in U.S. treasury securities and money market funds.
Interest Expense
Interest expense consists of interest incurred on our outstanding indebtedness and non-cash interest related to the accretion of debt discount and amortization of debt issuance costs associated with the Term Loans.
Loss on Debt Extinguishment
The loss on debt extinguishment is associated with our termination and settlement of the indebtedness under our prior secured credit facility with MidCap Financial Trust and certain of its affiliates (the “Prior Lender”) that was initiated and completed during the year ended December 31, 2024.
Other Expense, Net
Other expense, net primarily consists of income and expenses that do not originate from our primary business.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
Years Ended December 31,
Change
Revenue
Interventional Glaucoma
Percentage of total revenue
Interventional Dry Eye
Percentage of total revenue
Total
Cost of goods sold
Interventional Glaucoma
Interventional Dry Eye
Total
Gross profit
Interventional Glaucoma
Interventional Dry Eye
Total
Gross margin
Interventional Glaucoma
Interventional Dry Eye
Total
Operating expenses
Research and development
Selling, general and administrative
Total operating expenses
Loss from operations
Investment income
Interest expense
Loss on debt extinguishment
Other expense, net
Loss before income tax
Provision for income tax
Net loss and comprehensive loss
Revenue . Revenue in the year ended December 31, 2025 was $77.4 million, a decrease of $2.5 million, or 3.1%, compared to the prior year.
In the year ended December 31, 2025, our Interventional Glaucoma revenue was $75.7 million, a decrease of $0.2 million, or 0.2%, compared to the prior year. The decrease was primarily attributable to the LCDs that became effective in the fourth quarter of 2024 . Revenue increased in the second half of 2025, primarily attributable to an increase in ordering facilities, an increase in the number of units sold, and an increase in average selling prices compared to the prior year period.
Our Interventional Dry Eye revenue was $1.6 million for the year ended December 31, 2025, a decrease of $2.3 million, or 58.7% compared to the prior year. The overall decrease in revenue was primarily due to fewer SmartLids sold, due to our focus on the next phase of our commercial strategy, which involves achieving reimbursed market access for our TearCare products. During the fourth quarter of 2025, two MACs established jurisdiction-wide pricing, which led to improved sales performance in the fourth quarter.
Cost of Goods Sold . Cost of goods sold during the year ended December 31, 2025, decreased $0.9 million, or 7.6%, compared to the prior year. Our Interventional Glaucoma cost of goods sold increased $0.6 million compared to 2024. The increase was primarily driven by tariffs, higher overhead costs per unit, and product sales mix. Interventional Dry Eye cost of goods sold decreased $1.5 million compared to the prior year, primarily driven by lower volumes.
Gross Profit and Gross Margin . Our total gross profit was $66.7 million for the year ended December 31, 2025, a decrease of $1.6 million from the prior year comparable period. Our gross margin for the year ended December 31, 2025 increased to 86.2%, from 85.5% in the prior year comparable period. Gross margin in our Interventional Glaucoma segment was 86.8% for the year ended December 31, 2025, a decrease from 87.6% for the prior year comparable period, primarily due to higher overhead costs per unit, tariff costs, and product sales mix. In our Interventional Dry Eye segment, gross margin increased from 46.2% for the year ended December 31, 2024 to 59.3% for the year ended December 31, 2025, primarily driven by increased average selling prices.
Research and Development Expenses . R&D expenses were $14.6 million for the year ended December 31, 2025, a decrease of $3.4 million, or 18.8%, compared to the prior year. The decrease was primarily attributable to a $2.7 million decrease in personnel costs related to our August 2025 reduction in force. Clinical studies and general R&D expenses also decreased by $1.6 million during the current year. R&D expenses during the year ended December 31, 2025 included $1.0 million of restructuring costs related to this reduction in force.
Selling, General, and Administrative Expenses . SG&A expenses were $89.2 million for the year ended December 31, 2025, a decrease of $11.7 million, or 11.6%, compared to the prior year. The decrease was primarily attributable to a $5.4 million decrease in legal expenses, as well as a $1.0 million decrease in sales training, events, and demos. In addition, our personnel expenses decreased by $4.7 million, primarily driven by our August 2025 reduction in force. SG&A expenses during the year ended December 31, 2025 included $1.8 million of restructuring costs related to this reduction.
Investment Income . Investment income was $4.0 million for the year ended December 31, 2025, a decrease of $1.9 million, or 32.9%, from $5.9 million in the prior year period. The decline was due to lower investment balances as well as lower yield on held-to-maturity investments during the current year.
Interest Expense . Interest expense was $5.1 million in the year ended December 31, 2025, an increase of $0.5 million, or 10.3%, compared to the prior year period due to a higher outstanding principal balance under the Hercules Loan Agreement.
Loss on Debt Extinguishment. There were no extinguishments of debt in the current year. Loss on debt extinguishment was $2.0 million for the year ended December 31, 2024.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Years Ended December 31,
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net change in cash, cash equivalents, and restricted cash
Net Cash Used in Operating Activities
Net cash used in operating activities for the year ended December 31, 2025 was $29.7 million, consisting primarily of a net loss of $38.4 million and a net change in our operating assets and liabilities of $6.4 million, partially offset by non-cash charges of $15.1 million. The $6.4 million change in our net operating assets and liabilities included increases of $1.4 million in inventory and 0.7 million in prepaid expenses and other current assets, as well as decreases of $3.6 million in accrued compensation and $1.4 million in accounts payable and accrued and other current liabilities. These changes were partially offset by a $0.9 million decrease in accounts receivable. The non-cash charges primarily consisted of $13.1 million related to stock-based compensation, $0.9 of accretion of debt discount and debt issuance costs, $0.5 million of depreciation and amortization, and $0.5 million of noncash operating lease expense.
Net cash used in operating activities for the year ended December 31, 2024 was $22.4 million, consisting primarily of a net loss of $51.5 million, partially offset by non-cash charges of $20.1 million and a net change in our operating assets and liabilities of $9.0 million. The $9.0 million change in our net operating assets and liabilities included decreases of $3.5 million in accounts receivable and $1.6 million in inventory, as well as increases of $5.2 million in accrued compensation and $0.3 million accounts payable. These were partially offset by a $1.6 million decrease in other noncurrent liabilities. The non-cash charges primarily consisted of $17.1 million related to stock-based compensation, $1.0 million of noncash loss on debt
extinguishment, $0.8 million of accretion of debt discount and debt issuance costs, $0.7 million of depreciation and amortization, and $0.6 million of noncash operating lease expense.
Net Cash Used in Investing Activities
Net cash used in investing activities in the years ended December 31, 2025 and 2024 was $0.2 million and $0.4 million, respectively, consisting of purchases of property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was $1.8 million, consisting primarily of proceeds from the exercise of stock options and proceeds from employee stock plan purchases. Net cash provided by financing activities for the year ended December 31, 2024 was $5.0 million, consisting primarily of proceeds from the Hercules Loan Agreement, partially offset by costs associated with refinancing the term loan agreement.
Liquidity and Capital Resources
Sources of Liquidity
To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, the sale of common stock in our IPO, debt financing arrangements, and revenue from the sale of our products. In January 2024, we entered into a Loan and Security Agreement (the “Hercules Loan Agreement”) with Hercules Capital, Inc (“Hercules”) and certain of its affiliates (collectively with Hercules, the “Lenders”), which provides for a senior secured term loan facility in the aggregate principal amount of up to $65.0 million. We used the proceeds from an initial $35.0 million tranche (the “Initial Loan”) funded under the Hercules Loan Agreement to discharge our indebtedness under the Prior Loan Agreement with our Prior Lenders. In December 2024, we consummated the drawdown of the $5.0 million Tranche I(b) term loan advance (the "Tranche I(b) Loan") contemplated by the Hercules Loan Agreement.
As of December 31, 2025, we had cash and cash equivalents of $92.0 million, an accumulated deficit of $384.7 million, and an outstanding term loan balance of $40.0 million plus a $2.4 million fee final payment due at maturity under the Hercules Loan Agreement (excluding debt discount and amortized debt issuance costs). Based on our current planned operations, we expect our cash and cash equivalents balance, as well as other sources of liquidity, will enable us to fund our operations for at least the next 12 months and the foreseeable future.
Our historical cash outflows have primarily been associated with cash used for operating activities such as sales, marketing and commercialization of our products, research and development activities, regulatory and market access activities, intellectual property enforcement and portfolio expansion, capital expenditures and debt service costs. Our cash requirements will be significantly impacted by our ability to manage and grow our business by maintaining and expanding our sales to existing customers or introducing our products to new customers; our ability to obtain and maintain sufficient reimbursement for our products, including successfully protecting reimbursement for our Interventional Glaucoma products and expanding and maintaining sufficient reimbursement for our Interventional Dry Eye products; the level of our investment in commercialization and research and development activities, including clinical trials; whether we enter into any strategic acquisitions or investments, and the timing and amount of the associated capital expenditures; the outcome of our litigationagainst Alcon, including receipt of any final, non-appealable award thereunder; and competitive dynamics within our industry. There are numerous factors that may impact our long-term cash requirements, and we are unable to accurately predict them at this time. An extended period of global supply chain disruption, geopolitical or trade tensions, or economic uncertainty could materially affect our business, results of operations, financial condition, and access to sources of liquidity. For example, since February 2025, the U.S. has imposed tariffs that apply to all of our products and product components imported from China, which has increased, and may to continue to increase, the cost of our products and components and have a negative impact on our gross margins and liquidity.
We may in the future need to seek additional sources of liquidity and capital resources through equity or debt financings, such as additional securities offerings or through borrowings under a new or existing credit facility. There can be no assurance that such transactions will be available to us on favorable terms, if at all.
Hercules Capital Loan Agreement
In January 2024, we entered into the Hercules Loan Agreement with the Lenders, which provides for a maximum $65.0 million credit facility. An Initial Loan of $35.0 million was funded under the Hercules Loan Agreement on January 22, 2024, which was used to discharge our indebtedness under the Prior Loan Agreement. On December 10, 2024, we consummated the drawdown of the $5.0 million Tranche I(b) Loan under the Hercules Loan Agreement. Upon consummation of the Tranche I(b) Loan, the aggregate principal amount of borrowings under the Hercules Loan Agreement was $40.0 million.
In addition to the Initial Loan and the Tranche 1(b) Loan, the Hercules Loan Agreement provides additional tranches available to us (the “Tranche Loans,” and together with the Initial Loan and the Tranche I(b) Loan, the “Term Loans). Tranche 2 originally consisted of $10.0 million available to draw through September 15, 2025, contingent upon the achievement of certain performance milestones prior to June 30, 2025, which milestones were not met and thus this Tranche 2 was not available to the Company. Tranche 3 consisted of $15.0 million available to draw through the interest only period in increments of $5.0 million, subject to the sole approval of Hercules' investment committee.
The Hercules Loan Agreement originally provided for a maturity date of July 1, 2028, with an interest only period running for the first 30 months of the agreement term. This interest-only period was extendable for an additional six months for a total of 36 months upon the achievement of certain performance milestones prior to June 30, 2025; these milestones were not met by the June 30, 2025 deadline and thus the six-month extension of the interest only period was not available to the Company.
In September 2025, the Company and Hercules entered into a third amendment (the “Amendment”) to its Loan and Security Agreement. The Amendment provided for an additional six-month extension of the interest only period, to now extend to February 1, 2027. The Amendment also amended the Hercules Loan Agreement to reallocate the undrawn and unavailable $10.0 million tranche by increasing the amount available to draw through the interest only period from $15.0 million to $25.0 million in minimum increments of $5.0 million, subject in each case to the sole approval of Hercules’ investment committee.
The Term Loans accrue interest at a floating annual rate equal to the greater of 10.35%, or the Wall Street Journal prime rate (the “Prime Rate”) plus 2.35%, with the interest rate equal to 10.35% at September 30, 2025. The final payment fee is set at 5.95% of the funded balance, which is recognized as a debt discount and is being accreted into the amortization of debt issuance costs using the effective interest rate method over the term of the loan.
In conjunction with the funding of the Initial Loan, we issued warrants to the Lenders to purchase up to an aggregate of 135,686 shares of our common stock at an exercise price of $5.159 per share, which were recorded and classified as equity. On December 10, 2024, upon the funding of the Tranche I(b) Loan, we issued additional warrants to the Lenders to purchase 26,095 shares of our common stock at an exercise price of $3.83 per share. Each warrant is exercisable for a period of seven years from the date of issuance. If the additional Term Loans are funded, we will be obligated to issue to the Lenders additional warrants to purchase common stock in an amount equal to 2.0% of the funded balance of each tranche loan under the Hercules Loan Agreement, divided by the exercise price on the date we draw funds under such tranche loan. The exercise price will be calculated using the five-day volume-weighted average stock price as of such date. See Note 7, Stockholders' Equity, for additional information regarding these common stock warrants.
The obligations under the Hercules Loan Agreement are guaranteed by us and our future subsidiaries, subject to exceptions for certain foreign subsidiaries. The obligations under the agreement are secured by substantially all of our assets, including its material intellectual property. Additionally, we are subject to customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. We are also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement. We were in compliance with all covenants as of December 31, 2025.
While any Term Loans remain outstanding under the Hercules Loan Agreement, we are required to use commercially reasonable efforts to grant to the Lenders the option to invest up to $3.0 million in our next round of equity financing, if any, that is broadly marketed to multiple investors on the same terms, conditions and pricing offered to investors in such subsequent equity financing.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
Critical Accounting Estimates
Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.
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 are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.
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. We estimate the fair value of our stock option awards based on the estimated fair values as of the grant date using the Black-Scholes-Merton ("Black-Scholes") option-pricing model, net of estimated forfeitures. The model requires us to make a number of assumptions, including expected volatility, expected term, risk-free interest rate, and expected dividend yield.
The fair value of RSU awards is determined based on the number of units granted and the closing price of the Company's common stock as of the grant date. We expense the fair value of our equity-based compensation awards on a straight-line basis over the requisite service period, which is the period during which the related services are provided.
Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment with respect to their impact on our financial statements and related disclosures.
Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
Our exposure to interest rate risk is principally confined to our cash and cash equivalents and our outstanding credit agreement. As of December 31, 2025, we had cash, cash equivalents and investments of $92.0 million, which consisted of bank deposits, money market funds, and U.S. treasury bills. The primary objectives of our investment activities are the preservation of capital and support of our liquidity requirements. We place our cash, cash equivalents, and investments with high-quality financial institutions and have established investment guidelines relative to diversification and maturities designed to maintain safety and liquidity. 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. The Hercules Loan Agreement contains a floating rate equal to the greater of 10.35% or the Prime Rate plus 2.35%, with the initial interest rate under the agreement of 10.85%. As of December 31, 2025, the balance outstanding under the agreement is $40.0 million and the interest rate was 10.35%. 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.
Ite m 8. Financial Statements and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 34 )
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2025 and 2024
Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2025 and 2024
Consolidated Statements of Cash Flows for the Years ended December 31, 2025 and 2024
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Sight Sciences, Inc.
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, 2025 and 2024, 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, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
March 4, 2026
We have served as the Company’s auditor since 2019.
SIGHT SCIENCES, INC.
Consolidated B alance Sheets
(in thousands, except share and per share data)
December 31,
December 31,
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance for credit losses of $ 234 and $ 689 at December 31, 2025 and 2024, respectively
Inventory, net
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Other noncurrent assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued compensation
Accrued and other current liabilities
Total current liabilities
Long-term debt
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, par value $ 0.001 per share; 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2025 and 2024, respectively
Common stock, par value $ 0.001 per share; 200,000,000 shares authorized; 53,493,711 and 50,937,999 shares issued and outstanding as of December 31, 2025 and 2024, respectively
Additional paid-in-capital
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
The accompanying notes are an integral part of these consolidated financial statements.
SIGHT SCIENCES, INC.
Consolidated Statements of Oper ations and Comprehensive Loss
(in thousands, except share and per share data)
Years Ended December 31,
Revenue
Cost of goods sold
Gross profit
Operating expenses:
Research and development
Selling, general and administrative
Total operating expenses
Loss from operations
Investment income
Interest expense
Loss on debt extinguishment
Other expense, net
Loss before income taxes
Provision for income taxes
Net loss and comprehensive loss
Net loss per share attributable to common stockholders, basic and diluted
Weighted-average shares outstanding, basic and diluted
The accompanying notes are an integral part of these consolidated financial statements.
SIGHT SCIENCES, INC.
Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
Common Stock
Additional
Paid-In
Accumulated
Total
Stockholders’
Shares
Amount
Capital
Deficit
Equity
Balance at December 31, 2023
Issuance of common stock upon exercise of stock options
Issuance of common stock upon vesting of restricted stock units
Withholding taxes on net share settlement of restricted stock units
Employee stock purchase plan purchases
Warrant issuance
Stock-based compensation expense
Net loss
Balance at December 31, 2024
Issuance of common stock upon exercise of stock options
Issuance of common stock upon vesting of restricted stock units
Withholding taxes on net share settlement of restricted stock units
Employee stock purchase plan purchases
Stock-based compensation expense
Net loss
Balance at December 31, 2025
The accompanying notes are an integral part of these consolidated financial statements.
SIGHT SCIENCES, INC.
Consolidated Statem ents of Cash Flows
(in thousands)
Years Ended December 31,
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Accretion of debt discount and debt issuance costs
Stock-based compensation expense
Allowance for credit losses
Provision (benefit) for excess and obsolete inventories
Noncash operating lease cost
Loss on disposal of property and equipment
Noncash loss on debt extinguishment
Change in fair value of common stock warrants
Changes in operating assets and liabilities:
Accounts receivable
Inventory
Prepaid expenses and other current assets
Other noncurrent assets
Accounts payable
Accrued compensation
Accrued and other current liabilities
Other noncurrent liabilities
Net cash used in operating activities
Cash flows from investing activities:
Purchases of property and equipment
Net cash used in investing activities
Cash flows from financing activities:
Net proceeds from Hercules Loan Agreement
Repayment of MidCap Loan Agreement
Debt issuance costs
Proceeds from exercise of common stock options
Taxes paid on net settlement of restricted stock units
Proceeds from employee stock purchase plan purchases
Net cash provided by financing activities
Net change in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
Restricted Cash
Cash and cash equivalents at end of period
Supplemental disclosure of cash flow information
Cash paid for interest
Supplemental disclosure of non-cash investing and financing information
Acquisition of property and equipment included in accounts payable and accrued liabilities
Common stock warrants issued upon execution of Hercules Loan Agreement
The accompanying notes are an integral part of these consolidated financial statements.
SIGHT SCIENCES, INC.
Notes to Consolidated Fin ancial Statements
Note 1. The Company and Nature of Business
Description of Business
Sight Sciences, Inc. (the “Company”) was incorporated in the State of Delaware in 2010 and is headquartered in Menlo Park, California. The Company is an ophthalmic medical device company focused on the development and commercialization of surgical and nonsurgical technologies for the treatment of prevalent eye diseases. The Company’s mission is to develop transformative, interventional technologies that allow eyecare providers to procedurally elevate the standards of care — empowering people to keep seeing.
The Company's product portfolio aligns with its two reportable operating segments: Interventional Glaucoma and Interventional Dry Eye. The products for the Interventional Glaucoma segment consist of the OMNI® Surgical System family of products ("OMNI") and the SION® Surgical Instrument ("SION"). The Company’s commercial OMNI offerings, consisting of the Ergo Series of the OMNI Surgical System ("OMNI Ergo") and the OMNI EDGE Surgical System ("OMNI EDGE") are implant-free, minimally invasive glaucoma surgery technologies. OMNI Ergo and OMNI EDGE are indicated in the United States to reduce intraocular pressure in adult patients with primary open-angle glaucoma. The OMNI Ergo is CE Marked for the catheterization and transluminal viscodilation of Schlemm’s canal and cutting of the trabecular meshwork to reduce intraocular pressure in adult patients with open-angle glaucoma. SION is a bladeless, manually operated device used in ophthalmic surgical procedures to excise trabecular meshwork. The product portfolio for the Interventional Dry Eye segment consists of the TearCare® System ("TearCare") for ophthalmologists and optometrists. TearCare is a proprietary, interventional, dry eye device designed to melt and facilitate the comprehensive removal of meibomian gland obstructions and restore gland functionality and healthy oil production for adult patients with evaporative dry eye disease due to meibomian gland disease when used in conjunction with manual expression of the meibomian glands, enabling clearance of gland obstructions by physicians to address the leading cause of dry eye disease.
Liquidity Considerations
Since inception, the Company has incurred losses and negative cash flows from operations. As of December 31, 2025, the Company had an accumulated deficit of $ 384.7 million and recorded a net loss of $ 38.4 million for the year then ended and expects to incur additional losses in the future.
The Company believes its cash and cash equivalents balance, and other existing sources of liquidity will satisfy its working capital and capital resource requirements for at least 12 months from the date of issuance of its consolidated financial statements. Any failure to generate increased revenue, achieveimproved gross profit, or control operating costs could require the Company to raise additional capital through equity or debt financing. Such additional financing may not be available on acceptable terms, or at all. If the Company is unable to improve its financial performance, or to secure additional funding when desired, it may need to delay the development of its products, reduce research and development activities, modify or abandon planned future expenditures, or reduce operating costs. Any of these actions could harm the Company’s business, requiring it to change its business strategy, scale back its operations, or limit its ability to achieve its strategic objectives.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Sight Sciences UK, Ltd and Sight Sciences GmbH. All intercompany balances and transactions have been eliminated in consolidation.
Presentation Reclassification
Certain prior year amounts have been reclassified for consistency with current year presentation. This reclassification was to report withholding taxes on net share settlement of restricted stock units as a deduction to the issuance of common stock upon vesting of restricted stock units in the consolidated statements of stockholders’ equity. This reclassification had no effect on the reported results of operations.
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. The most significant estimates relate to the allowance for credit losses, inventory excess and obsolescence, the selection of useful lives of property and equipment, determination of the fair value of stock option grants, and provisions for income taxes and contingencies. Management evaluates its estimates and assumptions on an ongoing basis using historical experience, an assessment of current and anticipated future macroeconomic conditions, authoritative accounting guidance, and other factors management believes to be reasonable, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the financial statements. To the extent there are differences between these estimates and actual results it could result in a material effect on the Company’s financial condition, results of operations and liquidity.
Fair Value of Financial Instruments
The Company’s financial instruments typically consist of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, accrued and other current liabilities, common stock warrants, and short-term and long-term debt. 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 records 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 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. 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.
The Company relies on third-party contract manufacturers for the manufacture of all of its commercial products. The Company also depends on a limited number of single source suppliers to provide some of the components, accessories and materials used in the manufacture and assembly of its commercial products. Any failure on the part of the Company’s manufacturers or suppliers to timely provide products or components to the Company, or any other disruptions in the Company’s supply chain, would have a negative impact on the Company’s financial condition, results of operations and liquidity.
For the years ended December 31, 2025 and 2024, there were no customers that represented 10 % or more of the Company's revenue or accounts receivable.
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with an original maturity of 90 days or less, when purchased, to be cash and cash equivalents. Cash and cash equivalents include U.S. treasury securities that are classified as held-to-maturity and recorded at amortized cost in the financial statements. The remainder of cash and cash equivalents consists of checking and savings deposits, as well as money market funds, recorded at cost, which approximates fair value.
The Company also has restricted cash balances, which consist of checking and savings deposits, recorded at cost, which approximates fair value. These restricted cash balances are held as collateral in conjunction with the Company’s corporate credit card program. As of December 31, 2025, the Company had $ 0.3 million in restricted cash, which is recorded in prepaid and other current assets in the Company’s consolidated balance sheets.
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 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 allowance for credit losses was $ 0.2 million and $ 0.7 million as of December 31, 2025 and 2024, 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. Cost is determined using actual costs on a first-in, first-out basis for all inventory. Net realizable value is determined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. As of December 31, 2025, the Company’s inventory balance consisted of finished goods of $ 6.8 million and raw materials of $ 1.2 million. As of December 31, 2024, the Company’s inventory consisted of finished goods of $ 5.6 million and raw materials of $ 1.0 million.
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. The Company’s policy is to write down inventory that has become obsolete, inventory that has a cost basis in excess of the lower of cost or expected net realizable value, and inventory in excess of expected product demand. The estimate of excess quantities requires the Company to exercise judgment and is primarily dependent on the Company’s estimates of future demand for the particular product. As of December 31, 2025 and 2024, the Company had reserves for excess and obsolete inventory of $ 0.3 million and $ 0.3 million.
Property and Equipment, net
Property and equipment are recorded at cost, less accumulated depreciation. Repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, typically two to five years. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheets and any resulting gain or loss is reflected in the consolidated statements of operations and consolidated loss in the period realized.
Construction-in-process assets consist primarily of tools and equipment used to manufacture the Company’s products that have not yet been placed in service. These assets are stated at cost and are not initially depreciated. Once the assets are placed into service, assets are reclassified to the appropriate asset class based on their nature, and are depreciated in accordance with their respective useful lives as indicated above.
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. If indicators of impairment exist, an impairmentloss may be recognized when estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition are less than their carrying amount. Impairment, if any, is measured as the amount by which the carrying amount of the long-lived assets exceeds their fair value. 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, 2025 and 2024.
Leases
Contractual arrangements that meet the definition of a lease are classified as operating or finance leases and are recorded on the consolidated balance sheets as both a right-of-use asset (“ROU asset”) and lease liability, calculated by discounting fixed lease payments over the lease term at the Company’s incremental borrowing rate (“IBR”). 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. The Company has various operating leases, which include facility leases and equipment leases.
As the implicit rates for the Company's operating leases are not determinable, the Company uses an IBR based on the information available at the respective lease commencement dates to determine the present value of future payments. 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 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. In determining the lease term, the Company
includes all renewal options that are reasonably probable to be executed. The Company recognizes rent expense on a straight-line basis over the lease term for these short-term leases.
Common Stock Warrants
The common stock warrants issued by the Company pursuant to the Hercules Loan Agreement (as defined in Note 5. Debt) are classified in equity, as they meet all the criteria for equity classification. The fair value of the common stock warrants was calculated using the Black-Scholes option pricing method and are recorded at fair value upon issuance in additional paid-in capital in the consolidated balance sheets. These common stock warrants are not remeasured after the issuance date.
The Company’s unissued common stock warrants under the Hercules Loan Agreement are classified as liabilities in the consolidated balance sheets. These common stock warrants are remeasured at each reporting date using the Black-Scholes option pricing method, with the gain or loss recorded in the Company’s consolidated statements of operations and comprehensive loss.
See Note 5. Debt and Note 7. Stockholders' Equity, for additional information regarding the common stock warrants.
Revenue Recognition
The Company applies the following five steps to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its arrangements:
Identify the contract with a customer,
Identify the performance obligations in the contract,
Determine the transaction price,
Allocate the transaction price to performance obligations in the contract, and
Recognize revenue as the performance obligations are satisfied.
Revenue recognized during the years ended December 31, 2025 and 2024 relates entirely to the sale of the Company’s products within the Interventional Glaucoma and Interventional Dry Eye segments. These sales are primarily to hospitals, medical centers, and eyecare professionals ("ECPs") throughout the United States. Sales are generally made through sales representatives and distributors.
The Company’s revenue arrangements consist of a single performance obligation. Revenue is recognized at the point in time when control of the promised goods transfer to the Company’s customers. Revenue is measured at the amount of consideration expected to be received in exchange for the transfer of goods. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amounts and includes estimates of variable consideration, such as discounts or rebates, where applicable. The Company does not offer right of return, except in the case where items are defective as manufactured, and the Company does not typically provide customers with a right to a refund. 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. Payment terms, typically 30 days, are offered to customers and do not include a significant financing component. The Company extends credit to customers based upon their financial condition and credit history and generally requires no collateral. The Company does not have any contract balances related to product sales.
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. 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.
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.
Research and Development
The Company expenses research and development costs as incurred. Research and development expenses consist primarily of product development, clinical studies to develop and support the Company’s products, regulatory expenses, medical affairs, and other costs associated with products and technologies that are in development. Research and development expenses include employee compensation (including stock-based compensation), supplies, consulting, prototyping, testing, materials, travel expenses, depreciation, and an allocation of facility overhead expenses.
Selling, General and Administrative
Selling, general and administrative expenses include compensation (including stock-based compensation) and employee benefits for executive management, commercial, finance, and human resources personnel; facility costs (including rent); bad debt costs; professional service fees; and other general overhead costs, including depreciation.
Advertising Expense
The Company expenses advertising costs as incurred. Advertising expenses for fiscal years 2025 and 2024 were $ 2.4 million and $ 1.4 million, respectively, included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.
Stock-Based Compensation
The Company's equity incentive plan permits the grant of stock-based awards, such as stock options and restricted stock units ("RSUs"), to employees, directors and consultants. The Company’s employee stock purchase plan (“ESPP”) allows employees to purchase stock from the Company at a discount. The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. 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.
The Company selected the Black-Scholes option-pricing model as the method for determining the estimated fair value for stock options and awards granted pursuant to the ESPP. 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. The Company uses the simplified method for determining the expected term of the granted stock options since there is not adequate historical data to utilize in calculating the expected term
The fair value of RSU awards is determined based on the number of units granted and the closing price of the Company's common stock as of the grant date.
Interest Expense
The Company’s interest expense consists primarily of interest incurred on our outstanding indebtedness. The Company's interest expense also includes non-cash interest related to the accretion of debt discount and debt issuance costs, as well as the accrual of the final fee due at maturity.
Investment Income
The Company’s investment income consists primarily of interest and amortization on held-to-maturity investments in treasury securities. All treasury securities are purchased with maturities of less than 90 days and recorded at amortized costs in the financial statements.
Currency Remeasurement
Foreign currency transaction gains and losses are recorded in other income (expense), net in the Company’s consolidated statements of operations and comprehensive loss. Such amounts have not been material for all periods presented.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management assesses the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all off a deferred tax asset will not be realized. Due to the Company's
historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net deferred tax assets have been fully offset by a valuation allowance.
The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected in the period in which judgment occurs. The Company's policy is to recognize interest and penalties related to the underpayment of income tax as a component of provision for income taxes.
Comprehensive Loss
Comprehensive loss represents all changes in stockholders’ equity except those resulting from distributions to stockholders. There have been no items qualifying as other comprehensive income (loss) and, therefore, for all periods presented, there was no difference between comprehensive loss and the Company’s reported net loss.
Net Loss Per Share Attributable to Common Stockholders
Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Basic and diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period without consideration of potentially dilutive securities. The Company’s potentially dilutive shares, which consist of outstanding common stock options and RSUs, were excluded in the computation of diluted net loss per share for the period as the result would have been anti-dilutive due to the Company's net loss position in each period.
Restructuring Expense
Restructuring expenses may arise from targeted plans to reduce operating expenses, improve cost efficiencies, and better align our operating structure for long-term, profitable growth, and primarily include one-time employee severance and benefits contribution costs. For one-time termination benefits, expense is recorded when employees are entitled to receive those benefits and amounts can be reasonably estimated. Restructuring expenses are recorded as an operating expense in the consolidated statements of operations and comprehensive loss.
Emerging Growth Company and Smaller Reporting Company
The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as well as a "smaller reporting company, as defined by the Securities and Exchange Commission per Rule 12b-2 of the Exchange Act. As such the Company is eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies or smaller reporting companies, including reduced reporting and extended transition periods to comply with new or revised accounting standards for public business entities. The Company has elected to avail itself of this exemption and, therefore, is not subject to the timeline for adopting new or revised accounting standards for public business entities that are not emerging growth companies, and will follow the applicable transition guidance.
Recent Accounting Pronouncements
Accounting Standards Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The Company adopted the standard on January 1, 2025, and elected to apply the standard on a prospective basis for fiscal year reporting. The adoption resulted in the expanded presentation of the Company’s effective tax rate reconciliation and the disaggregation of income taxes paid in our financial statement footnotes. The application of these disclosure requirements had no impact on our consolidated balance sheets, consolidated statements of operations and comprehensive loss, and consolidated cash flow statements. The information is presented in Note 10: Income Taxes .
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU allows the Company to elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The Company adopted the standard for the year end December 31, 2025 for fiscal year reporting. The standard is to be applied on a prospective basis. The standard did not have an impact on the Company’s current credit loss measurement process, and thus no material impact on the Company’s financial results.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures . The ASU requires additional disclosure in the notes the financial statements of specified information about certain expenses such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation and other expenses which are presented in the face of the income statement within continuing operations. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact this new standard will have on the related disclosures in the consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Targeted Improvements to the Accounting for Internal-Use Software . This ASU modifies the criteria for when software costs may be capitalized by eliminating consideration of software project development stages and by enhancing guidance for the "probable-to-complete" threshold. This ASU is effective for our annual reports beginning in 2028, and interim periods within those annual reporting periods. Early adoption of this ASU is permitted. We are currently evaluating the impact that adoption of this ASU may have on our financial statements and disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements , which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting , and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact of adopting this standard and does not expect it to have a material impact on its financial statements.
As of December 31, 2025, there are no additional ASUs issued and not yet adopted that are expected to have a material impact on the Company's financial statements and related disclosures.
Note 3. Fair Value Measurements
The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3—Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety is based on the lowest-level input that is significant to the fair value measurement in its entirety.
The following tables set forth by level within the fair value hierarchy our assets and liabilities that are measured on a recurring basis and reported at fair value as of December 31, 2025 and 2024.
As of December 31, 2025
Level 1
Level 2
Level 3
Total
Cash and Cash Equivalents:
Money market funds
U.S. Treasury debt securities
Long-term debt:
Term Loans
Other noncurrent liabilities:
Common stock warrants
As of December 31, 2024
Level 1
Level 2
Level 3
Total
Cash and Cash Equivalents:
Money market funds
U.S. Treasury debt securities
Long-term debt:
Term Loans
Other noncurrent liabilities:
Common stock warrants
The Company's investments in U.S. treasury securities are classified as held-to-maturity and all have been purchased with original maturities of 90 days or less. Held-to-maturity debt securities are recorded at amortized cost in the financial statements. The following tables set forth the unrealized gains on held-to-maturity U.S. treasury securities as of December 31, 2025 and 2024.
As of December 31, 2025
Amortized Cost
Unrealized Gains
Unrealized Losses
Aggregate Fair Value
U.S. Treasury Securities
As of December 31, 2024
Amortized Cost
Unrealized Gains
Unrealized Losses
Aggregate Fair Value
U.S. Treasury Securities
The Company measures the fair value of outstanding debt for disclosure purposes on a recurring basis. As of December 31, 2025 and 2024, total debt of $ 40.3 million and $ 39.4 million is reported at amortized cost, respectively. This outstanding debt is classified as Level 2 as it is not actively traded. The amortized cost of the outstanding debt approximates the fair value.
The Company measures the fair value of the unissued common stock warrants that may be issued pursuant to the Hercules Loan Agreement (as defined in Note 5, Debt) using the Black-Scholes option pricing method. See Note 5, Debt, and Note 7, Stockholders' Equity, for additional information regarding the common stock warrants.
The financial statements as of December 31, 2025 and 2024, do not include any assets or liabilities that are measured at fair value on a nonrecurring basis.
Note 4. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consist of the following (in thousands):
As of December 31,
Tools and equipment
Computer equipment and software
Furniture and fixtures
Leasehold improvements
Construction in process
Less: Accumulated depreciation
Property and equipment, net
Depreciation expense was $ 0.3 million and $ 0.5 million for the years ended December 31, 2025 and 2024 respectively.
Accrued and Other Current Liabilities
Accrued and other current liabilities consist of the following (in thousands):
As of December 31,
Accrued expenses
Current portion of lease liabilities
Short term interest payable
Other accrued liabilities
Total accrued and other current liabilities
Other Noncurrent Liabilities
Other noncurrent liabilities consist of the following (in thousands):
As of December 31,
Noncurrent portion of lease liabilities
Other noncurrent liabilities
Total other noncurrent liabilities
Note 5. Debt
Hercules Capital Loan Agreement
In January 2024, the Company entered into a Loan and Security Agreement (the "Hercules Loan Agreement") with Hercules Capital, Inc ("Hercules") and certain of its affiliates (collectively with Hercules, the "Lenders"), which provides for a maximum $ 65.0 million credit facility. An initial tranche of $ 35.0 million (the “Initial Loan”) was funded under the Hercules Loan Agreement on January 22, 2024, which was used to discharge the Company's indebtedness under its prior secured credit facility (the "Prior Loan Agreement") with its prior lenders. On December 10, 2024, the Company consummated the drawdown of the $ 5.0 million Tranche I(b) Term Loan Advance (the "Tranche I(b) Loan") under the Hercules Loan Agreement. Upon consummation of the Tranche I(b) Loan, the aggregate principal amount of borrowings under the Hercules Loan Agreement was $ 40.0 million.
In addition to the Initial Loan and the Tranche 1(b) Loan, the Hercules Loan Agreement provides additional tranches available to the Company (the “Tranche Loans,” and together with the Initial Loan and the Tranche I(b) Loan, the “Term Loans"). Tranche 2 originally consisted of $ 10.0 million available to draw through September 15, 2025, contingent upon the achievement of certain performance milestones prior to June 30, 2025 which were not met and thus Tranche 2 was not available to the Company. Tranche 3 consisted of $ 15.0 million available to draw through the interest only period in increments of $ 5.0 million, subject to the sole approval of Hercules' investment committee.
The Hercules Loan Agreement originally provided for a maturity date of July 1, 2028 , with an interest only period running for the first 30 months of the agreement term, extendable for an additional six months for a total of 36 months upon the achievement of certain performance milestones prior to June 30, 2025. These performance milestones were not met by the June 30, 2025 deadline, and thus the six-month extension of the interest only period was not available to the Company.
In September 2025, the Company and Hercules entered into a third amendment (the “Amendment”) to the Hercules Loan Agreement, pursuant to which the expiration of the interest-only period under the agreement was extended by an additional six-months, from August 1, 2026 to February 1, 2027 . The Amendment also amended the Hercules Loan Agreement to reallocate an undrawn and unavailable $ 10.0 million tranche by increasing the amount available to draw through the interest only period from $ 15.0 million to $ 25.0 million in minimum increments of $ 5.0 million, subject to the sole approval of Hercules’ investment committee, maintaining the maximum $ 65.0 million credit facility.
The Term Loans accrue interest at a floating annual rate equal to the greater of 10.35 % or the Wall Street Journal prime rate plus 2.35 %, with the interest rate equal to 10.35 % at December 31, 2025. The final payment fee is set at 5.95 % of the funded balance, which is recognized as a debt discount and is being accreted into the amortization of debt issuance costs using the effective interest rate method over the term of the loan.
In conjunction with the funding of the Initial Loan, the Company issued warrants to the Lenders to purchase up to an aggregate of 135,686 shares of its common stock at an exercise price of $ 5.159 per share, which were recorded and classified as equity. On December 10, 2024, upon the funding of the Tranche I(b) Loan, the Company issued additional warrants to the Lenders to purchase 26,095 shares of its common stock at an exercise price of $ 3.83 per share. Each warrant is exercisable for a period of seven years from the date of issuance. If the additional Term Loans are funded, the Company will be obligated to issue to the Lenders additional warrants to purchase common stock in an amount equal to 2.0 % of the funded balance of each tranche loan under the Hercules Loan Agreement, divided by the exercise price on the date the Company draws funds under such tranche loan. The exercise price will be calculated using the five-day volume-weighted average stock price as of such date. See Note 7, Stockholders' Equity, for additional information regarding these common stock warrants.
The obligations under the Hercules Loan Agreement are guaranteed by the Company and its future subsidiaries, subject to exceptions for certain foreign subsidiaries. The obligations under the agreement are secured by substantially all of the Company's assets, including its material intellectual property. Additionally, the Company is subject to customary affirmative and negative covenants, including covenants that limit or restrict the ability of the Company to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. The Company is also subject to certain minimum cash and revenue covenants under the Hercules Loan Agreement. The Company was in compliance with all covenants as of December 31, 2025.
While any Term Loans remain outstanding under the Hercules Loan Agreement, the Company is required to use commercially reasonable efforts to grant to the Lenders the option to invest up to $ 3.0 million in the Company’s next round of equity financing, if any, that is broadly marketed to multiple investors on the same terms, conditions and pricing offered to investors in such subsequent equity financing.
Maturities Schedule
Long-term and short-term debt, as of December 31, 2025 and 2024 was as follows (in thousands):
As of December 31,
Term Loans
Total principal payments due
Unamortized discount, debt issuance costs, and final fee due at maturity
Total amounts outstanding
Less: Current portion, net of discount
Long-term debt
The repayment schedule relating to the principal amount of the Term Loans as of December 31, 2025, is as follows (in thousands):
Amount
Total principal payments
Final fee due at maturity
Total repayments
Note 6. Commitments and Contingencies
Operating Lease Obligations
The Company leases its corporate headquarters in Menlo Park, California. The lease commenced in August 2021, and the Company has since signed two amendments to extend the term of the lease. The second amendment, executed in January 2026, extended the lease term from November of 2026 until December of 2028. The lease ROU asset and corresponding lease liability were estimated using a weighted-average incremental borrowing rate (“IBR”) of 11.40 %. Total base rent for the amended 26 months under the amended lease agreement is approximately $ 1.1 million.
As of December 31, 2025, the weighted average remaining lease term for the Company's leases was 0.8 years.
Operating lease expense and supplemental cash flow information related to operating leases for the years ended December 31, 2025 and 2024 were as follows (in thousands):
Years Ended December 31,
Operating lease expense
Cash paid for operating leases
New operating lease assets obtained in exchange for
operating lease liabilities
Aggregate future minimum lease payments at December 31, 2025 under these noncancelable operating leases were as follows (in thousands):
As of December 31,
Total future minimum lease payments
Less: imputed interest
Present value of future minimum lease payments
Less: current portion of operating lease liability
Operating lease liabilities - noncurrent
Legal Proceedings
On September 16, 2021, the Company filed suit in the U.S. District Court for the District of Delaware (C.A. No. 1:21-cv-01317) (the “Court”) alleging that Ivantis, Inc. (“Ivantis”) directly and indirectly infringes the Company’s U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 by making, using, selling, and offering for sale the Hydrus® Microstent. The Company’s complaint seeks money damages and injunctive relief. On January 24, 2022, Ivantis asserted counterclaims requesting declaratory judgments that the Company's asserted patents-in-suit are not infringed and/or invalid. On August 1, 2022, the Company filed an amended complaintalleging that Alcon Inc., Alcon Vision, LLC and Alcon Research, LLC (collectively, “Alcon”) infringe the four originally asserted patents by making, using, selling, and offering for sale the Hydrus® Microstent, and that all defendants also infringe U.S. Patent No. 11,389,328. The defendants asserted counterclaims requesting declaratory judgments that the Company’s asserted patents-in-suit are not infringed and/or are invalid. In September 2022, Ivantis and Alcon filed petitions with the U.S. Patent and Trademark Office (“USPTO”) seeking inter partes review of U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 (IPR2022-01529, IPR2022-01530, IPR2022-01533, IPR2022-01540), each of which the USPTO denied for raising prior art references and invalidityarguments that were cumulative of those previously considered by the USPTO. On April 26, 2024, at the conclusion of a five-day jury trial, the Company was awarded a positive jury trial verdict of $34 million, comprised of $5.5 million in lost profits damages and $28.5 million in royalty damages for commercial sales of the Hydrus® Microstent for the period between its commercial launch through trial. The patents at issue were U.S. Patent Nos. 8,287,482, 9,370,443, and 11,389,328. In December 2024, the Court heard oral arguments on the parties’ post-trial briefings at the conclusion of which, the Court ordered the parties to engage in non-binding mediation. In March 2025, the Company and Alcon informed the Court that the dispute had not been resolved through mediation and asked the Court to rule on the parties’ post-trial motions and enter a judgement. The judgment has not yet been entered and, once entered, it will be subject to appeal.
In June 2025, Alcon filed petitions with the USPTO for ex parte reexaminations challenging the validity of each of the three patents asserted by the Company at trial, based on prior art patents and publications. The USPTO has granted Alcon’s
requests to initiate the reexaminations. It is possible that the April 2024 jury verdict in the Company’s favor, including its ability to collect past damages and ongoing royalties, may be materially and adversely impacted if the reexamination proceedings result in final, non-appealable judgments of invalidity of the asserted claims of the patents-in-suit before a final, non-appealable judgment is entered by the Court in the patent infringementlitigation or if the asserted claims are amended during the reexamination proceedings. For example, entry of such judgments of invalidity by the USPTO could include vacating the jury verdict and a finding that the patents-in-suit are invalid. The Company is presently unable to predict the outcome of this lawsuit or the ex parte reexamination proceedings or to reasonably estimate the potential financial impact of the lawsuit or ex parte reexamination proceedings.
In addition to the foregoing, from time to time, the Company is subject to legal claims, regulatory matters and contingencies in the ordinary course of business. Accruals for these matters are reflected in the financial statements based on management’s assessment, including the advice of legal counsel, of the expected outcome of these matters. Liabilities for estimated losses are accrued if the potential losses from any legal proceedings, regulatory matters or contingencies are considered probable and the amounts can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount of loss can be reasonably estimated. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to legal claims, regulatory matters and contingencies, and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period.
Except as described above, as of December 31, 2025 the Company was not a party to any legal proceedings, regulatory matters, or other disputes or claims which, if determined adversely, it believes would, individually or taken together, have a material adverse effect on the Company’s business, financial condition, operating results, liquidity, or future prospects.
Indemnification
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.
The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as a director or officer may be subject to any proceeding arising out of acts or omissions of such director or officer in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of December 31, 2025 and 2024.
Strategic Reduction in Force Initiative
In August of 2025, the Company implemented a targeted plan, intended to reduce operating expenses, improve cost efficiencies, and better align its operating structure for long-term profitability growth. In connection with the targeted plan, the Company restructured its global workforce in order to reduce operating expenses. Approximately 45 % of the employees impacted were in general and administrative functions. The remaining employees were split between research and development and clinical functions, as well as employees in sales and sales management functions.
In conjunction with the execution of the targeted plan, the Company incurred approximately $ 2.8 million of expense in the third quarter of 2025. The Company does not anticipate incurring any additional costs in execution of the targeted plan. Of this amount, $ 1.8 million is recorded in selling, general and administrative expenses, with $ 1.0 million recorded in research and development expenses. The expense consists mostly of one-time severance and benefits contribution costs. In addition, the Company recorded a non-cash reversal in stock-based compensation cost of $ 0.6 million in the third quarter of 2025. As of December 31, 2025, $ 0.7 million is recorded in accrued expenses for estimated costs incurred with the execution of the plan. The remaining costs will be paid to impacted employees through August 31, 2026.
Note 7. Stockholders' Equity
Common Stock
The Company’s certificate of incorporation provides for 200,000,000 authorized shares of common stock, par value $ 0.001 per share, and 10,000,000 authorized shares of preferred stock, par value $ 0.001 per share. The holders of common stock are entitled to receive dividends whenever funds are legally available, when and if declared by the board of directors. As of December 31, 2025, no dividends have been declared. Each share of common stock is entitled to one vote.
At December 31, 2025 and 2024, the Company had reserved common stock for future issuances as follows:
December 31,
Common stock available for future grant
Common stock options issued and outstanding
Restricted stock units outstanding
Shares available for future purchase under ESPP
Common stock reserved for issuance upon exercise of outstanding warrants
Common Stock Warrants
On January 22, 2024, in conjunction with the funding of the Initial Loan under the Hercules Loan Agreement, the Company issued common stock warrants to the Lenders to purchase up to an aggregate of 135,686 shares of its common stock at an exercise price of $ 5.159 per share. On December 10, 2024, upon the funding of the Tranche I(b) Loan, the Company issued additional warrants to the Lenders to purchase 26,095 shares of its common stock at an exercise price of $ 3.83 per share. Each warrant is exercisable for up to seven years from the date of issuance. During the year ended December 31, 2024, the fair value of the issued warrants recorded was $ 0.7 million.
If the additional Term Loans are funded, the Company will be obligated to issue to the Lenders additional warrants to purchase common stock in an amount equal to 2.0 % of the funded balance of each tranche loan, divided by the exercise price on the date the Company draws funds under such tranche loan, which is referred to as the issuance date. The exercise price will be calculated using the five-day volume-weighted average stock price as of the issuance date.
The unissued warrants do not meet the requirements for classification as equity and are recorded as other noncurrent liabilities in the consolidated financial statements. As of both December 31, 2025 and 2024, the fair value of the unissued warrants recorded was less than $ 0.1 million.
Note 8. 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 grant of stock options to employees and nonemployees of the Company.
In July 2021, the board of directors and stockholders adopted and approved the 2021 Incentive Award Plan, (the “2021 Plan”). Under the 2021 Plan, the Company has the ability to issue incentive stock options ("ISOs"), nonqualified stock options ("NSOs"), stock appreciation rights, dividend equivalent rights, restricted stock awards, and restricted stock units ("RSUs").
Stock options under the 2021 Plan can typically be granted for periods of up to ten years. For stock options granted to a grantee who, at the time the option is granted, owned stock representing more than 10% of the voting power of all classes of stock of the Company (or any parent or subsidiary of the Company), the term may be up to five years. The ISOs and NSOs are granted at a price per share not less than the fair value at the date of grant. The exercise price of a stock option granted to a 10% stockholder shall be not less than 110% of the grant date fair value of the shares. Stock options granted to new hires generally vest over a four-year period, with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting in 36 equal monthly installments thereafter. Stock options granted as merit awards generally vest in 48 equal monthly installments following the grant date.
RSUs are share awards that entitle the holder to receive shares of common stock upon vesting and settlement of the awards. RSUs granted to employees generally vest over a four-year period with straight-line vesting in equal amounts, either in annual or quarterly installments. RSUs granted to newly hired non-executive employees generally vest over a four-year
period, with 25 % of the shares vesting on the first anniversary of the grant date and the remaining shares vesting in 12 equal quarterly installments thereafter. RSUs granted to newly hired executive employees generally vest over a four-year period, with shares vesting in four (4) equal annual installments. RSUs granted to executive and non-executive employees as merit awards generally vest in 16 equal quarterly installments following the grant date.
The Company initially reserved 5,200,000 shares of common stock for future issuance under the 2021 Plan. This initial reserve is subject to annual increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031. These annual increases are equal to the lesser of (i) 5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Company's board of directors (the "Board"), subject to certain limitations. Pursuant to the evergreen provision, the initial share reserve was increased by 2,546,899 and 2,456,568 shares on January 1, 2025 and 2024, respectively.
At December 31, 2025 and 2024, there were 7,876,575 shares and 5,931,302 shares, respectively, of common stock available for issuance under the 2021 Plan.
The 2011 Plan was superseded by the 2021 Plan at the time of the initial public offering of the Company's common stock, which closed on July 15, 2021, and no further grants have been made under the 2011 Plan from the date the 2021 Plan became effective.
Stock Option Awards
The following table summarizes stock option activity under the 2011 and 2021 Plans:
Number of
Shares
Weighted-Average Exercise Price
Weighted-Average
Contractual
Term (in years)
Aggregate Intrinsic Value
(in thousands)
Outstanding, December 31, 2024
Grants
Forfeited/cancelled
Exercised
Outstanding, December 31, 2025
Vested and exercisable as of December 31, 2025
The Company did not grant any stock option awards during the year ended December 31, 2025. The weighted-average grant-date fair values of stock options granted during the year ended December 31, 2024 was $ 2.71 per share. The aggregate intrinsic value of stock options exercised, calculated as the difference between the exercise prices of the underlying stock options and the estimated fair value of the common stock on the date of exercise, was $ 2.9 million during the year ended December 31, 2025.
During the years ended December 31, 2025 and 2024, the Company recorded stock-based compensation expense of $ 4.1 million and $ 7.8 million, respectively, related to stock options. As of December 31, 2025, the unrecognized stock-based compensation of unvested stock options was $ 0.8 million, which is expected to be recognized over a weighted-average period of 0.9 years.
Determination of Fair Value
The grant date fair value of stock options granted was calculated via the Black-Scholes option-pricing model using the following weighted average assumptions:
Years ended December 31,
Expected term (in years)
Expected volatility
Risk-free interest rate
Dividend yield
Restricted Stock Units
RSUs are share awards that entitle the holder to receive shares of common stock upon vesting and settlement. RSUs cannot be transferred, and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. RSUs granted generally vest over a four-year period with straight-line vesting in equal amounts
(either in annual or quarterly installments), provided the employee remains continuously employed with the Company. The fair value of an RSU is equal to the closing price of the Company’s common stock on the grant date.
The following table summarizes RSU activity under the 2021 Plan:
Number of
Shares
Weighted-Average Grant Date Fair Value Per Share
Outstanding, December 31, 2024
Grants
Forfeited/cancelled
Vested
Outstanding, December 31, 2025
During the years ended December 31, 2025 and 2024, the Company recorded stock-based compensation of $ 8.6 million and $ 8.7 million, respectively, related to RSUs. As of December 31, 2025, the unrecognized stock-based compensation associated with unvested RSUs was $ 13.7 million, which is expected to be recognized over a weighted-average period of 2.4 years.
Employee Stock Purchase Plan
In July 2021, the board of directors and stockholders approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP permits participants to purchase shares of common stock at a discount through payroll deductions of up to a specified percentage of their eligible compensation. Shares of common stock are offered during two offering periods annually, each running for nine months, with the first offering period typically beginning in the second quarter, and the second offering period typically beginning in the fourth quarter. The purchase of shares for participants in the ESPP occurs at the conclusion of each offering period.
The Company initially reserved 850,000 shares of common stock for future issuance under the ESPP. This initial reserve is subject to annual increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031. These annual increases shall be equal to the lesser of (i) 1% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Board, subject to certain limitations. Pursuant to the evergreen provision, the initial share reserve was increased by 509,379 and 491,313 shares on January 1, 2025 and 2024, respectively.
As of December 31, 2025 and 2024, there were 1,880,211 shares and 1,631,076 shares of common stock available for issuance under the ESPP.
For the year ended December 31, 2025, participants in the ESPP purchased 260,244 shares for a total of $ 0.8 million. As of December 31, 2025, the Company has collected payroll withholdings of $ 0.1 million in the current offering period for the purchase of shares under the ESPP. For the years ended December 31, 2025 and 2024, the Company recorded stock-based compensation expense associated with the ESPP of $ 0.4 million and $ 0.6 million, respectively.
The fair value of shares to be issued under the ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the years ended December 31, 2025 and 2024, respectively:
Years ended December 31,
Expected term (in years)
Expected volatility
Risk-free interest rate
Dividend yield
Stock-Based Compensation
The following is a summary of stock-based compensation expense by function (in thousands):
Years Ended December 31,
Cost of goods sold
Research and development
Selling, general and administrative
Total stock-based compensation expense
Note 9. Net Loss per Share Attributable to Common Stockholders
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. As the Company reported a net loss for the years ended December 31, 2025 and 2024, basic net loss per share is the same as diluted net loss per share as the inclusion of potentially dilutive shares would have been antidilutive if included in the calculation.
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
Years Ended December 31,
Numerator:
Net loss attributable to common stockholders
Denominator:
Weighted-average shares of common stock
outstanding—basic and diluted
Net loss per share attributable to common
stockholders—basic and diluted
The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive:
December 31,
Options to purchase common stock
RSUs
Common stock warrants
Total
Note 10. Income Taxes
The components of the Company’s income tax provision for the years ended December 31, 2025 and 2024, consist of the following (in thousands):
Current
December 31,
Federal
Foreign
State
Provision for income taxes
The Company's components of income/(loss) before the provision for income taxes includes domestic loss of $ 38.9 million and $ 51.3 million for the years ended December 31, 2025 and 2024, respectively. Foreign income for the years ended December 31, 2025 and 2024 was $ 0.5 million and $ 0.1 million, respectively.
The Company adopted ASU No. 2023-09, Improvements to Income Tax Disclosure in fiscal year 2025 under the prospective method. Under this new standard, we disclose specific categories in the rate reconciliation and provide additional information for reconciling items of global pretax income.
The reconciliation of taxes at the federal statutory rate to our tax provision for income taxes are as follows for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09:
Year Ended December 31,
Amount
Percent
U.S. federal statutory tax rate
State and local income taxes, net of federal income tax effect
Foreign tax effects
Nontaxable or nondeductible items
Executive compensation
Equity compensation
Meals and entertainment
Tax credits
Research and development tax credits
Change in valuation allowance
Other adjustments
Effective tax rate
The reconciliation of taxes at the federal statutory rate to our tax provision for income taxes for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
Tax at statutory federal rate
State tax, net of federal benefit
Research and development credit
Compensation
Change in valuation allowance
Other
Effective tax rate
Deferred tax assets and liabilities reflect the net tax effect of temporary differences between carrying value of assets and liabilities for financial reporting purposes and the tax basis of these assets and liabilities as measured by income tax law. The income tax effect of temporary differences that give rise to deferred tax assets and (liabilities) consist of the following (in thousands):
December 31,
Deferred tax assets:
Net operating loss carryforwards
Deferred compensation
Research and development credits
Disallowed interest expense carryover
Fixed assets
Operating lease liability
Provision for bad debt
Capitalized research and development expenses
Other
Gross deferred tax assets
Less: Valuation allowance
Deferred tax assets, net of valuation allowance
Operating lease right-of-use assets
Deferred tax liabilities:
Net deferred tax assets
Internal Revenue Code (IRC) Section 382 limits the use of federal net operating losses and income tax credit carryforwards in certain situations where changes occur in stock ownership of a company. If the Company should have an ownership change of more than 50% of the value of the Company’s capital stock, utilization of the carryforwards could be restricted.
A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax assets will not be realized. As of each reporting date, the Company's management considers all evidence, both positive and negative, that could impact management's view with regard to future realization of deferred tax assets. As of December 31, 2025, 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. At December 31, 2025 and 2024, the Company has a net operating loss carryforward for federal income tax purposes of approximately $ 323.3 million and $ 269.2 million, respectively. At December 31, 2025 and 2024, the Company has a net operating loss carryforward for state income tax purposes of approximately $ 266.9 million and $ 245.0 million, respectively. 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 $ 308.5 million can be carried forward indefinitely but is subject to an 80 % taxable income limitation. 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, 2025 and 2024, the Company has federal research and development income tax credit carryforwards of approximately $ 2.8 million and $ 2.8 million, respectively. As of December 31, 2025 and 2024, the Company has state research and development income tax credit carryforwards of approximately $ 2.4 million and $ 2.3 million, respectively. The Federal income tax credits begin to expire in 2033. The California research and development credits can be carried forward indefinitely. The total amount of uncertain tax positions ("UTP") on research and development tax credits is $ 1.2 million and $ 1.3 million as of December 31, 2025 and 2024, respectively.
As of December 31, 2025 and 2024, the Company has business interest expense carryforwards of $ 0.8 million and $ 0.0 million, respectively. Business interest expense can be carried forward indefinitely.
The following table summarizes the activity related to the unrecognized tax benefits (in thousands):
December 31,
Unrecognized tax benefits at the beginning of the year
Additions based on tax positions related to the current year
Reductions for tax positions of prior years
Unrecognized tax benefits at the end of the year
The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception. Due to the history of net operating losses, the Company’s federal and state tax returns remain open to examination by the tax authorities .
Note 11. Segment Information
The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), manages the business through two operating segments, consistent with how the Company’s Chief Executive Officer: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions, and (iii) designates responsibilities of his direct reports. The Company’s operating segments, which were renamed in 2025, and which also qualify as reportable segments include: (i) Interventional Glaucoma (formerly “Surgical Glaucoma”) and (ii) Interventional Dry Eye (formerly “Dry Eye”). The change in names of the operating segments has no impact on how the CODM manages the business. These segments are generally determined based on the decision-making structure and the grouping of similar products and services.
The Company’s CODM uses segment gross profit to assess the operating performance and make resource allocation decisions for each of its segments. Segment gross profit represents revenue reduced by cost of goods sold within each of the operating and reportable segments. The CODM reviews a monthly executive reporting package based on consolidated results of the Company when making decisions about allocating resources and assessing performance. The CODM evaluates actual segment performance to budget and forecast, including monthly sales performance, when allocating capital and personnel.
The Company does not have any intercompany transactions between segments that require elimination. The CODM does not review operating expenses separately for its segments, as the Company does not allocate operating expenses, with many operating costs shared between the segments, and therefore, this is not considered when allocating resources and
assessing performance. The Company evaluated the monthly executive reporting package and did not identify any significant or other expenses for disclosure that are not already presented.
In reviewing and assessing segment performance and managing operations, management does not review segment assets. Substantially all of the Company’s revenue is generated from sales in the United States.
The following table summarizes select operating results information for each reportable segment (dollars in thousands):
Years Ended December 31,
Revenue
Interventional Glaucoma
Interventional Dry Eye
Total
Cost of goods sold
Interventional Glaucoma
Interventional Dry Eye
Total
Gross profit
Interventional Glaucoma
Interventional Dry Eye
Total
Operating expense
Investment income
Interest expense
Loss on debt extinguishment
Other expense, net
Loss before income tax
Note 12. Subsequent Events
U.S. Tariff Update
On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on the Company's business. The Company continues to monitor and evaluate these developments and assess their potential impact on the Company’s business, financial condition, and results of operations.
It em 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
I tem 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation and supervision of our principal executive officer and our principal financial and accounting officer, evaluated our disclosure controls and procedures. The term 'disclosure controls and procedures,' as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive officer, and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.
Based on this evaluation, our principal executive officer and principal financial and accounting officer concluded that as of December 31, 2025, 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. “Internal control over financial reporting,” as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, means a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management, with the participation and supervision of our principal executive officer and our principal financial and accounting officer, assessed the effectiveness of our internal control over financial reporting.
In making this assessment, our management used the criteria set forth in Internal Control – Integrated Framework (2013) as issued by the Committee of Sponsoring Organizations of the Treadway Commission (commonly referred to as COSO). Based on this assessment as of the end of the period covered by this Annual Report on Form 10-K, our management concluded that our internal control over financial reporting was effective based on those criteria.
This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption established by SEC rules for emerging growth companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rule 13a-15(d) of the Exchange Act during the fiscal year ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitation on Effectiveness of Controls and Procedures
In designing and evaluating our controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In assessing whether our disclosure controls and procedures were effective at a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There are inherent limitations to the effectiveness of any system of controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. 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.
Certifications
The certifications of our principal executive officer and principal financial and accounting officer required by Rule 13a-14(a) of the Exchange Act are filed as Exhibit 31.1 and Exhibit 31.2, and furnished as Exhibit 32.1 and Exhibit 32.2, respectively, to this Annual Report on Form 10-K. The disclosure in this Item 9A should be read in conjunction with such
certifications for a more complete understanding of our disclosure controls and procedures and internal control over financial reporting.
It em 9B. Other Information
Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications
During the three months ended December 31, 2025, none of our directors or officers adopted , terminated , or modified a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
It em 10. Directors, Executive Officers and Corporate Governance.
Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics (our “Code of Business Conduct and Ethics”), which applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our Code of Business Conduct and Ethics is available on our website at www.sightsciences.com in the “Corporate Governance” section of the “Investors” page. In addition, we intend to post on our website all disclosures that are required by law concerning any amendments to, or waivers from, any provisions of our Code of Business Conduct and Ethics. The inclusion of our website address in this Annual Report on Form 10-K does not include or incorporate by reference the information on the website into this Annual Report on Form 10-K.
The remaining information required by this item will be included in our definitive proxy statement for our 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”), expected to be filed with the SEC no later than 120 days after December 31, 2025 and is incorporated herein by reference.
It em 11. Executive Compensation.
The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference.
It em 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference.
It em 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference.
Ite m 14. Principal Accountant Fees and Services.
The information required by this item will be included in the 2026 Proxy Statement and is incorporated herein by reference.
PART IV
It em 15. Exhibits, Financial Statement Schedules.
(1) Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
Financial Statement Schedules
All financial statement schedules are omitted because they are not applicable or the amounts are immaterial or the required information is presented in the financial statements and notes thereto.
Exhibits: Exhibit Index has been submitted as a separate section of this Annual Report on Form 10-K.
Exhibits:
Exhibit Index has been submitted as a separate section of this Annual Report on Form 10-K.
Not applicable
It em 16. Form 10-K Summary
None.
Exhibit Index
Exhibit
Number
Exhibit
Description
Form
File No.
Exhibit
Filing Date
Filed/ Furnished Herewith
Restated Certificate of Incorporation of Sight Sciences, Inc.
Amended and Restated Bylaws of Sight Sciences, Inc.
Third Amended and Restated Investors' Rights Agreement, dated November 23, 2020, as amended
Specimen Stock Certificate evidencing the shares of common stock
Description of Capital Stock
Form of Warrant
Sight Sciences, Inc. 2011 Stock Incentive Plan, as amended, and U.K. sub-plan and forms of agreements thereunder
Sight Sciences, Inc. 2021 Incentive Award Plan and forms of option agreements thereunder
Sight Sciences, Inc. 2021 Incentive Award Plan Sub-Plan for UK Employees and forms of Agreements thereunder
Sight Sciences, Inc. Non-Employee Director Compensation Program
Sight Sciences, Inc. 2021 Employee Stock Purchase Plan
Form of Indemnification Agreement for Directors and Officers
Employment Agreement between Sight Sciences, Inc. and Paul Badawi, dated July 7, 2021
Employment Agreement between Sight Sciences, Inc. and David Badawi, M.D., dated July 7, 2021
Employment Agreement between Sight Sciences, Inc. and Jeremy Hayden, dated July 7, 2021
Amended and Restated Employment Agreement between Sight Sciences, Inc. and Alison Bauerlein, dated November 5, 2025
Employment Agreement between Sight Sciences, Inc. and Brenton Taylor, effective as of November 4, 2024
Employment Agreement between Sight Sciences, Inc. and James Rodberg, effective as of November 5, 2025
Multi-Tenant Space Lease between Sight Sciences and Deerfield Campbell, LLC, dated February 5, 2021.
First Amendment to Multi-Tenant Space Lease between Sight Sciences and Deerfield Campbell, LLC, dated December 15, 2023
Second Amendment to Multi-Tenant Space Lease between Sight Sciences and Deerfield Campbell, LLC, dated January 29, 2026
Supply Agreement between Sight Sciences, Inc. and Peter's Technology (Suzhou CO., LTD., dated January 14, 2021
Amendment #1 to Supply Agreement between Sight Sciences, Inc. and Peter's Technology (Suzhou) CO. LTD., dated January 28, 2022
Amendment #2 to Supply Agreement between Sight Sciences, Inc. and Peter's Technology (Suzhou) CO. LTD., dated July 19, 2022
Loan and Security Agreement, by and among Sight Sciences, Inc., and certain affiliates of Hercules Capital Inc., and Hercules Capital Inc., dated January 22, 2024
Second Amendment to Loan and Security Agreement, by and among Sight Sciences, Inc., certain affiliates of Hercules Capital, Inc., and Hercules Capital, Inc. dated June 17, 2025
Third Amendment to Loan and Security Agreement, by and among Sight Sciences, Inc., certain affiliates of Hercules Capital, Inc., and Hercules Capital, Inc., dated September 30, 2025
Sight Sciences, Inc. Insider Trading Compliance Policy
Subsidiaries of Sight Sciences, Inc.
Consent of Deloitte & Touche LLP
Power of Attorney
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350 , as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350 , as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
Sight Sciences, Inc. Policy for Recovery of Erroneously Awarded Compensation
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished herewith.
# Indicates a management contract or compensatory plan or arrangement.
+ Portions of this exhibit are redacted in accordance with Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish an unredacted copy of such exhibit, or a copy of any omitted schedule or exhibit, to the SEC upon request.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized .
SIGHT SCIENCES, INC.
Date: March 4, 2026
/s/ James Rodberg
James Rodberg
Chief Financial Officer (Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
