Second Sight Medical Products Inc (EYES) Reports Third Quarter 2015 Financial Results


Second Sight Medical Products Inc (NASDAQ:EYES), a developer, manufacturer and marketer of implantable visual prosthetics to provide some useful vision to blind patients, today reported financial results for the three-month and nine-month periods ended September 30, 2015.

Highlights of and Subsequent to the Third Quarter 2015:

  • Net revenue increased by 265% to $2.2 million in the third quarter of 2015, compared to $609,000 in the prior year period;
  • 15 Argus® II systems implanted worldwide, compared to five during the prior year period;
  • Gross margin improved to 66% during the quarter;
  • Added two active hospitals and ambulatory surgery centers for a total of 31 worldwide;
  • Expanded Medicare coverage to three Medicare Administrative Contractors (MACs) with the addition of favorable coverage for 10 new states fromNational Government Services announced today;
  • Including the 10 new states, coverage now spans a total of 16 states (Connecticut, Illinois, Kentucky, Maine, Massachusetts, Minnesota, New Hampshire, New York, North Carolina, Ohio, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, and Wisconsin); and
  • Successfully implanted second subject in our Dry Age-Related Macular Degeneration (AMD) clinical trial in the U.K; identified three remaining subjects with surgeries scheduled before the end of the year.

“This was our fourth consecutive quarter of year-over-year growth since our IPO, highlighted by steady growth in U.S. implants, increasing revenue and expanding margins. Our reimbursement efforts are progressing. We secured our third MAC and now have favorable coverage in four out of 12 MAC jurisdictions, spanning 16 states. As we add to the increasing body of published evidence supporting the safety and benefits of the Argus II implant, we expect to make further inroads with the remaining MACs and private insurance companies who continue to issue favorable coverage decisions on a case by case basis,” said Will McGuire, President and CEO of Second Sight.

“Our goal is to develop superior products, deliver exceptional user experiences and provide the necessary infrastructure to support commercial success. We continue to advance our research and development programs to further enhance the Argus II, explore its potential in new indications such as AMD and leverage the technology to potentially treat patients with nearly all forms of blindness. As the leader in an emerging industry, we are focused on building a solid foundation for sustained growth. We are confident that executing our strategic plan will deliver long-term value to customers and shareholders alike,” concluded McGuire.

Third Quarter 2015 Financial Results

Total revenue was $2.2 million for the third quarter of 2015, up 265% compared with $609,000 in the third quarter of 2014. The increase was primarily due to a higher number of implanted Argus II retinal prostheses in the third quarter of 2015 versus the year-ago quarter. There were 15 Argus II retinal prostheses implanted in the third quarter of 2015, compared to five for the third quarter of 2014. In the third quarter of 2015, the Company collected and recognized approximately $400,000 in net deferred revenue related to implants performed in prior quarters.

Gross profit was $1.5 million in the third quarter of 2015, compared to $193,000 in the third quarter of 2014. The improvement reflects the higher levels of production to meet demand, which allowed Second Sight to lower the overall cost per unit by spreading manufacturing overhead across more units.

Total operating expenses in the third quarter of 2015 were $6.1 million, compared with $5.8 million in the third quarter of 2014, reflecting the Company’s increased investment in sales and marketing to support unit growth, as well as costs associated with being a publicly-traded company partially offset by a decrease in research and development expense due to the utilization of $778,000 in grant funding during the third quarter of 2015.

Operating loss in the third quarter of 2015 was $4.7 million, compared to an operating loss of $5.6 million for the same period last year.

Net loss in the third quarter of 2015 was $4.7 million, or $0.13 per share, compared with a net loss of $7.6 million, or $0.31 per share, in the prior year quarter. The Company recorded non-cash charges of $942,000 during the third quarter of 2015, compared with non-cash charges of $3.0 million during the third quarter of 2014.

Non-GAAP adjusted net loss in the third quarter of 2015, excluding non-cash expenses, was $3.7 million, or a non-GAAP net loss of $0.10 per share, compared to a non-GAAP adjusted net loss of $4.7 million, or $0.19 per share in the third quarter of 2014.

Nine Months Ended September 30, 2015 Financial Results

For the nine months ended September 30, 2015, total revenue was $6.6 million in 2015, compared to $1.9 million in 2014. The increase reflects volume growth in the number of implanted Argus II retinal prostheses.

Gross profit during the nine months ended September 30, 2015 was $3.0 million, versus a gross loss of $259,000 in 2014. The improvement is primarily due to increased sales of implants.

Total costs and operating expenses during the first nine months of 2015 were $17.5 million versus $15.4 million during the same period in 2014. This increase is primarily due to additional investments in the business, as well as costs associated with Second Sight being publicly-traded. During the first nine months of 2015, the Company utilized $1.3 million of grant funding to offset higher research and development spending.

Operating loss in the first nine months of 2015 was $14.6 million, compared to an operating loss of $15.7 million in 2014.

Net loss for the nine months ended September 30, 2015 was $14.5 million, or $0.41 per share, compared with a net loss of $21.6 million, or $0.91 per share, in the prior year period. Non-GAAP adjusted net loss for the nine months ended September 30, 2015, excluding non-cash expenses, was $12.4 million, or a loss of $0.35 per share compared with non-GAAP adjusted net loss of $13.8 million and $0.59 per share in the prior year period.

As of September 30, 2015, Second Sight had $21.7 million in cash and cash equivalents and no debt.

2015 Objectives

  • Double the number of Centers of Excellence, over 2014, globally to drive further patient adoption.
  • Secure coverage with additional Medicare Administrative Contractors across the U.S. and with other payers, in addition to other key markets globally.
  • Initiate and complete enrollment for Age-related Macular Degeneration Feasibility Clinical Trial.
  • Develop and test a pre-clinical Orion™ I Visual Cortical Prosthesis.
  • Make significant advancements for the Argus II software upgrade scheduled for deployment in 2016.
  • Further expand the patent estate around new products and future development discoveries. (Original Source)

Shares of Second Sight Medical Products are up 7.36% to $6.71 in after-hours trading. EYES has a 1-year high of $24.02 and a 1-year low of $5.22. The stock’s 50-day moving average is $7.62 and its 200-day moving average is $11.60.

On the ratings front, Rodman & Renshaw analyst Amit Dayal reiterated a Buy rating on EYES, with a price target of $21, in a report issued on July 22. The current price target implies an upside of 236.0% from current levels. According to TipRanks.com, Dayal has a total average return of -32.2%, an 8.3% success rate, and is ranked #3743 out of 3808 analysts.

Second Sight Medical Products Inc develops, manufactures and markets implantable prosthetic devices that can restore some functional vision to patients blinded by outer retinal degenerations, such as Retinitis Pigmentosa.