RXST - RXSIGHT: ENVISIONING A BRIGHT FUTURE
RXSIGHT: ENVISIONING A BRIGHT FUTURE
10 JUL RXSIGHT: ENVISIONING A BRIGHT FUTURE
RxSight, Inc. (NASDAQ: RXST) is a commercial-stage ophthalmic medical device company that provides high-quality customized vision to patients following cataract surgery.
The Company and its Products
The Company is known for its RxSight® Light Adjustable Lens system, comprised of the RxSight Light Adjustable Lens® (LAL®), RxSight Light Delivery Device (LDD™), and accessories – this is the first and only commercially available intraocular lens (IOL) technology that can be adjusted after surgery enabling doctors to customize and deliver high-quality of vision to patients after cataract surgery.
RxSight, Inc. (NASDAQ: RXST)
Market Cap: $1.06B; Current Share Price: $31.22
Data by YCharts
LAL is a premium intraocular lens (IOL) made of proprietary photosensitive material that changes shape in response to specific patterns of ultraviolet (UV) light generated by the Company’s LDD.
RxSight designed the RxSight system to address the shortcomings of competitive premium IOL technologies and provide a solution that doctors can trust to improve visual outcomes and achieve high patient satisfaction.
Competitive premium IOLs require patients to specify their visual priorities before surgery and be willing to accept various optical trade-offs associated with those choices. Once a patient has selected a competitive premium IOL, the surgeon must rely on a series of preoperative diagnostic tests and predictive formulae to choose the appropriate lens power. If the doctor’s prediction is suboptimal, the patient may experience suboptimal results that could necessitate a subsequent corneal refractive procedure or other compromises to reach vision targets.
In contrast, with the RxSight system, the surgeons implant the LAL as they would in any other cataract procedure, determine refractive error with patient input several weeks following surgery, and then use the LDD to modify the LAL with the precise visual correction needed to achieve the patient’s desired vision outcomes. It can be said that the RxSight system provides doctors and patients increased confidence and peace of mind by eliminating the high-stakes preoperative guesswork typical to competitive premium IOLs and allowing patients to iterate their final vision characteristics with customized post-surgical adjustments.
We’ll discuss key elements that indicate a bright future for the Company.
- Underpenetrated market
A cataract is the loss of transparency in the eye’s natural lens, which causes blurry or hazy vision and can eventually lead to blindness. Approximately 50% of all individuals develop cataracts by age 60, usually in both eyes, and prevalence increases with age.
Among the world’s most commonly performed procedures, cataract surgery involves removing the cloudy natural lens and replacing it with a clear IOL. Before surgery, patients can opt for either a spherical monofocal IOL, which usually results in improved vision but requires glasses for best vision, or a premium IOL, which also corrects for astigmatism and presbyopia, thereby reducing spectacle dependence.
In the United States, Medicare and private insurers typically cover the total cost of spherical IOL procedures. In contrast, premium IOL procedures require patients to pay an incremental out-of-pocket fee, typically ranging from $1,000 to $4,000 per eye, depending on the specific premium IOL used. In the United States, the world’s most significant premium IOL market, 2022 premium procedures represented about 25% of all cataract procedures and generated approximately $760 million in revenue, a figure that is projected to grow at a 7% compound annual growth rate (CAGR) to reach $1.4B by 2027, according to the Market Scope 2023 IOL Market Report.
RxSight is poised to benefit from this opportunity. It is positioned to lead the expansion of the premium IOL market for three main reasons –
In other words, the RxSight system offers doctors and patients a significantly more reliable approach that can consistently deliver optimal, fully customized visual outcomes with few compromises, ultimately driving broad adoption and establishing it as the standard of care for premium cataract procedures.
- Effective Expansion Strategy
RxSight follows a well-thought-out and comprehensive expansion strategy.
The Company’s commercial efforts began in 2019 and have been primarily focused in the United States, building a “razor and razor blade” business model to drive new customer adoption and ongoing LAL volume growth.
RxSight’s U.S. commercial organization includes a direct sales team of LDD sales personnel, LAL account managers, clinical specialists, field service engineers, and marketing personnel. The Company’s sales efforts are concentrated on the roughly 3,000 U.S. cataract surgeons that perform 70%-80% of all premium IOL procedures. As of December 31, 2022, RxSight had established an installed base of 400 LDDs in ophthalmology practices, and since its inception through December 31, 2022, surgeons have implanted over 42,000 LALs.
The Company plans to grow its business further by
Thus, RxSight is doing its best to leverage its solution’s tangible and compelling benefits to achieve broad adoption of the technology and establish it as the standard of care for premium cataract surgery.
- Dependable Financial Performance
Nearly every patient can upgrade to the LAL, especially those who want the best quality of vision, patients who want vision at all distances, and post-LASIK patients. This creates a high demand for the product, leading to dependable financial performance.
The increasing adoption trend for the Company’s products is easily reflected in its financial performance.
Specifically, for Q1 FY23, RxSight reported revenue of $17.5 million, an increase of 96% compared to Q1 FY22, reflecting
Gross profit for Q1 FY23 was $10.4 million or 59% of revenue, an increase of $6.6 million or 176% compared to gross profit of $3.8 million or 42% of revenue for Q1 FY22.
For FY22, the Company reported total revenue of $49.0 million, an increase of 117% compared to FY21. The revenue increase was due to a 71% increase in the number of LDDs sold and a 204% increase in the number of LALs sold in 2022 compared to 2021.
For FY23, RxSight expects revenue of $79.0 million to $84.0 million, representing implied growth of 61% to 71% compared to 2022. The Company expects Gross margin in the range of 56% to 58%, representing an implied increase of 27% to 32% compared to 2022.
It can be inferred from the above discussion that RxSight is on an upward trajectory due to its unique product offering, dependable financial model, and extensive market opportunity. This makes it a Company worth tracking.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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Reference:
https://investors.rxsight.com/static-files/a10b3e31-3004-4af9-be8b-4323a07623cd
https://www.sec.gov/ix?doc=/Archives/edgar/data/1111485/000095017023006237/rxst-20221231.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/1111485/000095017023019703/rxst-20230331.htm