Sight Sciences, Inc. (SGHT) Q3 2021 Earnings Report, Transcript and Summary

Greetings, and welcome to the Sight Sciences Third Quarter 2021 Earnings Results Conference Call. [Operator instructions] This call is recorded. It is my pleasure to introduce your host, Philip Taylor from Gilmartin Group. Thank you. You may begin.

Thank you for participating in today's call. Presenting today are Sight Sciences' Co-Founder and Chief Executive Officer, Paul Badawi; Chief Financial Officer, Jesse Selnick; and Chief Commercial Officer, Shawn O'Neil. Earlier today, Sight Sciences released financial results for the three months and nine months ended September 30, 2021. A copy of the press release is available on the company's website at investors.sightsciences.com. I would like to remind everyone that comments made by management today and answers to questions will include forward-looking statements within the meaning of the Federal Securities laws. Those include statements related to Sight Sciences' anticipated financial performance and operating results, market opportunity, the future impact of COVID-19 on operations, business strategy, and plans for developing and marketing new products. Forward-looking statements are based on estimates and assumptions as of today and are neither promises nor guarantees and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these statements. A description of some of the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements on this call can be found in the Risk Factors section of the Form 10-Q filed today and other filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. For more information, please refer to the forward-looking statement notices and risk factors in the recent SEC filings. I will now turn the call over to Paul.

Thank you, Philip, and thanks to everyone for joining us on our second earnings call as a public company. I'm very excited to update you on our business and share our significant accomplishments across our commercial, clinical, regulatory, and patient access initiatives, as well as our thoughts on the 2022 payment rules released by CMS last week. Jesse will then discuss our third quarter financial results before we open up the call for questions. To start, I will highlight [Technical Difficulty] our resilient site team persevere, and we set new records for quarterly revenue as a company and for our surgical glaucoma segment. Our total revenue increased to 13.1 million, representing growth of 51% compared to the third quarter of last year. We believe we are also one of the very few eye care businesses to report meaningful sequential US growth in Q3 over Q2 2021, despite significant reimbursement noise in surgical glaucoma and the continuing impacts of COVID. Although, the third quarter is typically seasonally lower than the second quarter, our surgical glaucoma segment revenue increased to 12.4 million, representing 4% sequential growth from our then record second quarter revenues and growth of 58% versus the third quarter of last year, driven by strong new account growth and increased utilization of our surgical glaucoma product, OMNI. I'd like to remind everyone of the core principles of our company that allow us to persevere and succeed in any operating environment. We focus on the patient first always. We improved the lives of patients suffering from eye diseases by protecting and enhancing their most precious sense, vision. We aim to develop safe and effective products that address the underlying causes of the world's most prevalent eye diseases. Our current commercial products are OMNI and TearCare. Both products are the result of our rigorous product development process, which incorporates four key pillars. First, we master the physiology of a disease to gain a full understanding of the often multifactorial causes. We use this foundational knowledge base to guide our development of solutions that optimize treatment of the underlying causes of the disease. We then apply our iterative design process to develop products that are intuitive for the physicians to use. To pass the final test of our rigorous product development process, we must prove out a viable patient access strategy, either through existing avenues or by pioneering new routes. Leveraging these four pillars, we have created our first two products that have demonstrated improved clinical and real-world outcomes, empowering eye care providers to offer the best care for their patients. Having passed the rigorous test posed by our four-product development pillars, we believe that both OMNI and TearCare are competitively differentiated within their respective eye care markets. This product differentiation is substantiated by the commercial performance, market receptivity, and ECP feedback on both OMNI and TearCare. Our organic innovation and product development model works very well. So expect to hear more from us on the product development front in due course. Over the near and medium term, we will continue to prioritize three key strategic value drivers. Number one, continuing to expand OMNI's adoption and usage by surgeons for adult patients with primary open-angle glaucoma, or POAG, in the established combination cataract segment of the minimally invasive glaucoma surgery, or MIGS, market. Converting this key group of surgeons paves the way for them to perform stand-alone procedures, which brings us to number two, continued development of the virtually greenfield and substantially larger stand-alone segment of the MIGS market. And number three, seeking an expanded indication for use for TearCare for the application of localized heat therapy in adult patients with evaporative dry eye disease when used in conjunction with manual expression of the meibomian glands, while also advancing market access initiatives, including payer-tailored RCTs that can help create TearCare insurance access to patients whose eye care professionals believe TearCare is appropriate for them. We are pleased with our progress advancing each of these objectives. Our success requires cross-functional collaboration and teamwork through outside sciences, including commercial performance and expansion, the design, execution, and publication of clinical studies, achieving key regulatory milestones, and finally, expanding market access. Our first two goals relate to advancing the treatment of adult patients with POAG. OMNI has been clinically demonstrated to be safe and effective for intraocular pressure reduction for adult patients with POAG. Today, the MIGS market is segmented into procedures performed in combination with cataract surgery, which we refer to as the combination cataract segment and procedures performed on their own, which we refer to as the stand-alone segment. This segmentation is superficial and primarily the result of MIGS bypass stents only being indicated for use in combination cataract procedures. In March of this year, the FDA cleared an expanded indication for use for OMNI that we believe bridges the unnatural divide between combination cataract and stand-alone. This indication for use broadly covers the reduction of intraocular pressure for all adult patients with POAG without limitation with respect to severity of disease, mild, moderate, and advanced or lens status, phakic, which refers to patients who have not had cataract surgery, combination cataract as well as pseudophakic, which refers to patients who have had cataract surgery. We believe this clearance in OMNI's expanded indication represented a significant clarifying step forward in identifying which MIGS procedures are appropriate for certain broad indications rather than as a do no harm add-on to widespread cataract surgeries. This clearance was supported by a substantial body of real-world multi-center clinical data. We continue to invest very aggressively in the clinical and commercial development of OMNI, including further enhancements to OMNI's indication for use, which I will describe in more detail later. We believe that OMNI has two critical physiological and clinical advantages. Number one, OMNI can comprehensively address up to 360 degrees of the disease conventional outflow pathway. Canal implants address a much smaller segment. And number two, OMNI can address all three points of resistance in the conventional outflow pathway, while canal implants cannot. We believe OMNI's differentiated efficacy and indication for use, coupled with our commercial excellence, have driven our best-in-class commercial performance as evidenced by our share gain in combo cataract and market expansion with stand-alone. We've made significant inroads penetrating the adult POAG segment of the MIGS market with our exceptional customer experience initiative, which includes a meticulous surgeon and facility training program. We have already trained a substantial portion of our highest priority customers, the universe of over 3,000 MIGS-trained surgeons. In the third quarter of 2021, approximately 725 facilities ordered OMNI surgical systems, which included very healthy growth in new customers. The most exciting opportunity to expand the usage of OMNI lies in the five times larger stand-alone segment, where surgical intervention decisions rely far more heavily on procedure effectiveness and consistency relative to combination cataract procedures in which we believe the concomitant canal implant procedure is often viewed as a do no harm add-on in the mild patient. To even be considered as the sole reason to take a patient to the operating room, stand-alone MIGS interventions like OMNI must safely deliver a very high consistency and degree of effectiveness. Typically, surgeons first master using OMNI in combination cataract procedures because they have already been trained in that MIGS setting. As surgeons gain confidence in OMNI, we have observed a natural progression toward also using OMNI in stand-alone procedures. In two sequential procedures, OMNI allows surgeons to address up to 360 degrees of the conventional outflow channel, dilating and expanding Schlemm's canal and the collector channels with canaloplasty, followed by unrooting of disease trabecular meshwork during a single surgical session supported by favorable safety data from clinical studies and post-market use. Although our customers and surgeons will largely be the same in both segments, we believe the estimated $5 billion stand-alone segment requires a new go-to-market approach to improve awareness and educate the broader POAG community about the new treatment possibilities enabled by OMNI. This outreach program expands our contact points beyond cataract surgeons and glaucoma specialists to also encompass primary eye care providers who typically first diagnose and treat POAG with medications as well as patients. We are excited to help ophthalmologists, optometrists, and patients better understand the potential advantages of intervention with OMNI. We continue to see significant potential to expand usage of OMNI and are executing a plan to take full advantage of the opportunity that will include targeted expansion of our sales team in 2022 with incremental investments in reps who will focus specifically on office-based clinical education and stand-alone. We also made significant progress advancing clinical trials and augmenting the body of published literature and high-quality peer-reviewed journals that support the safety and efficacy of OMNI for use in future expanded indications for which we are developing the product. In August, we announced the publication of an article in clinical ophthalmology, analyzing 24-month outcomes from a single-center open-label study of the omnisurgical system conducted in Germany. The study reported that use of OMNI to perform a stand-alone MIGS procedure in mild to moderate open-angle glaucoma patients resulted in statistically significant reductions in both IOP and IOP-lowering medication use at 24 months. Mean baseline IOP in the study decreased from 24.6 millimeters mercury preoperatively to 14.9 millimeters mercury at 24 months or approximately a 40% IOP reduction. Mean baseline IOP lowering medication also decreased from 1.9 average medications per patient to 0.5 medications at month 24, with nearly 60% of eyes free of IOP-lowering medication. Last week, we announced the publication of another article in clinical ophthalmology that associated MIGS using OMNI with suppressed diurnal fluctuations in IOP, a clinically meaningful and independent risk factor for the progression of glaucoma. In that study, 95% of patients had a diminished peak IOP postoperatively when compared to preoperative measurements. And finally, earlier today, we announced FDA authorization to proceed with our Precision RCT under IDE. We designed this trial to evaluate the safety and effectiveness of OMNI for use in canaloplasty alone procedures. In Precision, we will compare results from combination cataract procedures in three trial arms. Canaloplasty alone using OMNI, canaloplasty followed by trabeculotomy using OMNI, and canal implants. We believe Precision will represent the largest prospective MIGS RCT ever initiated based on our target of 459 subjects receiving a MIGS procedure. We plan to use the results of Precision to support a premarket submission to the FDA, seeking clearance for an expanded indication for use of OMNI and canaloplasty alone procedures to reduce IOP in adult patients with POAG. If we are successful, surgeons would have additional flexibility to use OMNI to customize treatment and expand their preferred use case, particularly for milder cases. Additionally, we hope to share data from Precision with payers who are influential arbiters of patient access. CMS and other payers rely in part on review of relevant medical data published in peer-reviewed journals when making coverage and payment policy decisions. We believe our clinical trials will demonstrate clinically significant improvements in health and economic outcomes. Our market asset team made significant progress securing coverage among private payers for OMNI procedures in recent months. We're pleased to report that the OMNI procedure is now covered and reimbursed by MACs and private payers representing an estimated 75% of all medical benefit covered lives. We are grateful for the support of the AAO and AGS who continue to support our efforts. We continue to make progress and look forward to providing further updates over the coming quarters. Last week, the Centers for Medicare and Medicaid Services issued a final rule that includes updates on policy changes for Medicare payments to physicians and facilities. These final rules will go into effect on January 1, 2022, subject to the issuance of any updates or corrections by CMS. Payments related to CPT Code 66174, which is used to report procedures performed with OMNI were among those that were revised. As a whole, we are quite pleased with the Medicare payment landscape that will bring modest increases in payment for canaloplasty and trabeculotomy in the ASC and HOPD settings from 2021 to 2022. Our preliminary assessment of the physician fee and facility fee payment rates remains the same as when the proposed rules came out in July as we were going public. We believe OMNI's professional fees will be in a better relative position in 2022 versus 2021, compared to its combination cataract implant competitors. Although the approximate professional payment for canaloplasty will decrease by $209 to $739 which was expected given the elegant procedural advancements made by the OMNI technology for this procedure, the focus of our discussions with physicians continues to center on the strength of our clinical data. Nonetheless, physician reimbursement for canaloplasty will remain significantly superior to reimbursements for both stand-alone cataract surgery as well as cataract surgery in combination with canal-based implants. In routine combination cataract procedures using OMNI, the approximate total physician fee will be $1,003 versus $664 for the new canal implant combination cataract code CPT-66991 and $529 for stand-alone routine cataract surgery CPT-66984. In complex combination cataract procedures using OMNI, the approximate physician fee will be $1,101 versus $833 for the new canal implant in combination with complex cataract code CPT-66989. Our near-term reimbursement objective is to continually improve the competitiveness of payments for procedures performed with OMNI. We believe the combination of one, OMNI's highly differentiated efficacy; two, the relative advantage of the 2022 physician fees and modest increase in facility fees for 66174; three, ongoing clinical feedback from OMNI users; and four, our demonstrated historical growth trajectory will allow us to continue to take share from the combo cataract canal implants and advance our leadership in the five times larger stand-alone segment. We are pleased that CPT code 66174 will realize a modest increase of about 2% in both the ASC setting, which accounts for over 80% of OMNI's US revenues, and the HOPD setting. Payments for canaloplasty will increase 2.5% to $1,919 in the ASC setting and 2.1% to $4,000 in the HOPD setting. In 2022, ASCs will receive over $850 more for a stand-alone OMNI procedure than for a stand-alone cataract procedure. For HOPDs, the difference for these same two procedures will exceed $1,800. In 2021, ASCs received 953 more for combination cataract procedures using canal implants and for combination cataract canaloplasty procedures. This gap will be reduced by $158 for 2022, and we will continue our efforts alongside the medical societies, patient advocacy groups, and the surgical community to seek more equitable reimbursement. We sought device-intensive status for CPT code 66174 in the ASC setting, which would have resulted in an increase in payments to ASCs. CMS declined to assign device-intensive designation for 66174 for 2022. We believe this decision is incorrect and stems from inaccurate hospital reporting of device costs for CPT-66174. We will continue to work with the medical societies, patient advocacy groups, CMS, and other ophthalmic stakeholders to help ensure the accuracy of the billing data that CMS will rely on when deciding whether CPT-66174 merits device-intensive status in the future. Our third value driver focuses on TearCare, which is currently marketed as our powered heating pad for the application of localized heat where the medical community recommends the application of a warm compress to the eyelids. We purposefully built TearCare to deliver a precise and tightly controlled level of penetrating thermal energy through the outer eyelids and into the meibomian glands on the posterior side of the eyelids in a comfortable office-based procedure. We introduced TearCare in a controlled launch two years ago with approximately 10 reps covering the United States. Our plan for 2022 includes modest expansion of our TearCare sales force to fill in high-value geographic white space our controlled launch team cannot fully cover. We are developing and seeking FDA clearance of an expanded indication of TearCare for the application of localized heat therapy in adult patients with evaporative dry eye disease due to meibomian gland dysfunction when used in conjunction with manual expression of meibomian glands. Dry eye is a multifactorial disease that is most commonly characterized by poor-quality tears that evaporate too quickly. Study data showed that 86% of dry eye cases are associated with MGD, yet the most common dry eye treatments used today address aqueous deficiency for inflammation and represent 95% of manufacturer revenues. None of the leading prescription eye drop medications are indicated for or have a mechanism targeting the most prevalent underlying cause of dry eye, MGD. To compound this issue, Medicare and commercial insurers have not established any meaningful reimbursement for MGD treatment. Dry eye is the number one reason for visits to an eye care provider, and we believe the US market for effective MGD treatment could exceed $10 billion annually. We are executing a very thoughtful and well-informed strategy to unlock the potential market for TearCare in its authorized indications by pioneering optimal patient access to effective MGD care through health insurance. We want to maximize the reach of our TearCare technology and intend to provide a comprehensive solution for the broadest range of MGD sufferers. As with our value drivers for surgical glaucoma, our dry eye strategic initiative also involves cross-functional support from our clinical, regulatory, market access, and commercial teams. On the regulatory front, we submitted a premarket notification to the FDA in September that we hope will result in clearance for an expanded indication for use of TearCare in the coming months. In parallel with our TearCare regulatory efforts, enrollment continues nicely in our second TearCare RCT, SAHARA, which will evaluate the efficacy of TearCare compared to a leading prescription dry eye medication and assess the durability of TearCare treatments over a 24-month period. Articles based on results from our first RCT, OLYMPIA, have been published in two leading peer-reviewed journals. In OLYMPIA, TearCare was compared to LipiFlow. Among the recent publications was an article in cornea, reporting that a single use of TearCare significantly alleviated the signs and symptoms of dry eye disease in patients with MGD. We expect data from OLYMPIA, SAHARA, and other studies will support several additional articles and peer-reviewed journals. I would like to conclude my remarks by addressing why we sued Ivantis. In brief, we sued to protect our investments in research and development and to protect the market share and margins of our products. My brother and co-founder, David, and I began developing breakthrough ophthalmology technologies over 15 years ago. In the years that followed, we have continuously invested in research and development. We incorporated many of these innovations in successful commercial products like OMNI and TearCare. Our continuing ability to grow Sight Sciences and invest in R&D depends on obtaining and enforcing intellectual property rights. Our investors deserve to realize value from our inventions. Where we see blatant encroachment on our intellectual property, we must vigorously defend our rights. We owe it to our patients, our company, and our shareholders to hold accountable competitors who seek to profit from our investment. We cannot sit idly by while a competitor uses our intellectual property to compete against our own products. I would also like to note that the patents asserted against Ivantis are not associated with OMNI. The four patents in suit relate to our implantable circumferential canal scaffolding intellectual property. The Hydrus Microstent competes directly with OMNI in the combination cataract segment. Our lawsuit seeks to enjoin Ivantis from its infringing competition. With that, I'll now turn the call over to Jesse to discuss our third quarter financial results. Jesse?

Thank you, Paul. Our total revenue for the three months ended September 30, 2021, was a record 13.1 million, a 51% increase from the 8.7 million in the same period of 2020 and a 5% sequential increase from 12.5 million in the second quarter of 2021 in what normally is a seasonally weak sequential quarter in our industry. Our combined gross margin for the third quarter was 84%, compared to 70% in the corresponding prior-year period and 82% in the second quarter of 2021. Our surgical glaucoma segment revenues for the third quarter were a record $12.4 million, up 58% from 7.9 million in the third quarter of 2020, a sequential increase of 4% from 12 million in the second quarter of 2021. While we believe that COVID remains a factor in how all companies now conduct business, its impact on our commercial opportunity did not significantly change from when we spoke to you in August. Further, we did not observe any tailwind in the quarter from increased OMNI trialing due to the proposed rate changes at CMS that were announced in July. We trained modestly more surgeons in the third quarter than we did in the second quarter, reflecting more of the long-term growth trajectory in our business rather than any onetime improvement. As I said, rather than enjoying any one-time growth benefit, we believe a number of customers actually offset the hypothetical reimbursement tailwind by deferring OMNI trainings until they could work through their canal implant inventory, since there was a concern that reimbursement for canal implants will lose significant value after the year end. Very simply, our results point to the continuation of exemplary, consistent commercial execution. As Paul alluded to in his comments, we have set a standard of consistent market-leading growth at the center of a dynamically changing MIGS market, in which we are gaining dollar and volume share quarter after quarter after quarter, while also growing the overall MIGS market pie with each OMNI stand-alone case. More specifically, for this period, our surgical glaucoma sales benefited from an increase in the number of new accounts sold to in the quarter due in part to a selling environment that had more normalized commercial access to customer facilities than we had seen last year as well as increased utilization per active account. The results for the quarter were challenged by seasonality factors, such as surgeon vacations that increased COVID-related impacts compared to the second quarter that we believe were associated with the Delta variant in July specifically. Gross margin in surgical glaucoma was 87% in the third quarter, compared to 75% in the prior-year period and 85% in the second quarter. Sequential improvement was primarily the result of the transition of production to a low-cost, high-volume contract manufacturer in the first half of the year. In our dry eye segment, revenues were 700,000 or 0.7 million in the third quarter of 2021. Although this represents a decrease from the 0.8 million in the prior-year period, we believe we improved the quality of the revenue by focusing more on specialized dry eye accounts that can help us with our long-term strategy of pioneering market access for MGD. We understand this strategy is not necessarily aligned with the public market valuation environment largely driven by revenue, but we maintain our absolute conviction in TearCare's long-term value and in this approach to maximize value. Beginning in the fourth quarter of 2020, we refocused our drive sales team on accounts that would better align with our long-term goal of pioneering optimal access to effective MGD patient care. We anticipated that this strategy would negatively impact near-term results at the time, while our team adjusted before reestablishing strategic long-term growth. Emphasizing this point and to highlight the strength of the effort, following an initial decrease in sales in the fourth quarter of 2020, our dry eye sequential growth has increased 37% per quarter. Revenues for the third quarter of 2021 were 2.4 times in the fourth quarter of 2020 when we began this initiative. Beyond the financials, we are pleased with the results of our market access-driven strategy, which has resulted in improved targeting of new customers to fit TearCare's value proposition. Our sequential growth of 20% in the third quarter benefited from a growing number of new facilities sold compared to the second quarter as well as a larger base of reordering customers. Gross margin in dry eye was 33% in the quarter versus 12% in the third quarter of 2020 and 3% in the second quarter of 2021. As we discussed on previous calls, dry eye gross margins will be noisy until we consciously scale the business, at which point, we believe we'll be able to generate gross margins approaching those enjoyed by the surgical glaucoma business. Operating expenses in the third quarter of 2021 were 25.1 million, an 87% increase from 13.4 million in the third quarter of 2020, an 18% increase from 21.3 million in the second quarter of 2021. Supporting those of the operating expenses for the quarter included noncash stock-based compensation of $1.9 million, which -- on a comparative basis versus 0.2 million in the prior year and 0.9 million in the second quarter of 2021, both those latter periods being pre-IPO. SG&A expenses for the quarter were 20.8 million, compared to 11.2 million in the third quarter of 2020 and 17.8 million in the second quarter of 2021. The increase in SG&A was primarily due to our continued investment in scaling of operations and corporate headcount to support our growth. As part of our planning process for 2022, we identified opportunities to augment our team and further accelerate our growth. We'll continue to make significant investment in our corporate systems and personnel to ensure we make the most of our vast opportunity to improve patients' lives. R&D expenses for the quarter were $4.3 million, compared to 2.2 million in the third quarter of 2020 and 3.5 million in the second quarter of 2021. The majority of the increase in R&D expense from 2020 to 2021 was due to three factors. One, an increase in personnel expenses as we build out our clinical and regulatory and R&D departments. Two, contract manufacturing lab supplies and prototype development expenses. And three, clinical studies, which Paul highlighted in his comments. We expect our R&D expense to continue to grow over the near term as we execute our clinical road map and build out our internal R&D capabilities. Loss from operations for the three months ended September 30, 2021, was 14 million, which compares to a loss of 7.4 million for the same period in 2020 and a loss of 11.1 million in the second quarter of 2021. Offset uniquely in this quarter, we recognized other expense of $2 million, compared to 0.2 million in the prior-year period. And this was due to a final fair value remeasurement of since-exercised preferred stock upon our IPO. To state the obvious, this will not be an expense that will recur going forward given the change in our cap structure post-IPO. We had a net loss of $17.2 million or $0.43 per share or $0.43 per share for the third quarter of 2021 based on a weighted average post-IPO share count of 39.8 million shares. This compares to a net loss of 8.1 million or $0.85 per share in the third quarter of 2020 based on our weighted average pre-IPO share count of 9.5 million shares. We ended the quarter with $271.5 million of cash and equivalents and $32.5 million of long-term debt. And as a reminder, we completed our initial public offering in mid-July, which generated net proceeds of approximately $252.2 million. Turning to our outlook for 2021. We are revising our full year revenue guidance of $47.5 million to $48.5 million, which will represent growth of approximately 74% over 2020 at the midpoint. This guidance reflects a continuation of the growth trends we observed in recent quarters and it takes into account continued outstanding growth fundamentals while factoring in seasonality patterns, including fewer selling days in the remaining weeks of 2021 due to holidays and vacations and the presumption of the operating environment that we saw in the third quarter of 2021 and to date in the fourth quarter remains consistent through the year end. With that, I'd like to turn the call back over to Paul for some closing comments.

Thank you, Jesse. I hope we've made it very clear how our fundamental commitment to delivering the power of Sight to patients with eye disease informs every decision we make. We believe we are one of the very few companies in the medical device sector with the demonstrated capabilities to both innovate disruptively and commercialize with excellence. We strive to operate at an entirely different level, and that was on display this past quarter where we rose to the occasion, excelled on all fronts, and set commercial records across the board. Jesse and I will now be joined by Shawn O'Neil, our Chief Commercial Officer, to answer your questions. Operator, please open up the call for questions.

[Operator instructions] Our first question comes from the line of Ms. Cecilia Furlong from Morgan Stanley.

I wanted to start with the account growth that you highlighted in the quarter for OMNI. If you could just walk through kind of what you saw both from a headwind standpoint, anything due to COVID seasonality, but then also how you are able to open the accounts to where the trajectory you saw and as you look into 4Q as well kind of the road map you see there for further account opening.

Cecilia, it's Jesse. I'll take the first stab at that. We had a very strong quarter. It was a quarter in line with the second quarter in terms of new account openings, amount of trial activities, and the like. Our retention metrics are very strong as well. We -- but what we didn't see is -- we didn't see a -- my comments were really around the fact that it's not a one-off level of growth based on sort of noise in terms of the reimbursement market. It was just very much in line with the trajectory that we've enjoyed over the course of the year. And so I think COVID is baked into how we operate and our customers operate at this point in time. And we have the opportunity to continue to sell and to grow, and we're taking advantage of that opportunity. And so that's why we were able to put up the results that we did.

Yes, Cecilia. This is Shawn. I would add on that that it continues -- our trajectory and confidence continue to be fueled by our focus on the exceptional customer experience that we demonstrated actually across both businesses, OMNI and TearCare. And it's really the care and the training of the surgeon, doctor, and staff to ensure positive outcomes from their perspective as well as a positive outcome for their patients. And with that just continues to grow the confidence for greater utilization and for OMNI specifically than in the stand-alone market as Paul discussed in his comments.

And I guess, I wanted to ask just in terms of 4Q guidance, what you're factoring in, both from a reimbursement now that everything has been finalized. But any potential benefits from that as you think about 4Q, just ahead of '22 implementation, backlog impact, COVID pressures. Just any other dynamics you would call out as well as what you expect with the new label to be able to see just from the stand-alone opportunity and continuing to drive that.

Yes. I'll start and then Paul and Shawn, obviously, pile on. The guidance is based on the continuation of the growth metrics that we've been posting, largely obviously in the surgical glaucoma business. We're not -- it doesn't reflect anything. It reflects the current operating environment. We're not, Cecilia, guessing as to competitive reaction based on 2022 changes. We -- our view is that those changes will benefit us. But the 2021 rates are still in place and our guidance reflects really just a continuation of the results that we put forward and sort of the forward-leading KPIs that we track closely.

I'll just add on to that, Jesse. As it relates to CMS and the final rule and our outlook, I'd like to first state, our outlook was -- has always been extremely strong prior to our IPO, leading up to it, and through it, which coincided with the proposed rule. The proposed rule and more importantly, the final rule improved our relative position vis-a-vis our competition on both the professional fee for our 66174 surgeon fee premium widened over canal implant injection fees following a thoughtful rock survey of almost a hundred ophthalmic surgeons. The surgeon survey results, placing a premium on 66174 over implant injections was frankly expected since we know we asked our surgeons to perform more time-intensive, skillful, circumferential, multiprocedural work that ultimately drives up the consistency and degree of IOP-lowering clinical effects for patients. On the facility fee side, I think, we are pleased to see our 66174 facility fee disadvantage narrowed. The cataract stents have always had an advantage on the facility fee and that advantage narrowed in the final rule. So net-net, to your question, we're relatively better off in 2022 versus 2021, relative to our cataract stent competitors. Our outlook for commercial scale and growth has only been reinforced with more wind behind our backs as we enter 2022 and build on the OMNI acceleration we've seen quarter-after-quarter in 2021 without the CMS relative improvement to 66174. And the last thing I just want to mention quickly is there's a lot of comparison when these rules come out, they're important, and there's a lot of comparisons between us and the combo cataract stent competition. I think it's really important to remind everybody that our focus and growth market at Sight, it's the five times larger stand-alone market, where we stand alone and are pioneering that space. So on that front, in stand-alone, the 66174 pro fee and facility fee in the final rule is very competitive and attractive compared to cataract surgery alone, both on the professional fee and ASC fee. So generally, we are very bullish in both the combo cataract segment as well as the much larger stand-alone segment.

Cecilia, this is Shawn. I would add on to your question around the label. The label continues to be a positive for us as well with the expanded label for OMNI and the breadth of the adult patients with primary opening glaucoma and IOP lowering that really is going to be the cornerstone of our market-leading disease state education campaign as well as where we're going to be investing resources to educate the primary eye care provider. So we are definitely leveraging that expanded label to educate the community on the stand-alone and continue to pioneer and create leadership role in the stand-alone space.

Our next question comes from the line of Mr. Matt O'Brien from Piper Sandler.

I guess just a follow-up on what Cecilia was asking as far as new accounts go. Can you kind of frame up what you saw in terms of training competitive clinicians versus kind of those new to MIGS? And then what did you see in Q3 as far as stand-alone sales versus combo cataract?

This is Shawn. Yes. So as far as the training of new surgeons, we continue to focus on the high-volume MIGS surgeons. There's a bolus of our trained universe. As we continue to penetrate into those roughly 3,000 MIGS-trained comprehensive surgeons in the United States, so we've definitely seen as we continue to penetrate into that group because they are the ones that are already well informed on the anatomy and angle surgery, and we're gaining confidence with them in that combo space, ultimately leading into our expansion in the stand-alone space. I know that we are getting some additional data, CPT level data, to really quantify our penetration of the stand-alone space. As we've mentioned before, we do have internal information that shows that we are growing in that space based on our training and conversations with surgeons and we look forward to providing more detailed information in the future as we get that additional data.

Sorry. Go ahead, Paul.

Just on that real quick. We do want to get granular data to report quarterly on our stand-alone progress -- market development progress. We have done some initial CPT analyses for now, just annual results, and we can say that the year of OMNI launch in 2018, when we look at CPT-66174 used alone, so stand-alone 66174, there were approximately 11,800 claims. In 2018, that grew in 2019, the second year of OMNI, after OMNI's launch, this number doubled to just over 26,900 claims. And then in 2020, despite the COVID pandemic, obviously impacting nonlife-threatening surgical procedures, saw that number grow significantly again. And there were 30,000 -- just over 30,000 claims processed for stand-alone use of 66174. So we've asked our market access team to get even more granular data, and we believe that we're going to be able to have at least quarterly data almost current very soon. And so we look forward to -- in the not-too-distant future, hopefully being able to share quarterly stand-alone growth at 66174 if we can get that data.

And then I don't know if this is for Paul or for Jesse. But as we think about the fourth quarter, again, it's a nice progression versus Q3, and it sounds like you probably had some headwinds here in Q3. But the guidance -- it's a nice little step up. It's not a huge step up versus Q3, which, again, is a seasonally softer quarter. So why not a little bit more on the guidance side for Q4? And then what I'm really trying to get to is if you just annualize Q4, you're not -- there's a lot of growth that needs to happen to kind of get to where the Street is at for '22. And I know there's new reps coming in, but just what gives you the confidence or what can you help us see that should give us all the confidence in hitting some of these '22 numbers that are pretty steep ramp?

Matt, I would encourage you to take a look at it this way. How much quarterly dollar growth does the guidance imply in 2021 versus how we exited 2020? And where -- and given all the factors and momentum in the business, where -- does it actually imply a slope increase or not as you look and sort of get comfortable to 2022 number? We're exiting -- when we developed our forecast, we're going to be exiting the year stronger than given sort of the step-ups in guidance than we initially thought to be able to confidently support that number. And we feel pretty confident we're going to be exiting the year right in that place. It's -- the back half -- the first half of the year is healthier in terms of step function of the growth often like what our experience has been in this market. I think it's going to be a little bit of a noisy December, to be honest, like in terms of vacations taken, vacation days, true selling opportunity in the back half of the month. But we think, as we said about the third quarter, when you look at the comps, that this guidance implies a very healthy amount of sequential growth for an eye care business, particularly a surgical eye care business.

Our last question comes from the line of Joanne Wuensch from Citi.

This is Anthony on for Joanne. Thank you all for squeezing us in here. I just have one question, and it's a bit more open ended. What surprised you the most and the least over the past three months, especially just given all the reimbursement price? Thanks for taking the question.

Sorry. Could you repeat that? What surprised us the most or what surprised --

Yes. Sorry if I was breaking up. I just asked what surprised you the most and the least over the past three months?

I mean, I don't know. We've been executing to our fundamentals across our three value drivers in a very predictable way and as you can tell from our top performance this quarter. So we've been, frankly, just focused on taking -- continuing to take share in combo cataract expanding use in stand-alone and advancing all of our TearCare initiatives, and I think we've done that in a very predictable and compelling way. So I don't look back at the last quarter seeing too many surprises. Sorry, that's not an exciting answer, but Shawn or Jesse, maybe you guys were surprised by something.

No. I would agree, Paul. And Anthony, this is Shawn. I would say it's not a surprise, but I think the thing that's really been a pleasure for us from an execution -- commercial execution standpoint is just the advocacy that we received from our customer base and the acceptance of the -- both technologies, OMNI and TearCare within our strategies to develop the stand-alone market with the mild to moderate stand-alone market with OMNI and to execute against our strategy for patient access with TearCare and MGD. So I think the acceptance and just the advocacy that we've had from our customer base with these technologies and our go-to-market strategy has been really a high point for us and continues to fuel our confidence as we continue to move forward in both these markets.

My answer quickly is I was surprised about how strong our results were relative to peers and competitors that have also reported results.

We have a question from the line of Matt O'Brien from Piper Sandler.

Just two quick follow-ups. There was some consolidation in this space earlier this week. I'm just curious as far as how you think about that consolidation and the impact of the business in '22? And then there's also a little bit more competition on the canaloplasty side that was recently approved. And I'm just curious as far as your thoughts as far as if that would be a headwind for you guys? Or if it's just it maybe opens up the market just because there is so much opportunity in that category?

Yes. I'll take a crack at that, Matt. This is Paul. On the consolidation side, obviously, I'm guessing you're referring to the acquisition of Ivantis by Alcon. I think what -- for me, what comes to mind -- two things come to mind. One, the stents, whether it's Hydrus or iStent, those are products indicated in combination with cataract surgery, where we've already demonstrated an ability to take share effectively. And it's -- that's one-fifth of the market. We have the five times larger stand-alone market that we are focused on and penetrating effectively. So it's -- that doesn't affect us there. And also, we have Shawn on the line. Shawn was at Alcon for 20-plus years. He's best-in-class commercially. He's built out a best-in-class commercial leadership team and team throughout the organization. So as it relates to our ability to compete effectively and win, I think our confidence grows every day. Shawn, if you want to comment a bit on that?

Yes. Absolutely, Paul. We obviously anticipate Alcon's presence to meet additional investment and just recognition of the importance of the MIGS space for patient care. But I think that additional investment in education awareness is overall positive for the marketplace. And because of the performance of OMNI to date and our confidence and this differentiated efficacy profile and with a broad indication for use that we have to enter into a stand-alone MIGS market, we're still really confident in our ability to lead that stand-alone MIGS market and continue to leverage our top commercial talent that we have here and continue to invest and expand here at Sight Sciences to meet our strategic objectives. So, I think overall, it's a positive. And frankly, those are the same things that are going to allow us to compete regardless of what competitor comes into the marketplace is going to continue to be focusing on our points of differentiation of OMNI's ability to address all three points of resistance for those mild to moderate, either in combination with cataracts and most definitely in the stand-alone space and just continue to leverage that in our exceptional customer experience to continue to build our leadership position in stand-alone.

And Matt on your second question regarding potential canaloplasty entrants. I think a couple of things come to mind, maybe four things. Number one is R&D, and I'll get into -- we are the pioneers of ab interno canaloplasty, ab interno canaloplasty, and trabeculotomy. We've been at it for many, many years and have been iterating. So the clinical excellence that is OMNI is the result of tens of thousands of cases, significant clinician feedback, significant iteration. I can tell you it's been a long road to get to the device that we have today that is delivering such incredible results for surgeons and their patients. So it's not easy. So generating a prototype, showing a prototype, maybe even getting a clearance may be straightforward. But delivering a highly dependable reproducible canaloplasty device that is capable of consistently helping the surgeon circumnavigate 100, 200-micron diameter delicate canal for 36 to 40 millimeters around consistently is not easy, period. On the clinical front, I haven't seen -- I personally haven't seen any clinical data from anybody on another ab interno canaloplasty entrant. I think if we're going to be talking about canaloplasty and labels, I think we need to see clinical data, I think it brings us to the third point from a regulatory perspective. I would ask whichever companies or products that we're discussing here. I would ask them what is the indication for use? Is it for canaloplasty? Is it for pressure lowering? Is it for primary open-angle glaucoma? Because I'm pretty sure the pathway that we've gone through requires significant clinical data to be -- to have a canaloplasty indication and to promote for canaloplasty and I mean, we have -- we just announced earlier today, maybe some of you have seen it, we put out a press release just before this call on our IDE for a canaloplasty alone indication. So we have a very large MIGS trial, I think the largest that will ever be conducted, 459 patients, to seek this canaloplasty alone indication. And then lastly, beyond R&D, clinical and regulatory, again, I don't -- I haven't seen any of these devices, but I will say, we've been at this for over a decade, and we have a very broad and deep patent estate intellectual property covering methods and devices of circumferential canalicular glaucoma surgery. So those are the four things that come to mind as it relates to any potential entrants.

This concludes our question-and-answer session. I would like to turn the call back to Paul Badawi for closing remarks.

Just want to say thank you all for your time, attention, and interest in Sight Sciences.

This concludes today’s conference call. You may now disconnect.