RxSight (RXST) risk factors, FY2024 10-K

Risks related to our business and products

1. 01In order to support our continued operations and the growth of our business, we may seek to raise additional capital, which may not be available to us on acceptable terms, or at all
2. 02We face significant competition, and if we are unable to compete effectively, we may not be able to achieve or maintain significant market penetration or improve our results of operations
3. 03A variety of risks associated with marketing our products internationally could materially adversely affect our business
4. 09We have a limited operating history and if we fail to effectively train our sales force, increase our sales and marketing capabilities or develop broad brand awareness in a cost-effective manner, our growth will be impeded, and our business will suffer
5. 10We have a history of net losses, and we expect to continue to incur losses in the future. If we ever achieve profitability, we may not be able to sustain it
6. 11the extent to which we acquire or invest in businesses, products or technologies
7. 12Global economic, political and market conditions, including downgrades of the U.S. credit rating, may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability
8. 13Deterioration in the economic conditions globally resulting in instability in global financial markets, including: inflation and rising interest rates and instability in the capital markets
9. 14We currently maintain all of our cash, cash equivalents and short-term investments in one financial institution and, therefore, our cash, cash equivalents and short-term investments could be adversely affected if the financial institution in which we hold our cash, cash equivalents and short-term investments fails
10. 15Our success depends in large part on our RxSight system. If we are unable to successfully market and sell our RxSight system, our business prospects will be significantly harmed, and we may be unable to achieve revenue growth
11. 16whether we are required by the FDA or comparable non-U.S. regulatory authorities to conduct additional clinical trials for current or future indications
12. 17Adoption of our products depends upon appropriate training for doctors, and inadequate training may lead to negative patient outcomes, affect adoption of our products and adversely affect our business
13. 18The commercial success of our RxSight system will depend upon attaining significant market acceptance of these products among patients and doctors
14. 19an inability to generate patient referral due to dissatisfaction with results obtained through treatment with our products, the out-of-pocket cost of treatments using our products or otherwise
15. 20Our RxSight system involves surgical risks and is contraindicated in certain patients, which may limit adoption
16. 21Product price and qualification for coverage and reimbursement
17. 22obtain, maintain, enforce and defend our intellectual property rights and operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others
18. 23of a product development, including during research and development, clinical trials, regulatory review, manufacturing and marketing. Delays in product introductions could have a material adverse effect on our business, financial condition and results of operations
19. 24If our facilities become damaged or inoperable, or if we are required to vacate a facility, we may be unable to manufacture our products or we may experience delays in production or an increase in costs, which could adversely affect our results of operations
20. 25Technological change may adversely affect sales of our products and may cause our products to become obsolete
21. 26Results of earlier studies may not be predictive of future clinical trial results, and planned studies may not establish an adequate safety or efficacy profile for our RxSight system and other planned or future products, which would affect market acceptance of our RxSight system
22. 27If our clinical trials are unsuccessful or significantly delayed, or if we do not complete our clinical trials, our business may be harmed
23. 28Unauthorized third parties may seek to access our devices or other products and services, or related devices, products, and services, and modify or use them in a way inconsistent with our FDA clearances and approvals, which may create risks to users
24. 29We may expend our limited resources to pursue a particular product or indication and fail to capitalize on products or indications that may be more profitable or for which there is a greater likelihood of success
25. 30produced economically, successfully commercialized or widely accepted in the marketplace. The expenses or losses associated with unsuccessful product development or launch activities, or a lack of market acceptance of our new products, could adversely affect our business, financial condition and results of operations
26. 31If we fail to identify, acquire and develop other products, we may be unable to grow our business
27. 32We may acquire other companies or technologies, which could fail to result in a commercial product or increased revenue, divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results
28. 33Coverage and adequate reimbursement and/or the ability of patients to pay for the difference between the price charged by practices and the reimbursement amount may not be available for our products in sufficient markets, which could diminish our sales or affect our ability to sell our products
29. 34the inability to market and sell our products
30. 35These and other risks associated with international operations may materially adversely affect our ability to attain or maintain profitable operations in international markets, which would have a material adverse effect on our business, financial condition and results of operations
31. 36We may not be able to achieve or maintain satisfactory pricing and margins for our products
32. 37The sizes of the markets for our current and future products have not been established with precision and may be smaller than we estimate
33. 38Our quarterly and annual results may fluctuate significantly and may not fully reflect the underlying performance of our business
34. 39We have expanded, and expect to continue to expand, our organization, including expanding our sales and marketing capability and creating additional infrastructure to support our operations as a public company, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
35. 40Certain of our operating results and financial metrics may be difficult to predict as a result of seasonality
36. 41Our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income may be subject to certain limitations

Risks related to intellectual property

1. 04We may not be able to protect our intellectual property rights throughout the world, which could impair our business
2. 42If we are unable to obtain, maintain, protect and enforce patent and other intellectual property protection for our technology and products, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets
3. 43of any issued patents will provide sufficient protection from competitors. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain
4. 44Patent terms may be inadequate to protect our competitive position on technology for an adequate amount of time
5. 45Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements
6. 46We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products
7. 47Our future reliance on third parties may require us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed
8. 48We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to sell and market our products
9. 49obligations to pay license fees, damages, attorney fees and court costs, which could be significant. In addition, if we are found to willfully infringe third-party patents or trademarks or to have misappropriated trade secrets, we could be required to pay treble damages in addition to other penalties
10. 50Because of the expense and uncertainty of litigation, we may not be in a position to enforce our intellectual property rights against third parties
11. 51Our rights to develop and commercialize our products are subject, in part, to the terms and conditions of licenses granted to us by others
12. 52Our potential licensors may have relied on third-party consultants or collaborators or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents we in-license. This could materially and adversely affect our business, financial condition and results of operations
13. 53If disputes over intellectual property that we license in the future prevent or impair our ability to maintain our licensing arrangements on acceptable terms, we may not be able to successfully develop and commercialize the affected products, which would have a material adverse effect on our business
14. 54monitor whether our predecessors or future licensors limit their use of the technology to these uses, and we could incur substantial expenses to enforce our rights to our licensed technology in the event of misuse
15. 55We may not be successful in obtaining necessary rights to any products we may develop through acquisitions and in-licenses
16. 56Any collaboration or partnership arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our products
17. 57We may be subject to claims challenging the inventorship of our patents and other intellectual property
18. 58If we are unable to protect the confidentiality of our trade secrets and other proprietary information, our business and competitive position may be harmed
19. 59Changes in United States patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products
20. 60we do not have any issued or in-licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing
21. 61Intellectual property rights do not necessarily address all potential threats to our competitive advantage
22. 62Our use of “open source” software could subject our proprietary software to general release, adversely affect our ability to sell our products and subject us to possible litigation
23. 63If our trademarks, service marks 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

Risks related to government regulation

1. 05If we fail to obtain and maintain necessary regulatory clearances or approvals for our products, or if clearances or approvals for future products and indications are delayed or not issued, our commercial operations may be harmed
2. 64If we fail to obtain and maintain necessary regulatory clearances or approvals for our products, or if clearances or approvals for future products and indications are delayed or not issued, our commercial operations would be harmed
3. 65Before a new medical device, or a new intended use for an existing product, can be marketed in the United States, a company must first submit and receive either 510(k) clearance pursuant to Section 510(k) of the FDCA, or approval of a premarket approval, or PMA, application from the FDA, unless an exemption applies
4. 66the FDA or foreign regulatory authorities may audit our clinical trial data and conclude that the data is not sufficiently reliable to support approval or clearance
5. 67Our products and operations are subject to extensive government regulation and oversight in the United States
6. 68marketing or labeling of a product, such regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market
7. 69In addition, violations of the FDCA relating to the promotion of approved products may lead to investigations alleging violations of federal and state healthcare fraud and abuse and other laws, as well as state consumer protection laws
8. 70Material modifications to our products may require new 510(k) clearances or pre-market approvals or may require us to recall or cease marketing our products until clearances or approvals are obtained
9. 71Our products may be subject to recalls after receiving FDA or foreign approval or clearance, which could divert managerial and financial resources, harm our reputation and adversely affect our business
10. 72submission of these reports has been and could be used by competitors against us in competitive situations and cause customers to delay purchase decisions or cancel orders and would harm our reputation
11. 73If we, or our suppliers, fail to comply with the FDA’s QSR or QSMR when it goes into effect in February 2026, or other applicable foreign regulations, our manufacturing or distribution operations could be delayed or shut down and our revenue could suffer
12. 74Healthcare reform initiatives and other administrative and legislative proposals may adversely affect our business, financial condition, results of operations and cash flows in our key markets
13. 75insurance mandates on employers and individuals, the provision of subsidies to eligible individuals enrolled in plans offered on the health insurance exchanges and the expansion of the Medicaid program. The ACA has impacted existing government healthcare programs and has resulted in the development of new programs
14. 76the availability of capital
15. 77If we fail to comply with United States federal and state fraud and abuse and other healthcare laws and regulations, we could face substantial penalties and our business operations and financial condition could be adversely affected
16. 78Changes in the CMS fee schedules may harm our revenue and operating results
17. 79Legislative or regulatory reforms may make it more difficult and costly for us to obtain regulatory clearance or approval of our planned or future products and to manufacture, market and distribute our products after clearance or approval is obtained
18. 80Compliance with the EU Medical Device Regulation, applicable regulations in the United Kingdom, and other applicable foreign regulations, as well as any changes to existing regulations, may be costly and disruptive to our business, and expose us to increased liability
19. 81more power to notified bodies
20. 82Our clinical trials may fail to demonstrate competent and reliable evidence of the safety and effectiveness of our products, which would prevent or delay commercialization of our products in development
21. 83Defects or failures associated with our products could lead to recalls, safety alerts or litigation, as well as significant costs and negative publicity
22. 84Our employees, independent contractors, consultants, commercial partners, distributors and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
23. 85Environmental health and safety laws may result in liabilities, expenses and restrictions on our operations. Failure to comply with environmental laws and regulations could subject us to significant liability
24. 86We face risks related to our collection and use of data, which could result in investigations, inquiries, litigation, fines, legislative and regulatory action and negative press about our privacy and data and security protection practices
25. 87significant, and may require us to modify our practices and policies and to incur substantial costs and expenses in an effort to comply
26. 88Our global operations can expose us to numerous and sometimes conflicting legal and regulatory requirements, including to anti-bribery and anti-corruption laws, such as the FCPA and the U.K. Bribery Act, and violation of these requirements could result in substantial penalties and prosecution and harm our business
27. 89suspension or debarment from U.S. government contracts, which could have a material and adverse effect on our business, financial condition and results of operations

Risks related to reliance on third parties

1. 06We depend upon third parties, including single and sole source suppliers, to manufacture certain components and subcomponents of the RxSight system, making us vulnerable to supply disruptions and price fluctuations
2. 90From time to time, we engage outside parties to perform services related to certain of our clinical studies and trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our products
3. 91We and our component suppliers may not meet regulatory quality standards applicable to our manufacturing processes, which could have an adverse effect on our business, financial condition and results of operations
4. 92We depend upon third parties, including single and sole source suppliers, to manufacture certain components and subcomponents of the RxSight system making us vulnerable to supply disruptions and price fluctuations
5. 93The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business

Risks related to our common stock

1. 07The price of our stock may be volatile, and you could lose all or part of your investment
2. 08We do not know whether an active, liquid and orderly trading market will exist for our common stock or what the market price of our common stock will be and as a result it may be difficult for you to sell your shares of our common stock
3. 94The price of our stock may be volatile, and you could lose all or part of your investment
4. 95The realization of any of the above risks or any of a broad range of other risks, including those described in this Part I, Item1A, “Risk Factors,” could have a dramatic and adverse impact on the market price of our common stock
5. 96If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline
6. 97As of December 31, 2024, we had 40,428,220 shares of common stock issued and outstanding. All of these shares are available for sale in the public market, subject to limitations under Rule 144 with respect to affiliates of our company
7. 98If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired
8. 99We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock
9. 100Provisions in our certificate of incorporation, bylaws and Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the market price of our common stock
10. 101require a super-majority vote of stockholders to amend some provisions described above
11. 102any action asserting a claim against us that is governed by the internal-affairs doctrine
12. 103Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations
13. 104Our Board of Directors are authorized to issue and designate shares of our preferred stock in additional series without stockholder approval under our charter documents and Delaware law
14. 105Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations
15. 106Our success is highly dependent on our ability to attract and retain highly skilled executive officers and employees
16. 107Our business and operations would suffer in the event of system failures or security breaches or incidents
17. 108Economic conditions may adversely affect our business
18. 109our ability to predict future operating results and on our financial condition and operating results. If global economic conditions remain uncertain or deteriorate, it may materially impact our business, operating results and financial condition
19. 110Litigation and other legal proceedings may adversely affect our business
20. 111Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses
21. 112Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory