Sight Sciences, Inc. (SGHT) stock intrinsic value fair value estimate & owner earnings analysis

Sight Sciences sells eye-surgery devices. Its main business is Interventional Glaucoma (the OMNI and SION surgical systems, which lower eye pressure), which produced $75.7 million of 2025 revenue. A much smaller Interventional Dry Eye line (the TearCare system) produced $1.6 million. Total 2025 revenue was $77.4 million, down 3.1%, with an 86% gross margin. The product economics are excellent; the problem is that operating costs of $103.8 million exceed gross profit of $66.7 million, and the company has never produced positive owner earnings. Owner earnings, our measure of what the business actually earns for shareholders, are operating cash flow less working-capital swings, less stock compensation, less the capital spending needed to stay in business. On that basis the company lost about $2.01 per share in 2021, $1.75 in 2022, $1.10 in 2023, $1.01 in 2024 and $0.70 in 2025 (2025 operating cash flow was negative $29.7 million and stock compensation was $13.1 million). The trend is clearly improving, helped by an August 2025 workforce reduction. In the first half of 2026 revenue rose to $43.1 million from $37.1 million and operating cash outflow narrowed to $12.7 million from $19.1 million; we estimate the first-half loss on our measure at roughly $18 million versus $25 million a year earlier. That is encouraging, but it is still a loss, and only two quarters of improvement are not enough to change our view of the level. Bear case: $0 per share. Medicare coverage limits that took effect in November 2024 in five of the seven regional Medicare contractors restrict billing when more than one surgical glaucoma procedure is done together, and the company says further restrictions from the remaining two would reduce volumes further. Losses continue, the $40.0 million Hercules term loan (plus a $2.4 million fee due at maturity, floating rate of at least 10.35%, with minimum-cash and minimum-revenue covenants) has to be serviced from an unprofitable business, and the patent verdict is lost. Nothing we can evidence produces positive earnings, so the operating business is worth nothing to shareholders. Base case: $0 per share. We credit no growth. Revenue growth in 2026, gains for TearCare reimbursement (two Medicare contractors set pricing in late 2025), and further cost cuts are all plausible but none is locked in, so we do not count them. At the 2025 loss level the business consumes value rather than creating it. Our method does not add the $92.0 million of cash held at the end of 2025 or subtract debt; leverage is reflected in the bear case only. This means the shares' value largely depends on whether the company can reach profitability before that cash is used up, which our method deliberately does not assume. Bull case: $0.55 per share. In April 2024 a jury awarded Sight Sciences $34 million against Alcon (maker of the Hydrus stent) for patent infringement, made up of $5.5 million of lost profits and $28.5 million of royalties. Post-trial rulings and any appeal are still pending, and Alcon has requested patent reexaminations that the Patent Office agreed in September 2025 to proceed with. If the verdict is upheld and collected, roughly $34 million spread over about 54.5 million shares is about $0.62 per share, or about $0.55 after allowing two years of waiting at a 6% discount rate. We count nothing beyond this: no growth and no profitability. What would make this wrong: the method values only earning power that is already demonstrated. If the improvement seen in the first half of 2026 continues, the operating loss disappears, and the 86% gross margin then produces strong earnings on a small cost base, the business is worth far more than we show. Conversely, an unfavourable outcome in the patent reexaminations or new coverage restrictions would remove the only value in the bull case. Reconciling the company's reported cash flow to net loss plus non-cash charges showed no unexplained gap. The margin-of-safety price of $0.25 is deliberately far below the bull case given the size of the uncertainty, and applies only once the business shows sustained positive owner earnings.