SYLMAR, Calif—Second Sight Medical Products (NASDAQ:EYES), maker of the Argus II Retinal Prosthesis Systems, reported losses for the three- and nine-month periods ended Sept. 30, 2016.

Net sales in the third quarter of 2016 were $1.2 million compared with $2.2 million in the third quarter of 2015. Second Sight said the decrease in revenue was driven by three primary factors: 1) the reduced U.S. CMS reimbursement rate for 2016; 2) the timing of revenue recognition due to certain deal terms, and 3) geographic mix of implants that favored EMEA in the current year, where the company historically had received a lower level of revenue per implant. As a result, the revenue per implant was $84,000 in the third quarter of 2016, compared with $148,000 in the third quarter of 2015, the company said.

Gross loss was $1.4 million in the third quarter of 2016, compared to a $1.5 million gross profit in the third quarter of 2015. This gross loss is primarily attributed to lower revenues, unabsorbed production costs and excess inventory reserve adjustments when compared to the prior year, according to Second Sight. The cost of sales during the third quarter of 2016 was $2.6 million and includes roughly $700,000 of unabsorbed production costs due to lower production volumes and a $1.0 million reserve for excess inventory.

Total operating expenses in the third quarter of 2016 were $7.1 million, compared with $6.1 million in the third quarter of 2015, reflecting higher research and development costs and higher stock-based compensation and salaries. Net loss for the third quarter of 2016 was $8.5 million.

"We are pleased with two positive recent developments regarding our U.S. reimbursement: the final rule yesterday for a calendar year 2017 outpatient reimbursement rate of $150,000, and the approval of two new Category III CPT codes, providing clinicians the ability to bill for programming and re-programming services, starting in July,” said Will McGuire, president and CEO of Second Sight.

“In addition, as we evolve our commercialization strategy in the U.S., we are creating Centers of Excellence (COE) that are committed to ensuring competence in patient screening, post-surgery programming and rehabilitation. Ultimately, we expect our COE strategy to better serve patients and drive higher, more consistent volumes. Outside the U.S., we are advancing our reimbursement efforts in England and now Belgium, and have made good progress with our distribution partners in other new markets,” he said.

For the nine-month period, Second Sight generated $3.3 million in total revenue versus $6.6 million in 2015. The decline was primarily driven by a reduction in global implant volumes, and a reduced revenue per unit, resulting from a lower U.S. CMS reimbursement rate for 2016.

Gross loss in the first nine months of 2016 was $3.5 million, versus a gross profit of $3.0 million in 2015. The nine-month results for 2016 include the unabsorbed production costs and an excess inventory reserve adjustment mentioned above.

Total operating expenses during the first nine months of 2016 were $19.3 million versus $17.5 million during the same period in 2015. This increase includes higher general, administrative and R&D costs offset by lower clinical costs, including higher compensation and stock-based compensation costs.

Net loss for the nine months ended Sept. 30, 2016 was $22.8 million.