SYLMAR, Calif.—Second Sight Medical Products (NASDAQ:EYES), developers of the Argus II retinal implant, posted losses for the three- and six-month periods ended June 30, 2016.

For the six months ended June 30, 2016, Second Sight’s total revenue was $2.1 million compared to $4.4 million in 2015. The decline was primarily driven by a reduction in U.S. implant volumes as a result of customer concerns that the new Medicare outpatient payment rate, which became effective on January 1, 2016, would be insufficient to cover costs of the Argus II and related surgical procedure, the company said.

Gross loss in first six months of 2016 was $2.1 million, versus a gross profit of $1.5 million in 2015. The six month results for 2016 include the unabsorbed production costs and one-time inventory adjustment mentioned above. Total operating expenses during the first six months of 2016 were $12.3 million versus $11.4 million during the same period in 2015. This increase includes higher general and administrative costs offset by lower R&D and clinical costs, including higher compensation and stock-based compensation costs. Operating loss in the first half of 2016 was $14.3 million, compared to an operating loss of $9.9 million in the comparable 2015 period.

Total revenue was $1.0 million for the second quarter of 2016, compared with $2.7 million in the second quarter of 2015. There were 11 Argus II retinal prostheses implanted in the second quarter of 2016, compared to 20 for the second quarter of 2015. Although U.S. implant volumes rebounded modestly versus the prior quarter, the company said its business in the second quarter of 2016 was still recovering from lower Medicare outpatient payment rates, which became effective on January 1, 2016.

Gross loss was $2.2 million in the second quarter of 2016, compared to a $1.1 million gross profit in the second quarter of 2015. This gross loss is the result of approximately $1.0 million in revenue less $3.2 million in cost of sales. This cost of sales figure is comprised of approximately $700,000 of product costs, approximately $1 million of unabsorbed production costs due to a lower production volume and a one-time $1.5 million adjustment for excess inventory, the company said. Total operating expenses in the second quarter of 2016 were $6.3 million, compared with $6.0 million in the second quarter of 2015, reflecting higher administrative costs, including higher stock-based compensation and salaries.

“We appreciate the strong show of support from investors through our recent Rights Offering. This infusion of cash will help us to continue funding the important work we do serving a growing population who have lost their sight,” said Will McGuire, president and CEO of Second Sight. “We are also encouraged by the higher proposed CMS reimbursement rate for 2017, which would cover both the Argus II and the associated surgical procedure. Looking ahead, we believe that Second Sight is poised to see a rebound in implant numbers in the second half of the year and beyond.”