It has been about a month since the last earnings report for Glaukos (GKOS) . Shares have lost about 14.7% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Glaukos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.Glaukos Misses Q4 Earnings Estimates, Raises 2026 Reve ...

Summary of the Conference Call Transcript Industry Overview - **Industry**: Pharmaceuticals - **Context**: The pharmaceutical sector is being upgraded to overweight as a diversifier amid geopolitical tensions, particularly in the Middle East. Traditional hedges like bonds have failed to provide diversification, leading investors to seek alternatives such as gold, defense stocks, and now pharmaceuticals [2][14]. Core Points and Arguments 1. **Performance of Pharmaceuticals**: - The global pharma sector has performed in line with the market since February 27, 2026, but historically, it has outperformed during oil supply-side shocks, with an average outperformance of 8% in the following three months [3][19]. - The sector is currently discounting a PMI of 52, indicating it is positioned defensively against economic downturns [4][34]. 2. **Economic Indicators**: - A 10% rise in oil prices is estimated to reduce global GDP by 0.2%, while a similar rise in European retail gas prices could reduce GDP by 0.1% [4][39]. - The IMF and UBS forecasts suggest that if GDP growth falls below 1.5%, pharmaceuticals are likely to outperform [4][38]. 3. **Financial Health**: - The pharmaceutical sector has low leverage, making it resilient during periods of rising credit spreads. High yield spreads are expected to rise from 2.9% to 3.25% [5][44]. - The sector is currently undervalued, trading at a P/E ratio on par with the market, which is below its historical norm of a 13% premium [6][60]. 4. **Technological Advancements**: - The integration of Gen AI and quantum computing is expected to enhance R&D productivity and accelerate drug discovery, particularly for chronic diseases [6][50][51]. - Gen AI could potentially halve the cost and time required to bring a drug to market, improving the overall efficiency of pharmaceutical companies [51]. 5. **Market Positioning**: - Pharmaceuticals are currently under-owned, ranking as the seventh most shorted sector globally [6][55]. - The top recommended stocks include Roche, AstraZeneca, Eli Lilly, and Merck, which are considered undervalued with positive earnings revisions [6][62]. Additional Important Insights - **Healthcare Equipment**: The healthcare equipment sector is also recommended for overweight positioning, scoring high on the global scorecard [7][63]. - **Funding Strategy**: To fund the overweight in pharmaceuticals, a reduction in bank holdings is suggested, particularly in the US, due to concerns over credit spreads and macroeconomic indicators [8][76]. - **Consumer Plays**: In a scenario where the Middle East conflict resolves quickly, there is a favorable outlook for European consumer plays, with a small overweight in European banks maintained [9][76]. Conclusion The pharmaceutical sector is positioned as a strong defensive play amid current geopolitical tensions and economic uncertainties. With low leverage, potential for technological advancements, and favorable market conditions, it presents a compelling investment opportunity.

Disclaimer All statements other than statements of historical facts included in this presentation that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements are based on management's current expectations, assumptions, estimates and beliefs. Although we believe that we have a reasonable basis for forward-looking statements contained herein, we caution you that they are based on current expectations abo ...

Core Insights - Brown Capital Management's Small Company Fund underperformed in Q4 2025, with a decline of 1.50% compared to the Russell 2000® Growth index's gain of 1.22% [1] - The Fund's performance for the entire year 2025 was down 11.46%, significantly lagging behind the Index's return of 13.01% [1] - The Fund's investment strategy is based on company fundamentals, which showed strong revenue and earnings growth in 2025 [1] Company Highlights - Glaukos Corporation (NYSE:GKOS) is a key holding in the Fund, focusing on glaucoma treatment through its medical devices [2][3] - The stock of Glaukos Corporation experienced a one-month return of -3.22% and a 52-week decline of 3.20%, with a market capitalization of $6.908 billion as of February 20, 2026 [2] - Glaukos offers innovative products such as iStent, Infinite, and iDose, with iDose being a recent FDA-approved implant that allows continuous drug delivery for glaucoma treatment, marking a significant advancement in the field [3]

Record 2025 performance was primarily driven by the rapid adoption of iDose TR, which generated approximately $136 million in its first full year. Management attributes U.S. glaucoma growth to the successful advancement of the interventional treatment paradigm, shifting the standard of care toward earlier surgical intervention. International glaucoma net sales grew 13% on a constant currency basis in the fourth quarter, reflecting broad-based scaling of infrastructure despite emerging competitive tria ...

Core Insights - Glaukos Corporation reported a fourth-quarter 2025 adjusted loss of 28 cents per share, missing the Zacks Consensus Estimate by 0.06%, but showing improvement from a loss of 40 cents per share in the same quarter last year [1] - For the full year, the adjusted loss per share was 90 cents, reflecting a 51.6% increase from the previous year [1] - The GAAP loss per share was $2.32, compared to a loss of 60 cents in the prior-year quarter [1] Revenue Details - Glaukos achieved revenues of $143.1 million in the fourth quarter, marking a 36% year-over-year increase and surpassing the Zacks Consensus Estimate by 6% [2] - Total revenues for 2025 reached $507.4 million, up 32% year over year [2] Quarter in Detail - The company recorded net sales of $119.2 million for Glaucoma, a 42% increase year over year, while sales in Corneal Health totaled $24 million [3] Margin Analysis - Adjusted gross profit rose 40.3% year over year to $121.8 million, with an adjusted gross margin of 85.1% compared to 82.3% in the previous year [4] - Selling, general and administrative expenses increased by 37.2% year over year to $94.7 million, while research and development expenses totaled $43.7 million, up 19.5% [4] - Total operating expenses were $138.4 million, reflecting a 31% increase from the prior year [4] Financial Update - Glaukos ended the fourth quarter of 2025 with cash and cash equivalents and short-term investments of $282.6 million, up from $277.5 million at the end of the third quarter [6] 2026 Guidance - The company raised its guidance for 2026 revenues, expecting net sales in the range of $600-$620 million, with the Zacks Consensus Estimate at $610.6 million [7] - The loss per share estimate for 2026 is projected at 33 cents, indicating a 60.9% improvement year over year [7] Growth Drivers - Key growth drivers include the continued adoption of iDose TR and the launch of Epioxa, which supports long-term growth through ROI-focused investment and cash flow management [9] - U.S. glaucoma growth is driven by rapid adoption of iDose TR, broader physician utilization, and strong clinical confidence in the therapy's long-term outcomes [10] - International growth reflects broad-based strength across key regions, supported by investments in international infrastructure [11] Epioxa Launch - The recent FDA approval of Epioxa introduces a new topical cross-linking therapy for keratoconus, with drug availability expected soon [12] - The company is building out its Epioxa site-of-care network, aiming to cover nearly 50% of the U.S. population, expanding to 90% over time [12] - Payer engagement for Epioxa has begun, reaching insurers covering 50% of U.S. commercial lives [13] Overall Assessment - The quarter reinforces Glaukos' transition into a diversified ophthalmic growth company, with multiple commercial catalysts and pipeline milestones positioning it for durable double-digit revenue expansion [14] - Shares of Glaukos have gained 18.4% over the past six months, contrasting with a 7.1% decline in the industry [14]

Core Viewpoint - Glaukos Corp reported mixed financial results for the fourth quarter, with losses exceeding analyst expectations but sales surpassing estimates [1] Financial Performance - The company reported quarterly losses of 28 cents per share, missing the analyst consensus estimate of losses of 20 cents per share [1] - Quarterly sales were $143.100 million, exceeding the analyst consensus estimate of $136.396 million [1] Future Guidance - Glaukos affirmed its FY2026 sales guidance, projecting sales between $600.000 million and $620.000 million [1] Stock Performance - Following the earnings announcement, Glaukos shares fell by 0.1%, trading at $106.64 [1] Analyst Ratings and Price Targets - Needham analyst David Saxon maintained a Buy rating on Glaukos and raised the price target from $125 to $127 [3] - Wells Fargo analyst Larry Biegelsen maintained an Overweight rating and increased the price target from $122 to $135 [3]

Core Insights - Glaukos reported revenue of $143.12 million for Q4 2025, a year-over-year increase of 35.7% and slightly above the Zacks Consensus Estimate of $142.93 million, resulting in a surprise of +0.13% [1] - The company reported an EPS of -$0.28, which is an improvement from -$0.40 a year ago, but fell short of the consensus estimate of -$0.22, leading to an EPS surprise of -26.47% [1] Revenue Performance - International Glaucoma revenues reached $32.78 million, exceeding the average estimate of $31.67 million by six analysts, representing a year-over-year increase of +17.6% [4] - United States Glaucoma revenues were reported at $86.4 million, surpassing the average estimate of $81.11 million, with a significant year-over-year change of +53.5% [4] - Net Sales for Corneal Health amounted to $24 million, exceeding the average estimate of $21.06 million, reflecting a year-over-year increase of +12.4% [4] - Net Sales for Glaucoma totaled $119.2 million, above the average estimate of $112.79 million, indicating a year-over-year change of +41.7% [4] Stock Performance - Over the past month, Glaukos shares have returned -9%, compared to a -1.4% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Glaukos reported a quarterly loss of $0.28 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.22, representing an earnings surprise of -26.47% [1] - The company achieved revenues of $143.12 million for the quarter ended December 2025, exceeding the Zacks Consensus Estimate by 0.13% and showing a year-over-year increase from $105.5 million [2] - The stock has underperformed the market, losing about 3.1% since the beginning of the year compared to the S&P 500's decline of 0.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.18 on revenues of $131.98 million, and for the current fiscal year, it is -$0.33 on revenues of $610.61 million [7] - The estimate revisions trend for Glaukos was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Medical - Instruments industry, to which Glaukos belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, TransMedics, is expected to report quarterly earnings of $0.41 per share, reflecting a year-over-year change of +115.8%, with revenues projected to be $155.91 million, up 28.2% from the previous year [9][10]

Financial Data and Key Metrics Changes - Glaukos reported record fourth quarter consolidated net sales of $143.1 million, up 36% on a reported basis and 34% on a constant currency basis compared to the year-ago quarter [7] - For the full year of 2025, consolidated record net sales reached $507.4 million, growing 32% versus 2024 [7] - The company reaffirmed its full year 2026 net sales guidance range of $600 million to $620 million, implying over 20% year-over-year growth at the midpoint [7] Business Line Data and Key Metrics Changes - The U.S. glaucoma franchise achieved record fourth quarter net sales of $86.4 million, reflecting a strong year-over-year growth of 53%, driven by iDose TR, which generated approximately $45 million in sales during the fourth quarter [9] - The international glaucoma franchise delivered net sales of $32.8 million, with year-over-year growth of 18% on a reported basis and 13% on a constant currency basis [11] - The corneal health franchise reported net sales of $24 million, with year-over-year growth of 12%, including $21.4 million from Photrexa [12] Market Data and Key Metrics Changes - The company noted strong physician adoption of iDose TR, with sales of approximately $136 million in 2025, indicating positive clinical outcomes and growing contributions [9] - The international market is expected to face competitive product trialing headwinds in major markets, partially offset by contributions from iStent infinite following its EU MDR certification [11] Company Strategy and Development Direction - Glaukos aims to advance the interventional glaucoma treatment paradigm with iDose TR and launch Epioxa, targeting new markets in interventional keratoconus and rare diseases [8] - The company is focused on capital allocation, emphasizing ROI-driven investments and cash flow while advancing a robust industry-leading pipeline [9] - The FDA approval of Epioxa is seen as a pivotal moment, allowing the company to redefine its go-to-market approach and expand patient care access [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong growth momentum into 2026, driven by the advancements in iDose TR and the launch of Epioxa [8] - The company acknowledged potential challenges in the transition from Photrexa to Epioxa, particularly in Q2 and Q3, but expects stronger results in Q4 as the J-code becomes effective [37] - Management highlighted the importance of clinical education and payer engagement to ensure successful adoption of Epioxa [25] Other Important Information - Glaukos has invested over $1 billion in R&D since inception, focusing on chronic and rare ophthalmic diseases [21] - The company is committed to pioneering new marketplaces within ophthalmology, emphasizing innovation as a core value [22] Q&A Session Summary Question: Can you elaborate on the early positive coverage determinations for Epioxa? - Management noted that early positive outcomes have been observed with a handful of Medicaid societies and one of the larger Blue plans, with no formal pushback on pricing dynamics [25] Question: What drove the sequential deceleration in iDose revenue in Q4? - Management indicated that the mix shift towards Medicare Advantage and specific dynamics related to glaucoma procedures impacted revenue, but they expect continued growth in Q1 [29] Question: Can you provide more detail on the components of the FY 2026 guidance? - Management expects high single-digit growth internationally, with U.S. glaucoma growth driven entirely by iDose TR, while corneal health is expected to grow modestly with some volatility [35][37] Question: How do you view the interplay between iDose and TREX? - Management emphasized the goal of providing multiple treatment options for patients, with expectations for different surgeons to choose between iDose TR and TREX based on clinical profiles [49] Question: What are the expectations for operating expenses in 2026? - Management anticipates mid-teen year-over-year growth in operating expenses, aiming for around $555 million to $560 million, while maintaining operating leverage [54]