Glaukos(GKOS) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information This section provides key administrative details of the Form 10-Q filing, including the reporting period, registrant status, and outstanding common stock - This is a Quarterly Report (Form 10-Q) for the period ended June 30, 2025, filed by Glaukos Corporation (Commission file number: 001-37463)[2] Common Stock Trading Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock | GKOS | New York Stock Exchange | - The registrant is a Large accelerated filer and is not a shell company[3][4] - As of July 31, 2025, there were 57,349,987 shares of Common Stock outstanding[4] Note Regarding Forward-Looking Statements This section cautions readers about forward-looking statements in the report, which are subject to risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements regarding future operations, expenses, capital expenditures, income, macroeconomic impact, growth strategy, product development, regulatory environment, and market position[10] - These statements are based on management's beliefs and assumptions and involve risks, uncertainties, and other factors that may cause actual results to differ materially[10][11] - Readers are cautioned not to place undue reliance on these statements and to review the 'Risk Factors' section[11] Risk Factors Summary This section provides a high-level overview of the principal risks facing the company, categorized by business, indebtedness, regulatory environment, intellectual property, and common stock Risks Related to Our Business This section summarizes key business risks, including the potential failure of iDose TR commercial success, negative impacts from economic downturns and public health crises, supply/manufacturing disruptions, inability to achieve sustained profitability, failure to generate sufficient sales or develop new products, risks of international operations, and challenges in managing growth and retaining personnel - Failure to achieve commercial success of iDose TR could materially impact the business[17] - Downturns or volatility in general economic conditions and public health crises could harm the business[17] - Supply and/or manufacturing disruptions impacting principal revenue-producing products could reduce gross margins and negatively impact operating results[17] - The company may not reach sustained profitability or generate sufficient sales of commercialized products[17] - Risks associated with international operations, failure to meet customer expectations, misuse of products by surgeons, and inability to manage anticipated growth effectively are significant[17] Risks Related to Our Indebtedness This section highlights risks related to the company's debt, including the potential for future indebtedness to limit cash flow for operations and the impact of capped call transactions on common stock value and counterparty risk - If future indebtedness is incurred, debt service obligations could limit cash flow and adversely affect financial condition and operating results[17] - Capped call transactions may affect the value of common stock and subject the company to counterparty risk[17] Risks Related to Our Regulatory Environment This section outlines risks stemming from the regulatory environment, such as the adverse effects of healthcare legislative reform and changes in trade policies, the high cost and potential failure to comply with extensive regulations, and the negative impact of inadequate or inconsistent reimbursement for products - Healthcare legislative reform measures and changes in U.S. and international trade policies may have a material adverse effect on the business and results of operations[17] - Compliance with applicable regulations can be costly, and failure to comply could harm the business, financial condition, and operating results[17] - Legislative or regulatory reform of the healthcare system could hinder or prevent products' commercial success[17] - Inadequate or inconsistent reimbursement for products may adversely impact the business[17] Risks Related to Our Intellectual Property This section details risks concerning intellectual property, including the potential failure to adequately protect IP, which could allow competitors to develop similar products, and the costs and interference associated with intellectual property claims or litigation - Failure to protect intellectual property could substantially impair the ability to compete[17] - Intellectual property claims or litigation could be costly, time-consuming, unsuccessful, and interfere with the ability to commercialize products[17] Risks Related to Our Common Stock This section addresses risks related to the company's common stock, specifically anti-takeover provisions in its Certificate of Incorporation and Bylaws that could make acquisitions more difficult and limit stockholders' actions, and exclusive forum provisions that could restrict stockholders' choice of judicial forum - Provisions in the Certificate of Incorporation and Bylaws limit stockholders' ability to take certain actions and could delay or discourage takeover attempts[17] - The Certificate of Incorporation designates the sole and exclusive forum for certain types of actions and proceedings, which could limit stockholders' ability to obtain a favorable judicial forum[17] PART I: FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Glaukos Corporation, including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with accompanying notes. These statements provide a snapshot of the company's financial position and performance for the periods ended June 30, 2025, and December 31, 2024 (balance sheet), and for the three and six months ended June 30, 2025 and 2024 (income and cash flow statements) Condensed Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Asset/Liability Category | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Assets: | | | | Cash and cash equivalents | $100,813 | $169,626 | | Short-term investments | $173,973 | $149,289 | | Accounts receivable, net | $82,985 | $60,744 | | Inventory | $64,621 | $57,678 | | Total current assets | $436,065 | $449,792 | | Property and equipment, net | $111,816 | $97,867 | | Intangible assets, net | $270,491 | $263,445 | | Goodwill | $66,710 | $66,134 | | Total assets | $986,958 | $974,756 | | Liabilities & Equity: | | |\ | Total current liabilities | $79,136 | $75,125 | | Total liabilities | $221,846 | $207,825 | | Total stockholders' equity | $765,112 | $766,931 | | Total liabilities and stockholders' equity | $986,958 | $974,756 | - Total assets increased by approximately $12.2 million, driven by increases in short-term investments, accounts receivable, inventory, and property and equipment, partially offset by a decrease in cash and cash equivalents[19] - Total liabilities increased by approximately $14.0 million, primarily due to increases in accrued liabilities and other liabilities[19] Condensed Consolidated Statements of Operations This section presents the company's revenues, expenses, and net loss for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $124,120 | $95,690 | $230,784 | $181,312 | | Cost of sales | $26,896 | $22,550 | $51,212 | $42,808 | | Gross profit | $97,224 | $73,140 | $179,572 | $138,504 | | Operating expenses | $119,913 | $103,114 | $222,939 | $207,544 | | Loss from operations | $(22,689) | $(29,974) | $(43,367) | $(69,040) | | Net loss | $(19,657) | $(50,545) | $(37,803) | $(91,383) | | Basic and diluted net loss per share | $(0.34) | $(1.00) | $(0.66) | $(1.82) | - Net sales increased by 30% for the three months and 27% for the six months ended June 30, 2025, compared to the prior year periods[21] - Net loss significantly decreased by 61% for the three months and 59% for the six months ended June 30, 2025, primarily due to reduced non-operating expenses related to convertible senior notes[21][178][193] Condensed Consolidated Statements of Comprehensive Loss This section outlines the company's net loss and other comprehensive income or loss components for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(19,657) | $(50,545) | $(37,803) | $(91,383) | | Other comprehensive income (loss): | | | | | | Foreign currency translation income | $274 | $633 | $127 | $988 | | Unrealized (loss) income on short-term investments | $(7) | $121 | $130 | $38 | | Other comprehensive income | $267 | $754 | $257 | $1,026 | | Total comprehensive loss | $(19,390) | $(49,791) | $(37,546) | $(90,357) | - Total comprehensive loss decreased significantly, mirroring the reduction in net loss, with minor contributions from foreign currency translation income and unrealized gains/losses on short-term investments[24] Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's stockholders' equity, including net loss, stock-based compensation, and common stock issuances, for the period ended June 30, 2025 Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :------------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $766,931 | $765,112 | Key Changes (December 31, 2024 to June 30, 2025): * Common stock issued under stock plans, net: $2,198 (Q1 2025) + $2,524 (Q2 2025) * Stock-based compensation: $12,986 (Q1 2025) + $18,019 (Q2 2025) * Net loss: $(18,146) (Q1 2025) + $(19,657) (Q2 2025) - Total stockholders' equity slightly decreased from $766.9 million at December 31, 2024, to $765.1 million at June 30, 2025, primarily due to net losses partially offset by stock-based compensation and common stock issuances[19][28] Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Activity Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | | Operating Activities | $(11,542) | $(52,239) | | Investing Activities | $(57,730) | $5,481 | | Financing Activities | $4,195 | $21,759 | | Effect of exchange rate changes | $(4,635) | $(1,516) | | Net decrease in cash, cash equivalents and restricted cash | $(69,712) | $(26,515) | | Cash, cash equivalents and restricted cash at end of period | $104,647 | $72,808 | - Net cash used in operating activities decreased significantly from $(52.2) million in 2024 to $(11.5) million in 2025, primarily due to a reduced net loss and favorable changes in working capital[30][206][207][208] - Investing activities shifted from providing $5.5 million in 2024 to using $(57.7) million in 2025, driven by cash paid for acquisitions (Mobius, Aliso Building) and increased purchases of short-term investments[30][209][211][212] - Financing activities provided less cash in 2025 ($4.2 million) compared to 2024 ($21.8 million), mainly due to lower proceeds from stock option exercises and share purchases[30][214][215] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, including accounting policies, balance sheet details, and recent acquisitions Note 1. Organization and Basis of Presentation This note describes Glaukos Corporation's business, the basis of financial statement preparation, and significant recent acquisitions - Glaukos Corporation is an ophthalmic pharmaceutical and medical technology company focused on glaucoma, corneal disorders, and retinal diseases, known for its Micro-Invasive Glaucoma Surgery (MIGS) devices and iDose TR[31] - The financial statements are prepared in accordance with GAAP for interim information and should be read in conjunction with the 2024 Annual Report on Form 10-K[33][34] - On May 16, 2025, the Company acquired Mobius Therapeutics, LLC for $12.4 million (net of cash acquired), including contingent consideration, to expand its glaucoma product portfolio with Mitosol[35] - On April 4, 2025, the Company purchased the Aliso Building for $16.6 million for future expansion opportunities[36][37] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting policies and estimates used in preparing the financial statements, including cash and cash equivalents, and recent accounting pronouncements - The preparation of financial statements requires management estimates and judgments, considering the impact of the macroeconomic environment (inflation, supply shortages, foreign exchange rates)[38][39] Cash, Cash Equivalents and Restricted Cash (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $100,813 | $169,626 | | Restricted cash | $3,834 | $4,733 | | Total | $104,647 | $174,359 | - The Company adopted ASU No. 2023-09 (Income Taxes) and is evaluating its impact on the 2025 Form 10-K, not expecting a material impact. ASU No. 2024-03 (Income Statement Expenses) is not yet adopted[41][42] Note 3. Balance Sheet Details This note provides detailed breakdowns of specific balance sheet accounts, including short-term investments, accounts receivable, inventory, and accrued liabilities Short-term Investments (Estimated Fair Value, in thousands) | Type of Investment | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | U.S. treasury securities | $142,303 | $115,891 | | Bank certificates of deposit | $8,608 | $5,623 | | Commercial paper | $1,990 | - | | Corporate notes | $13,170 | $16,938 | | Asset-backed securities | $4,887 | $7,819 | | Municipal bonds | $3,015 | $3,018 | | Total | $173,973 | $149,289 | - Accounts receivable, net, increased to $83.0 million at June 30, 2025, from $60.7 million at December 31, 2024, primarily due to higher iDose TR sales with extended payment terms[45] Inventory (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Finished goods | $23,909 | $23,667 | | Work in process | $17,909 | $14,663 | | Raw material | $22,803 | $19,348 | | Total | $64,621 | $57,678 | Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Accrued bonuses | $13,365 | $22,025 | | Accrued payroll taxes | $4,930 | $1,436 | | Accrued Employee Stock Purchase Plan liability | $5,342 | $2,842 | | Accrued sales rebates | $12,233 | $7,956 | | Accrued vacation benefits | $6,240 | $5,530 | | Other accrued liabilities | $23,342 | $22,310 | | Total | $65,452 | $62,099 | Note 4. Fair Value Measurements This note explains the company's fair value measurement classifications and details the valuation of financial instruments and contingent consideration - Fair value measurements are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[51] - Money market funds are Level 1. U.S. government agency bonds, U.S. treasury securities, bank certificates of deposit, commercial paper, municipal bonds, corporate notes, and asset-backed securities are Level 2[58][59] - Contingent consideration from acquisitions is a Level 3 measurement, estimated using a Monte Carlo simulation model and other unobservable inputs. The liability was $9.3 million at June 30, 2025, up from $1.6 million at December 31, 2024, primarily due to the Mobius acquisition[60][62] Note 5. Real Estate Acquisitions and Leases This note details the acquisition of the Aliso Building and provides information on the company's operating and finance lease liabilities and their maturities - On April 4, 2025, the Company acquired the Aliso Building for approximately $16.6 million, accounted for as an asset acquisition, with the purchase price allocated to land, building, and intangible assets/liabilities[64][65][67] Allocated Purchase Price of Aliso Building (in thousands) | Component of Value | Assets | Liabilities | | :----------------------- | :----- | :---------- | | Land | $10,127 | - | | Building | $5,800 | - | | Site improvements | $412 | - | | Tenant improvements | $60 | - | | Tangible assets | $16,399 | $0 | | Leasehold improvements (below market) | - | $(459) | | Leases in place | $666 | - | | Intangible assets | $666 | $(459) | | Total fair value | $17,065 | $(459) | | Allocated purchase price | $16,606 | | - The Company has operating and finance leases for facilities and equipment, with non-cancelable terms ranging from one to thirteen years, including options to extend[71][72] Maturity of Lease Liabilities (in thousands) | Period | Operating Leases | Finance Leases | | :-------------- | :--------------- | :------------- | | Remainder of 2025 | $2,135 | $2,690 | | 2026 | $4,040 | $5,487 | | 2027 | $4,315 | $5,651 | | 2028 | $4,264 | $5,821 | | 2029 | $4,268 | $5,995 | | 2030 | $4,254 | $6,175 | | Thereafter | $40,248 | $84,341 | | Total lease payments | $63,524 | $116,160 | | Less: imputed interest | $26,238 | $46,101 | | Total lease liabilities | $37,286 | $70,059 | Note 6. Business Combinations This note describes the acquisition of Mobius Therapeutics, LLC, including the merger consideration allocation and details of contingent consideration - On May 16, 2025, Glaukos acquired Mobius Therapeutics, LLC for $12.4 million (net of cash acquired), including contingent consideration of $7.7 million, to expand its glaucoma product portfolio with Mitosol[78][79] Allocation of Mobius Merger Consideration (in thousands) | Assets Acquired | Amount | | :------------------------ | :----- | | Cash and cash equivalents | $4,349 | | Accounts receivable | $1,223 | | Inventory | $2,209 | | Prepaid expenses and other current assets | $99 | | Intangible assets | $17,800 | | Goodwill | $575 | | Liabilities Assumed | | | Accounts payable | $1,065 | | Accrued liabilities | $704 | | Fair value of net assets acquired | $24,486 | Contingent Consideration Breakdown: * Potential future net sales-based milestone payments up to $80.0 million * Future single-digit percentage royalty payments based on net sales - Goodwill of $0.6 million is attributable to the assembled workforce, intellectual property, and expected synergies, and is deductible for tax purposes once contingent consideration is paid[80] Note 7. Intangible Assets and Goodwill This note provides a breakdown of intangible assets acquired from Mobius, other recognized intangible assets, and the composition and amortization schedule of all intangible assets and goodwill Mobius Intangible Assets Acquired (in thousands) | Intangible Asset | Estimated Fair Value | Useful Life (in years) | | :--------------------------- | :------------------- | :--------------------- | | Developed intellectual property | $17,400 | 9.0 | | Customer relationships | $400 | 9.0 | | Total | $17,800 | | - The Company recognized a $5.2 million intangible asset related to minimum compensation payments under a sales agreement with Celanese Canada ULC for raw materials used in iDose TR, amortized over four years[83] Composition of Intangible Assets and Goodwill (in thousands) | Category | June 30, 2025 Net Amount | December 31, 2024 Net Amount | | :------------------------------------- | :----------------------- | :--------------------------- | | Intangible assets subject to amortization | $151,591 | $144,545 | | In-process research and development | $118,900 | $118,900 | | Total Intangible Assets | $270,491 | $263,445 | | Goodwill | $66,710 | $66,134 | Expected Amortization Expense for Finite-Lived Intangible Assets (in thousands) | Period | Amortization Expense | | :---------------- | :------------------- | | Remainder of 2025 | $12,830 | | 2026 | $25,976 | | 2027 | $26,326 | | 2028 | $24,205 | | 2029 | $23,526 | | Thereafter | $38,728 | | Total amortization | $151,591 | Note 8. Revenue from Contracts with Customers This note details the company's net sales by product category and geography, revenue recognition policies, and contract liabilities - Net sales are primarily from iStent family products, Photrexa, and iDose TR, with revenue recognized when control of products transfers to customers, net of variable consideration like rebates and discounts[88][89][90] Disaggregation of Revenue by Product Category and Geography (in thousands) | Category & Geography | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Glaucoma: | | | | | | United States | $72,282 | $49,751 | $131,410 | $91,732 | | International | $31,251 | $26,131 | $60,260 | $51,369 | | Corneal Health: | | | | | | United States | $18,237 | $17,069 | $34,179 | $32,776 | | International | $2,350 | $2,739 | $4,935 | $5,435 | | Total: | $124,120 | $95,690 | $230,784 | $181,312 | - Accounts receivable increased due to iDose TR sales with extended payment terms. Contract liabilities include volume-based rebates and Medicaid Drug Rebate Program (MDRP) allowances, totaling $12.2 million at June 30, 2025[93][99][100] Note 9. Net Loss per Share This note explains the calculation of basic and diluted net loss per share and lists potentially dilutive securities not included due to the company's net loss position - Basic and diluted net loss per share are the same for the periods presented due to the Company's net loss position, making common stock equivalents anti-dilutive[102] Potentially Dilutive Securities Not Included in Diluted Net Loss per Share (in thousands of common stock equivalent shares) | Security Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Convertible senior notes | - | 1,025 | - | 1,025 | | Stock options outstanding | 1,958 | 2,264 | 2,043 | 2,241 | | Unvested restricted stock units | 877 | 830 | 817 | 933 | | Employee stock purchase plan | 3 | 28 | 12 | 24 | | Total | 2,838 | 4,147 | 2,872 | 4,223 | Note 10. Debt This note details the exchange and redemption of convertible notes and the unwinding of capped call transactions, impacting the company's debt structure - In June 2024, the Company exchanged $230.0 million of its 2.75% convertible notes due 2027 for 4,253,423 shares of common stock. The remaining $57.5 million was redeemed on December 16, 2024[104][105] - Interest expense related to Convertible Notes was $1.9 million (3 months) and $4.0 million (6 months) for June 30, 2024, including amortization of debt issuance costs[106] - In December 2024, the Company unwound 50% of its capped call transactions, receiving $53.2 million in cash settlement[107][108] Note 11. Stock-Based Compensation This note provides the allocation of stock-based compensation expense across various categories and details the total unamortized stock-based compensation Allocation of Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $1,245 | $838 | $2,217 | $1,564 | | Selling, general and administrative | $12,549 | $7,013 | $20,983 | $14,285 | | Research and development | $4,225 | $3,462 | $7,805 | $6,629 | | Total | $18,019 | $11,313 | $31,005 | $22,478 | - Total unamortized stock-based compensation expense was approximately $104.2 million at June 30, 2025, with $12.2 million for stock options and $92.0 million for RSUs, recognized over remaining vesting terms[109][110][111] Note 12. Income Taxes This note discusses the effective tax rate, unrecognized tax benefits, and the potential impact of new tax legislation on the company's financial statements - The effective tax rate for Q2 2025 was (1.28)% and for 6M 2025 was (1.54)%, primarily due to NOL carryforwards, partially offset by state and foreign income taxes[113] - Gross unrecognized tax benefits were $36.2 million at June 30, 2025, an increase from $34.6 million at December 31, 2024[114] - The Company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its condensed consolidated financial statements[115] Note 13. Commitments and Contingencies This note outlines the company's commitments, including a secured letter of credit and the Executive Deferred Compensation Plan liability - The Company has a secured letter of credit related to its Aliso Facility, with approximately $3.8 million in restricted cash as of June 30, 2025[116] - The Executive Deferred Compensation Plan liability was approximately $17.3 million at June 30, 2025, shadowed by company-owned life insurance (COLIs) with a fair value of $17.2 million[117] Note 14. Business Segment Information This note clarifies that the company operates as a single segment and provides a breakdown of selected segment expenses - The Company operates as one operating segment: the development and commercialization of ophthalmic therapies for glaucoma, corneal disorders, and retinal diseases[118] Selected Segment Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $26,896 | $22,550 | $51,212 | $42,808 | | Sales, marketing & distribution | $40,025 | $35,210 | $74,468 | $71,431 | | Research & development | $25,802 | $19,805 | $48,724 | $38,238 | | Clinical | $10,736 | $14,621 | $20,167 | $26,914 | | General & administrative | $43,350 | $30,978 | $79,580 | $56,732 | | In-process research and development | - | $2,500 | - | $14,229 | | Significant segment expenses | $146,809 | $125,664 | $274,151 | $250,352 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, highlighting key financial indicators, recent developments, market updates, business outlook, and a detailed comparison of financial performance for the three and six months ended June 30, 2025, versus 2024. It also discusses liquidity, capital resources, and critical accounting policies Overview This section provides a high-level summary of Glaukos' business, key financial indicators, and overall financial performance for the reporting periods - Glaukos is an ophthalmic pharmaceutical and medical technology company focused on glaucoma, corneal disorders, and retinal disease, with key products including MIGS devices (iStent family) and iDose TR[121] - Key financial indicators are net sales, gross margin, operating expenses, and cash on hand[122] Financial Overview (in thousands, except gross margin) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :---------------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Net sales | $124,120 | $95,690 | $230,784 | $181,312 | | Gross margin | 78% | 76% | 78% | 76% | | Operating expenses | $119,913 | $103,114 | $222,939 | $207,544 | | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------------------- | :------------ | :---------------- | | Cash, cash equivalents, short-term investments and restricted cash | $278,620 | $323,648 | - The company incurred net losses of $19.7 million for Q2 2025 and $37.8 million for 6M 2025, with an accumulated deficit of $783.2 million as of June 30, 2025[124] Recent Developments This section highlights significant recent corporate activities, including strategic acquisitions and real estate purchases, impacting the company's portfolio and infrastructure - On May 16, 2025, Glaukos acquired Mobius Therapeutics, LLC for $12.4 million (net of cash acquired), including contingent consideration, to expand its glaucoma portfolio with Mitosol[125] - On April 4, 2025, the company purchased the Aliso Building for $16.6 million, providing future expansion opportunities adjacent to its corporate headquarters[126] Market and Business Update This section discusses the impact of global economic conditions, foreign currency fluctuations, regulatory certifications, and Medicare reimbursement changes on the company's market and business operations - Global economic conditions, including inflation, supply shortages, and foreign exchange rate fluctuations, have led to higher costs for components and raw materials, impacting gross margins and product delivery[127] - Foreign currency fluctuations positively affected international glaucoma net sales growth by approximately 410 basis points for Q2 2025 and 25 basis points for 6M 2025, primarily due to the Euro and Japanese yen[128] - In June 2025, the company received EU MDR certification for its iStent family of products, with commercial launch activities in key EU markets expected in the second half of 2025[129] - The unique, permanent J-code (J7355) for iDose TR became effective July 1, 2024, and temporary CPT codes (0660T and 0661T) for its procedural component were assigned to APC 5492, retroactively effective January 1, 2024[133] - Proposed 2026 Medicare rules reflect a modest increase in facility fee payment rates for glaucoma products but reductions in physician fee payment rates for cataract and surgical MIGS procedures[134] Business Outlook This section provides management's expectations regarding future product utilization, market disruptions, and regulatory timelines for key product candidates - Utilization of iDose TR is anticipated to increase as reimbursement processes become more timely and consistent across Medicare Administrative Contractors (MACs)[136] - CMS physician fee payment rate decreases and MAC LCDs have disrupted traditional customer ordering patterns, reducing U.S. Glaucoma sales volumes for iStent products used with cataract surgery[137] - Royalty income from the Hydrus® Microstent settlement agreement expired on April 26, 2025[138] - The FDA has set a PDUFA date of October 20, 2025, for Epioxa, a potential surgery-free topical drug therapy for keratoconus, which may cause market disruption as it transitions from Photrexa[140] - A PDUFA date in January 2026 is set for the supplemental NDA for re-administration of iDose TR[141] Components of Results of Operations This section defines the key components contributing to the company's financial results, including net sales, cost of sales, operating expenses, and non-operating items - Net sales are primarily from iStent family, iDose TR, Photrexa, and bioactivation systems, sold through direct sales in the U.S. and direct subsidiaries/distributors internationally[144][145] - Cost of sales includes raw materials, labor, manufacturing overhead, and amortization of intangible assets (Avedro, Mobius developed technology, Celanese agreement), totaling $5.8 million for Q2 2025 and $11.4 million for 6M 2025[148][151] - Selling, General and Administrative (SG&A) expenses include personnel costs, marketing, post-approval studies, and professional fees. Amortization of customer relationships intangible assets was less than $0.1 million for Q2 2025[153][154] - Research and Development (R&D) expenses cover new product development, pre-clinical studies, and clinical trials. R&D expenses are expected to increase with expanding pharmaceutical development and clinical trials[156][157][158] - Acquired In-Process Research and Development (IPR&D) expenses relate to technology acquisitions not deemed business combinations. No IPR&D expenses were incurred in Q2 2025[160][177] - Non-operating expense, net, includes interest income/expense and unrealized foreign currency gains/losses. Income taxes are primarily state and foreign income taxes, offset by NOL carryforwards[161][162] Results of Operations This section provides a detailed comparative analysis of the company's financial performance for the three and six months ended June 30, 2025, versus 2024 Comparison of Three Months Ended June 30, 2025 and June 30, 2024 This section compares the company's net sales, expenses, and net loss for the second quarter of 2025 against the same period in 2024 Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | % Increase (decrease) | | :----------------------------------- | :---------- | :---------- | :-------------------- | | Net sales | $124,120 | $95,690 | 30% | | Cost of sales | $26,896 | $22,550 | 19% | | Gross profit | $97,224 | $73,140 | 33% | | Selling, general and administrative | $83,375 | $66,188 | 26% | | Research and development | $36,538 | $34,426 | 6% | | Acquired in-process research and development | - | $2,500 | (100)% | | Total operating expenses | $119,913 | $103,114 | 16% | | Loss from operations | $(22,689) | $(29,974) | (24)% | | Total non-operating income (expense), net | $3,280 | $(20,240) | NM | | Income tax provision | $248 | $331 | (25)% | | Net loss | $(19,657) | $(50,545) | (61)% | - U.S. glaucoma net sales increased by 45% to $72.3 million, driven by higher iDose TR sales, partially offset by lower iStent family product volumes due to MIGS restrictions[167] - International glaucoma sales increased by 20% to $31.3 million, reflecting growing volume in key markets (Japan, France, UK, Germany) and favorable foreign exchange rates[168] - Corneal health net sales increased by 4% to $20.6 million, with U.S. Photrexa sales positively impacted by higher average sales prices and new accounts, partially offset by MDRP rebates[169] - SG&A expenses increased by $17.2 million (26%), with $7.1 million from increased compensation (including $5.5 million in stock-based compensation) and $10.1 million from discretionary expenses[172][173][174] - Non-operating income, net, improved by $23.5 million, primarily due to a decrease of $18.0 million in expense related to the Convertible Notes exchange and a $3.6 million change in unrealized foreign currency amounts[178] Comparison of Six Months Ended June 30, 2025 and June 30, 2024 This section compares the company's net sales, expenses, and net loss for the first six months of 2025 against the same period in 2024 Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | % Increase (decrease) | | :----------------------------------- | :---------- | :---------- | :-------------------- | | Net sales | $230,784 | $181,312 | 27% | | Cost of sales | $51,212 | $42,808 | 20% | | Gross profit | $179,572 | $138,504 | 30% | | Selling, general and administrative | $154,048 | $128,163 | 20% | | Research and development | $68,891 | $65,152 | 6% | | Acquired in-process research and development | - | $14,229 | (100)% | | Total operating expenses | $222,939 | $207,544 | 7% | | Loss from operations | $(43,367) | $(69,040) | (37)% | | Total non-operating income (expense), net | $6,138 | $(21,635) | NM | | Income tax provision | $574 | $708 | (19)% | | Net loss | $(37,803) | $(91,383) | (59)% | - U.S. glaucoma net sales increased by 43% to $131.4 million, primarily due to higher iDose TR volumes, partially offset by lower iStent family product volumes[182] - International glaucoma sales increased by 17% to $60.3 million, reflecting broad-based volume growth in key markets and modestly favorable foreign exchange rates[183] - Corneal health net sales increased by 2% to $39.1 million, with U.S. Photrexa sales up $1.4 million due to higher average sales prices and new accounts, partially offset by MDRP rebates[184] - SG&A expenses increased by $25.9 million, with $13.0 million from increased compensation (including $7.0 million in stock-based compensation) and $12.9 million from discretionary expenses[187][188][189] - Non-operating income, net, improved by $27.8 million, primarily due to a $18.0 million decrease in expense from the Convertible Notes exchange and a $4.8 million change in unrealized foreign currency amounts[193] Liquidity and Capital Resources This section discusses the company's sources and uses of cash, including operating, investing, and financing activities, and future capital expenditure plans - Principal liquidity sources are existing cash, cash equivalents, short-term investments, and cash generated from operations and financing activities[196][198] Liquidity Data (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $100,813 | $169,626 | | Short-term investments | $173,973 | $149,289 | | Working capital | $356,929 | $374,667 | - Operating activities used $11.5 million in net cash for the six months ended June 30, 2025, a significant improvement from $52.2 million used in the prior year period[201][206] - Investing activities used $57.7 million for the six months ended June 30, 2025, primarily for acquisitions (Mobius, Aliso Building) and short-term investments[209][211] - Financing activities provided $4.2 million for the six months ended June 30, 2025, mainly from stock option exercises and ESPP purchases, offset by employee tax payments[214] - The company plans to develop a new 200,000 square foot R&D and manufacturing facility in Huntsville, Alabama, with construction expected to begin in 2026, leading to higher capital expenditures in 2025[203][213] Critical accounting policies and significant estimates This section reaffirms the company's adherence to U.S. GAAP and notes no material changes to critical accounting policies or estimates since the last annual report - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and judgments that affect reported amounts[219] - There have been no material changes to critical accounting policies and estimates during the three and six months ended June 30, 2025, compared to those disclosed in the Annual Report[222] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in the company's exposure to market risk since December 31, 2024, and refers to the Annual Report on Form 10-K for further details - No material changes in exposure to market risk have occurred since December 31, 2024[223] - Further details on quantitative and qualitative disclosures about market risk are available in the Annual Report on Form 10-K for the year ended December 31, 2024[223] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting. Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms management's evaluation of the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025[224] - Based on the evaluation, disclosure controls and procedures were concluded to be effective at a reasonable assurance level[224] Changes in Internal Control over Financial Reporting This section reports that no material changes to internal control over financial reporting occurred during the second fiscal quarter of 2025 - No changes in internal control over financial reporting were identified during the second fiscal quarter of 2025 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[225] PART II: OTHER INFORMATION This section covers additional information not included in the financial statements, such as legal proceedings, updated risk factors, insider trading arrangements, and exhibits Item 1. Legal Proceedings This section states that there are no legal proceedings to report - There are no legal proceedings to report[228] Item 1A. Risk Factors This section updates and supersedes previously disclosed risk factors, detailing various risks that could materially affect the company's business. These include challenges related to product commercialization, macroeconomic conditions, supply chain, profitability, international operations, product quality, personnel, acquisitions, cybersecurity, data privacy, tax carryforwards, indebtedness, regulatory compliance, reimbursement, and intellectual property Risks Related to Our Business This section details various business-specific risks, including product commercialization, economic conditions, supply chain, profitability, international operations, and personnel management - The commercial success of iDose TR is dependent on factors like physician adoption, consistent reimbursement, manufacturing capacity, and patient outcomes; failure in any could materially impact the business[231] - Unfavorable global economic conditions (inflation, supply shortages, currency fluctuations) and public health crises could adversely affect business, operations, and financial condition, including potential loss of cash if banking partners fail[232][233][234][237] - Material disruptions in the supply or manufacture of key products (iStent family, Photrexa, iDose TR) could reduce gross margins and negatively impact operating results, especially given reliance on limited third-party suppliers and single manufacturing locations[235][236][238] - The company has incurred significant losses and its ability to reach sustained profitability is highly uncertain, requiring substantial capital and operating expenditures for growth[239] - Success depends on generating sales of commercialized products and developing/commercializing additional products; new products may not receive regulatory approval or achieve profitability, and competition is increasing[241][242][243] - International operations expose the company to risks including complex regulatory processes, varied intellectual property protection, pricing pressures, political instability, and foreign currency fluctuations[244][245][246] - Failure to meet customer expectations for product quality or delivery, or misuse of products by ophthalmic surgeons, could harm reputation, sales, and operating earnings[247][248] - Failure to effectively manage anticipated growth, including increased responsibilities, competition, and demand, could harm the business[249][250] - Inability to retain or recruit qualified personnel, especially senior management and key employees, could prevent or delay growth plans and strategic objectives[251] - Acquisitions, collaborations, and partnerships may fail to integrate successfully, result in commercialized products, or lead to litigation, diverting management attention and impacting operating results[252] - Cybersecurity threats, incidents, service interruptions, or data corruption could materially disrupt operations, leading to decreased sales, increased costs, or loss of intellectual property, and impact internal controls over financial reporting[253][254][255][256] - Failure to comply with data privacy and security laws (e.g., GDPR, CCPA, AI regulations) could result in significant liability, fines, and harm to reputation[257] - Net operating loss (NOL) tax carryforwards and R&D credit carryforwards may not be fully available or utilized due to limitations or insufficient future taxable income[258][259][260] Risks Related to Indebtedness This section outlines risks associated with the company's debt, including cash flow limitations and counterparty risk from capped call transactions - Future indebtedness could limit cash flow for operations, increase vulnerability to economic downturns, and require a substantial portion of cash flow for debt service, adversely affecting the business[261][262] - Capped call transactions may affect the value of common stock due to hedge modification activities by option counterparties and expose the company to counterparty credit risk[263][264][265] Risks Related to Our Regulatory Environment This section addresses risks from healthcare legislative reforms, extensive government regulations, compliance with fraud and abuse laws, and reimbursement uncertainties - Healthcare legislative reform and changes in U.S. and international trade policies, including tariffs and drug pricing reforms (e.g., Inflation Reduction Act), may adversely affect profitability, supply chain, and market access[266][267][286] - Extensive government regulation (FDA, state, foreign) for medical devices and drugs can be costly to comply with; failure to adhere can result in enforcement actions, delays in approvals, or product recalls[268][269][270][271][272][273] - Compliance with healthcare fraud and abuse, anti-kickback, false claims, and transparency laws is critical; violations could lead to penalties, exclusion from government programs, and reputational harm[276][277][278] - Legislative or regulatory reform, including the Loper decision impacting agency deference, and compliance with EU MDR/UKMDR, could hinder commercial success, increase costs, or restrict product sales[279][280][281][283] - Inadequate or inconsistent reimbursement from third-party payors (Medicare, Medicaid, private insurers) for products and associated procedures can materially harm commercialization and profitability, with payment rates subject to change and uncertainty[289][290][291][292](index=292&type=chunk][293] Risks Related to Our Intellectual Property This section highlights risks concerning the protection of intellectual property and the potential costs and disruptions from IP litigation - Inability to adequately protect intellectual property (patents, trademarks, trade secrets) could allow competitors to develop similar products, substantially impairing the ability to compete[294][295][296] - Involvement in patent and other intellectual property litigation or administrative proceedings can be costly, time-consuming, and unsuccessful, potentially interfering with product commercialization or le