Glaukos Corporation Announces Second Quarter 2021 Financial Results

August 5, 2021

SAN CLEMENTE, Calif.--(BUSINESS WIRE)-- Glaukos Corporation (NYSE: GKOS), an ophthalmic medical technology and pharmaceutical company focused on novel therapies for the treatment of glaucoma, corneal disorders and retinal diseases, today announced financial results for the second quarter ended June 30, 2021. Key highlights include:

  • Net sales growth of 147% to $78.1 million in Q2 2021, compared to $31.6 million in Q2 2020.
  • Glaucoma net sales of $62.7 million and Corneal Health net sales of $15.4 million in Q2 2021.
  • Gross margin of approximately 77% and non-GAAP gross margin of approximately 84% in Q2 2021.
  • Operating expenses of $74.6 million and non-GAAP operating expenses of $67.8 million in Q2 2021.

“We are pleased with our record second quarter financial performance driven by sound execution on our key strategic priorities and the ongoing market recovery,” said Thomas Burns, Glaukos president and chief executive officer. “We remain steadfastly dedicated to transform the treatment of chronic eye diseases for the benefit of patients worldwide.”

Second Quarter 2021 Financial Results

Net sales increased 147% in the second quarter of 2021 to $78.1 million, compared to $31.6 million in the same period in 2020.

Gross margin for the second quarter of 2021 was approximately 77%, compared to approximately 31% in the same period in 2020. Non-GAAP gross margin for the second quarter of 2021 was approximately 84%, compared to approximately 78% in the same period in 2020.

Selling, general and administrative (SG&A) expenses for the second quarter of 2021 increased 19% to $45.3 million, compared to $38.1 million in the same period in 2020. Non-GAAP SG&A expenses for the second quarter of 2021 increased 30% to $43.6 million, compared to $33.6 million in the same period in 2020.

Research and development (R&D) expenses for the second quarter of 2021 increased 28% to $24.3 million, compared to $19.0 million in the same period in 2020. Non-GAAP R&D expenses for the second quarter of 2021 increased 29% to $24.1 million, compared to $18.6 million in the same period in 2020. In addition, during the second quarter of 2021, the company also incurred a $5.0 million in-process R&D charge associated with an upfront payment related to the execution of an amended licensing arrangement with Intratus, Inc. to include the treatment of presbyopia.

Loss from operations in the second quarter of 2021 was $14.2 million, compared to operating loss of $47.2 million in the second quarter of 2020. Non-GAAP loss from operations in the second quarter of 2021 was $1.8 million, compared to non-GAAP operating loss of $27.6 million in the second quarter of 2020.

Net loss in the second quarter of 2021 was $17.5 million, or ($0.38) per diluted share, compared to a net loss of $39.9 million, or ($0.90) per diluted share, in the second quarter of 2020. Non-GAAP net loss in the second quarter of 2021 was $5.1 million, or ($0.11) per diluted share, compared to non-GAAP net loss of $27.0 million, or ($0.61) per diluted share, in the second quarter of 2020.

The company ended the second quarter of 2021 with approximately $428 million in cash and cash equivalents, short-term investments and restricted cash.

2021 Revenue Guidance

The company expects 2021 net sales to be in the range of $285 million to $290 million.

Webcast & Conference Call

The company will host a conference call and simultaneous webcast today at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss the results and provide additional information about the company’s financial outlook. A link to the webcast is available on the company’s website at http://investors.glaukos.com. To participate in the conference call, please dial 833-231-8262 (U.S.) or 647-689-4107 (international) and enter Conference ID 4248858. A replay of the webcast will be archived on the company’s website following completion of the call.

About Glaukos

Glaukos (www.glaukos.com) is an ophthalmic medical technology and pharmaceutical company focused on novel therapies for the treatment of glaucoma, corneal disorders and retinal diseases. The company pioneered Micro-Invasive Glaucoma Surgery, or MIGS, to revolutionize the traditional glaucoma treatment and management paradigm. Glaukos launched the iStent®, its first MIGS device, in the United States in 2012, its next-generation iStent inject® device in the United States in 2018 and most recently, its iStent inject W device in the United States in 2020. In corneal health, Glaukos’ proprietary suite of single-use, bio-activated pharmaceuticals are designed to strengthen, stabilize and reshape the cornea through a process called corneal collagen cross-linking to treat corneal ectatic disorders and correct refractive conditions. Glaukos is leveraging its platform technology to build a comprehensive and proprietary portfolio of micro-scale surgical and pharmaceutical therapies in glaucoma, corneal health and retinal disease.

Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of federal securities laws. All statements other than statements of historical facts included in this press release 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 about future events affecting us and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that may cause our actual results to differ materially from those expressed or implied by forward-looking statements in this press release. These potential risks and uncertainties that could cause actual results to differ materially from those described in forward-looking statements include, without limitation, uncertainties regarding the duration and severity of the COVID-19 pandemic and its impact on our business or the economy generally; our ability to continue to generate sales of our commercialized products and develop and commercialize additional products; our dependence on a limited number of third-party suppliers, some of which are single-source, for components of our products; the occurrence of a crippling accident, natural disaster, or other disruption at our primary facility, which may materially affect our manufacturing capacity and operations; securing or maintaining adequate coverage or reimbursement by third-party payors for procedures using the iStent, the iStent inject, the iStent inject W, our corneal cross-linking products or other products in development; our ability to properly train, and gain acceptance and trust from ophthalmic surgeons in the use of our products; our ability to compete effectively in the medical device industry and against current and future competitors (including MIGS competitors); our compliance with federal, state and foreign laws and regulations for the approval and sale and marketing of our products and of our manufacturing processes; the lengthy and expensive clinical trial process and the uncertainty of timing and outcomes from any particular clinical trial or regulatory approval processes; the risk of recalls or serious safety issues with our products and the uncertainty of patient outcomes; our ability to protect, and the expense and time-consuming nature of protecting our intellectual property against third parties and competitors and the impact of any claims against us for infringement or misappropriation of third party intellectual property rights and any related litigation; and our ability to service our indebtedness. These and other known risks, uncertainties and factors are described in detail under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for 2020, which was filed with the SEC on March 1, 2021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which was filed with the SEC on May 6, 2021, and will also be included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which we expect to file on or before August 9, 2021. Our filings with the Securities and Exchange Commission are available in the Investor Section of our website at www.glaukos.com or at www.sec.gov. In addition, information about the risks and benefits of our products is available on our website at www.glaukos.com. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. You are cautioned not to place undue reliance on the forward-looking statements in this press release, which speak only as of the date hereof. We do not undertake any obligation to update, amend or clarify these forward-looking statements whether as a result of new information, future events or otherwise, except as may be required under applicable securities law.

Statement Regarding Use of Non-GAAP Financial Measures

To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company uses certain non-GAAP historical financial measures. Management makes adjustments to the GAAP measures for items (both charges and gains) that (a) do not reflect the core operational activities of the Company, (b) are commonly adjusted within the Company's industry to enhance comparability of the Company's financial results with those of its peer group, or (c) are inconsistent in amount or frequency between periods (albeit such items are monitored and controlled with equal diligence relative to core operations). The Company uses the term "Non-GAAP" to exclude external acquisition-related costs incurred to effect a business combination; amortization of intangible assets acquired in a business combination, asset purchase transaction or other contractual relationship; impairment of goodwill and intangible assets; in-process R&D charges; fair value adjustments to contingent consideration liabilities and pre-acquisition contingencies arising from a business combination; integration and transition costs related to business combinations; fair market value adjustments to inventories acquired in a business combination or asset purchase transaction; restructuring charges, duplicative operating expenses, or asset write-offs (or reversals) associated with exiting or significantly downsizing a business; gain or loss from the sale of a business; gain or loss on the mark-to-market adjustment, impairment, or sale of long-term investments; mark-to-market adjustments on derivative instruments that hedge income or expense exposures in a future period; significant legal litigation costs and/or settlement expenses; legal and other associated expenses that are both unusual and significant related to governmental or internal inquiries; significant extraordinary one-time partnering receipts or payments immediately recognized as income or expense and that are not recurring; amortization of debt discount and associated issuance costs related to the company’s convertible senior debt offering; and significant discrete income and other tax adjustments related to transactions as well as changes in estimated acquisition-date tax effects associated with business combinations, and the impact from implementation of tax law changes and settlements. See “GAAP to Non-GAAP Reconciliations” for a reconciliation of each non-GAAP measure presented to the comparable GAAP financial measure.

GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
 
 
Three Months Ended Six Months Ended
June 30, June 30,
 

2021

 

2020

 

2021

 

2020

Net sales

$

78,093

 

$

31,558

 

$

146,061

 

$

86,894

 

Cost of sales

 

17,759

 

 

21,668

 

 

34,392

 

 

54,197

 

Gross profit

 

60,334

 

 

9,890

 

 

111,669

 

 

32,697

 

Operating expenses:
Selling, general and administrative

 

45,300

 

 

38,116

 

 

87,221

 

 

88,662

 

Research and development

 

24,256

 

 

18,971

 

 

45,475

 

 

43,844

 

In-process research and development

 

5,000

 

 

-

 

 

5,000

 

 

-

 

Total operating expenses

 

74,556

 

 

57,087

 

 

137,696

 

 

132,506

 

Loss from operations

 

(14,222

)

 

(47,197

)

 

(26,027

)

 

(99,809

)

Non-operating expense:
Interest income

 

342

 

 

590

 

 

725

 

 

1,286

 

Interest expense

 

(3,306

)

 

(1,872

)

 

(6,535

)

 

(2,753

)

Other (expense) income, net

 

(88

)

 

1,201

 

 

(1,627

)

 

(510

)

Total non-operating expense

 

(3,052

)

 

(81

)

 

(7,437

)

 

(1,977

)

Loss before taxes

 

(17,274

)

 

(47,278

)

 

(33,464

)

 

(101,786

)

Income tax provision (benefit)

 

208

 

 

(7,384

)

 

487

 

 

(7,834

)

Net loss

$

(17,482

)

$

(39,894

)

$

(33,951

)

$

(93,952

)

 
Basic and diluted net loss per share

$

(0.38

)

$

(0.90

)

$

(0.74

)

$

(2.13

)

 
Weighted average shares used to compute basic and diluted net loss per share

 

46,306

 

 

44,335

 

 

46,011

 

 

44,078

 

GLAUKOS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)

 

June 30,

 

December 31,

2021

 

2020

(unaudited)

 

 

Assets
Current assets:
Cash and cash equivalents

$

118,296

 

$

96,596

 

Short-term investments

 

300,265

 

 

307,772

 

Accounts receivable, net

 

37,569

 

 

36,059

 

Inventory, net

 

17,500

 

 

15,809

 

Prepaid expenses and other current assets

 

16,905

 

 

13,206

 

Total current assets

 

490,535

 

 

469,442

 

Restricted cash

 

9,416

 

 

9,566

 

Property and equipment, net

 

54,380

 

 

24,008

 

Operating lease right-of-use asset

 

19,551

 

 

20,009

 

Finance lease right-of-use asset

 

50,232

 

 

51,443

 

Intangible assets, net

 

345,237

 

 

357,693

 

Goodwill

 

66,134

 

 

66,134

 

Deposits and other assets

 

8,240

 

 

7,207

 

Total assets

$

1,043,725

 

$

1,005,502

 

 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable

$

6,957

 

$

4,371

 

Accrued liabilities

 

63,181

 

 

45,331

 

Convertible senior notes

 

279,339

 

 

-

 

Total current liabilities

 

349,477

 

 

49,702

 

Convertible senior notes

 

-

 

 

189,416

 

Operating lease liability

 

20,139

 

 

20,704

 

Finance lease liability

 

72,905

 

 

60,690

 

Deferred tax liability, net

 

8,298

 

 

10,512

 

Other liabilities

 

8,581

 

 

7,029

 

Total liabilities

 

459,400

 

 

338,053

 

 
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding

 

-

 

 

-

 

Common stock, $0.001 par value; 150,000 shares authorized; 46,497 and 45,275 shares issued and 46,469 and 45,247 shares outstanding at June 30, 2021 and December 31, 2020, respectively

 

46

 

 

45

 

Additional paid-in capital

 

933,328

 

 

976,590

 

Accumulated other comprehensive income

 

652

 

 

1,004

 

Accumulated deficit

 

(349,569

)

 

(310,058

)

Less treasury stock (28 shares as of June 30, 2021 and December 31, 2020)

 

(132

)

 

(132

)

Total stockholders' equity

 

584,325

 

 

667,449

 

Total liabilities and stockholders' equity

$

1,043,725

 

$

1,005,502

 

GLAUKOS CORPORATION

GAAP to Non-GAAP Reconciliations

(in thousands, except per share amounts and percentage data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2021

 

Q2 2020

 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Cost of sales

$

17,759

 

$

(5,591

)

(a)

$

12,168

 

$

21,668

 

$

(14,785

)

(a)(f)(g)

$

6,883

 

 
Gross Margin

 

77.3

%

 

7.1

%

 

84.4

%

 

31.3

%

 

46.9

%

 

78.2

%

 
Operating expenses:
Selling, general and administrative

$

45,300

 

$

(1,666

)

(b)(c)

$

43,634

 

$

38,116

 

$

(4,473

)

(b)(c)(h)

$

33,643

 

 
Research and development

$

24,256

 

$

(140

)

(d)

$

24,116

 

$

18,971

 

$

(338

)

(d)

$

18,633

 

 
In-process research and development

$

5,000

 

$

(5,000

)

(e)

$

-

 

$

-

 

$

-

 

$

-

 

 
Loss from operations

$

(14,222

)

$

12,397

 

$

(1,825

)

$

(47,197

)

$

19,596

 

$

(27,601

)

 
Interest expense

$

(3,306

)

$

-

 

$

(3,306

)

$

(1,872

)

$

557

 

(i)

$

(1,315

)

 
Income tax provision (benefit)

$

208

 

$

-

 

$

208

 

$

(7,384

)

$

7,256

 

(j)

$

(128

)

 
Net loss

$

(17,482

)

$

12,397

 

(k)

$

(5,085

)

$

(39,894

)

$

12,897

 

(k)

$

(26,997

)

 
Diluted net loss per share

$

(0.38

)

$

0.27

 

$

(0.11

)

$

(0.90

)

$

0.29

 

$

(0.61

)

 
(a) Cost of sales adjustments related to the acquisition of Avedro, Inc. (Avedro), including amortization of developed technology intangible assets and stock-based compensation expense related to replacement awards, totaling $5.6 million in Q2 2021 and $5.7 million in Q2 2020.
(b) Avedro acquisition-related expenses, including amortization expense of customer relationship intangible assets and stock-based compensation expense related to replacement awards of $1.0 million in Q2 2021 and $2.6 million in Q2 2020.
(c) Expenses related to the Company's patent infringement litigation and related matters of $0.7 million in Q2 2021 and $1.7 million in Q2 2020.
(d) Stock-based compensation expense related to replacement awards from the acquisition of Avedro of $0.1 million in Q2 2021 and $0.3 million in Q2 2020.
(e) Upfront payment associated with the execution of the amended licensing arrangement with Intratus, Inc.
(f) COVID-19 related excess and obsolete reserves associated with the fair-value step up of acquired Avedro inventory, totaling ($0.5) million.
(g) $9.7 million of inventory fair value step-up costs associated with the acquisition of Avedro.
(h) $0.2 million of expenses related to the Company's implementation of its new enterprise systems and other technology optimizations, restructuring expenses associated with the acquisition of Avedro, and integration expenses from the acquisition of Avedro.
(i) Non-cash interest expense for the amortization of debt discount and associated issuance costs related to the convertible senior notes.
(j) Tax benefit related to the Company's issuance of the convertible senior notes.
(k) Includes total tax effect for non-GAAP pre-tax adjustments. For non-GAAP adjustments associated with the U.S., the tax effect is $0 given the Company's U.S. taxable loss positions in both 2021 and 2020.

GLAUKOS CORPORATION

GAAP to Non-GAAP Reconciliations

(in thousands, except per share amounts and percentage data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year-to-Date Q2 2021

 

Year-to-Date Q2 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

Adjustments

 

 

 

Non-GAAP

 

GAAP

 

Adjustments

 

 

 

Non-GAAP

Cost of sales

$

34,392

 

$

(11,191

)

(a)

$

23,201

 

$

54,197

 

$

(38,224

)

(a)(f)(g)

$

15,973

 

 
Gross Margin

 

76.5

%

 

7.6

%

 

84.1

%

 

37.6

%

 

44.0

%

 

81.6

%

 
Operating expenses:
Selling, general and administrative

$

87,221

 

$

(2,886

)

(b)(c)

$

84,335

 

$

88,662

 

$

(13,920

)

(b)(c)(h)

$

74,742

 

 
Research and development

$

45,475

 

$

(290

)

(d)

$

45,185

 

$

43,844

 

$

(2,308

)

(d)(i)

$

41,536

 

 
In-process research and development

$

5,000

 

$

(5,000

)

(e)

$

-

 

$

-

 

$

-

 

$

-

 

 
Loss from operations

$

(26,027

)

$

19,367

 

$

(6,660

)

$

(99,809

)

$

54,452

 

$

(45,357

)

 
Interest expense

$

(6,535

)

$

-

 

$

(6,535

)

$

(2,753

)

$

557

 

(j)

$

(2,196

)

 
Income tax provision (benefit)

$

487

 

$

-

 

$

487

 

$

(7,834

)

$

7,256

 

(k)

$

(578

)

 
Net loss

$

(33,951

)

$

19,367

 

(l)

$

(14,584

)

$

(93,952

)

$

47,753

 

(l)

$

(46,199

)

 
Diluted net loss per share

$

(0.74

)

$

0.42

 

$

(0.32

)

$

(2.13

)

$

1.08

 

$

(1.05

)

(a) Cost of sales adjustments related to the acquisition of Avedro, Inc. (Avedro), including amortization of developed technology intangible assets, stock-based compensation expense related to replacement awards, and restructuring expenses, totaling $11.2 million year-to-date Q2 2021 and $11.5 million year-to-date Q2 2020.
(b) Avedro acquisition-related expenses, including amortization expense of customer relationship intangible assets and stock-based compensation expense related to replacement awards of $2.0 million year-to-date Q2 2021 and $7.5 million year-to-date Q2 2020.
(c) Expenses related to the Company's patent infringement litigation and related matters of $0.9 million year-to-date Q2 2021 and $4.3 million year-to-date Q2 2020.
(d) Stock-based compensation expense related to replacement awards from the acquisition of Avedro of $0.3 million year-to-date Q2 2021 and $2.1 million year-to-date Q2 2020.
(e) Upfront payment associated with the execution of the amended licensing arrangement with Intratus, Inc.
(f) $7.4 million of inventory write-off charges and COVID-19 related excess and obsolete reserves, a portion of which includes the associated fair-value step up of acquired Avedro inventory.
(g) $19.3 million of inventory fair value step-up costs associated with the acquisition of Avedro.
(h) $2.2 million of expenses related to the Company's implementation of its new enterprise systems and other technology optimizations, restructuring expenses associated with COVID-19 and the acquisition of Avedro, and integration expenses from the acquisition of Avedro.
(i) Restructuring expenses associated with COVID-19 and the acquisition of Avedro, totaling $0.2 million.
(j) Non-cash interest expense for the amortization of debt discount and associated issuance costs related to the convertible senior notes.
(k) Tax benefit related to the Company's issuance of the convertible senior notes.
(l) Includes total tax effect for non-GAAP pre-tax adjustments. For non-GAAP adjustments associated with the U.S., the tax effect is $0 given the Company's U.S. taxable loss positions in both 2021 and 2020.

 

Chris Lewis
Sr. Director, Investor Relations & Corporate Strategy & Development
(949) 481-0510
clewis@glaukos.com

Source: Glaukos Corporation