Glaukos Corporation Announces Second Quarter 2022 Financial Results

August 3, 2022

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, 2022. Key highlights include:

  • Net sales of $72.7 million in Q2 2022.
  • Glaucoma net sales of $56.1 million and Corneal Health net sales of $16.6 million in Q2 2022.
  • Gross margin of approximately 75% and non-GAAP gross margin of approximately 83% in Q2 2022.
  • Raised 2022 net sales guidance to $275 million to $280 million, compared to $270 million to $275 million previously.

“I’m pleased with our second quarter performance and solid execution of our strategies despite a challenging global environment,” said Thomas Burns, Glaukos chairman and chief executive officer. “We are now in the midst of several exciting new product launches and continue to successfully invest in and advance our robust pipeline of novel, dropless platform technologies designed to meaningfully advance the standard of care and improve outcomes for patients suffering from chronic eye diseases.”

Second Quarter 2022 Financial Results

Net sales in the second quarter of 2022 were $72.7 million, compared to $78.1 million in the same period in 2021.

Gross margin for the second quarter of 2022 was approximately 75%, compared to approximately 77% in the same period in 2021. Non-GAAP gross margin for the second quarter of 2022 was approximately 83%, compared to approximately 84% in the same period in 2021.

Selling, general and administrative (SG&A) expenses for the second quarter of 2022 increased 10% to $49.9 million, compared to $45.3 million in the same period in 2021. Non-GAAP SG&A expenses for the second quarter of 2022 increased 12% to $49.0 million, compared to $43.6 million in the same period in 2021.

Research and development (R&D) expenses for the second quarter of 2022 increased 31% to $31.7 million, compared to $24.3 million in the same period in 2021. Non-GAAP R&D expenses for the second quarter of 2022 increased 31% to $31.7 million, compared to $24.1 million in the same period in 2021.

In addition, during the second quarter of 2022, the company incurred a $10.0 million in-process R&D (IPR&D) charge associated with an upfront payment related to the execution of a licensing arrangement with iVeena Delivery Systems, Inc., compared to a $5.0 million IPR&D charge incurred in the second quarter of 2021 associated with an upfront payment related to the execution of an amended licensing arrangement with Intratus, Inc. These charges were included in both GAAP and non-GAAP operating expenses, which is a change versus the company’s previous methodology where similar IPR&D transactions were excluded for non-GAAP disclosure and reporting purposes. This change is the result of the U.S. Securities and Exchange Commission’s most recent industry correspondence on this matter.

Loss from operations in the second quarter of 2022 was $36.8 million, compared to operating loss of $14.2 million in the second quarter of 2021. Non-GAAP loss from operations in the second quarter of 2022 was $30.4 million, compared to non-GAAP operating loss of $6.8 million in the second quarter of 2021. Included in the non-GAAP loss from operations figures are IPR&D charges of $10.0 million and $5.0 million in the second quarter of 2022 and 2021, respectively.

Net loss in the second quarter of 2022 was $45.5 million, or ($0.96) per diluted share, compared to a net loss of $17.5 million, or ($0.38) per diluted share, in the second quarter of 2021. Non-GAAP net loss in the second quarter of 2022 was $39.1 million, or ($0.83) per diluted share, compared to non-GAAP net loss of $10.1 million, or ($0.22) per diluted share, in the second quarter of 2021. Included in the non-GAAP net loss figures are IPR&D charges of $10.0 million and $5.0 million in the second quarter of 2022 and 2021, respectively, which caused the non-GAAP loss per diluted share to have an additional loss of ($0.21) and ($0.11) in each of these respective periods.

The company ended the second quarter of 2022 with approximately $400 million in cash and cash equivalents, short-term investments and restricted cash.

2022 Revenue Guidance

The company expects 2022 net sales to be in the range of $275 million to $280 million.

Webcast & Conference Call

The company will host a conference call and simultaneous webcast today at 1:30 p.m. PT (4:30 p.m. ET) 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 888-210-2212 (U.S.) or 646-960-0390 (international) and enter Conference ID 7935742. A replay of the webcast will be archived on the company’s website following completion of the call.

Quarterly Summary Document

The company has posted a document on its Investor Relations website under the “Financials & Filings – Quarterly Results” section titled “Quarterly Summary.” This Quarterly Summary document is designed to provide the investment community with a summarized and easily accessible reference document that details the key facts associated with the quarter, the state of the company’s business objectives and strategies and any forward statements or guidance the company may make. Going forward, this document will be provided alongside the company’s earnings press release and is designed to be read by investors before the regularly scheduled quarterly conference call. As such, today’s conference call will be in a format primarily consisting of a questions and answers session, during which Glaukos will address any queries investors have regarding the company’s results. It is the company’s goal that this format will make its quarterly earnings process more efficient and impactful for the investment community going forward.

About Glaukos

Glaukos (www.glaukos.com) is an ophthalmic medical technology and pharmaceutical company focused on developing and commercializing novel therapies for the treatment of glaucoma, corneal disorders and retinal diseases. Glaukos first developed Micro-Invasive Glaucoma Surgery (MIGS) as an alternative to the traditional glaucoma treatment paradigm, launching its first MIGS device commercially in 2012, and has since developed a portfolio of technologically distinct and leverageable platforms to support ongoing pharmaceutical and medical device innovations. Products or product candidates for each of these platforms are designed to advance the standard of care through better treatment options across the areas of glaucoma, corneal disorders and retinal diseases.

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; the impact of general macroeconomic conditions; the reduced physician fee and ASC facility fee reimbursement rate finalized by CMS for 2022 for procedures utilizing the Company’s iStent family of products and its impact on our U.S. combo-cataract glaucoma revenue;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, iAccess, iPRIME, iStent infinite, 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 technologies (including MIGS technologies); 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, which was filed with the SEC on May 5, 2022, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, which is expected to be filed with the SEC by August 9, 2022. Our filings with the SEC are available in the Investor Section of our website at www.glaukos.comor 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; certain 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 or proceeds legal and other associated expenses that are both unusual and significant related to governmental or internal inquiries; 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,
 

2022

2021

2022

2021

Net sales

$

72,685

 

$

78,093

 

$

140,366

 

$

146,061

 

Cost of sales

 

17,833

 

 

17,759

 

 

34,896

 

 

34,392

 

Gross profit

 

54,852

 

 

60,334

 

 

105,470

 

 

111,669

 

Operating expenses:
Selling, general and administrative

 

49,900

 

 

45,300

 

 

93,849

 

 

87,221

 

Research and development

 

31,712

 

 

24,256

 

 

58,589

 

 

45,475

 

In-process research and development

 

10,000

 

 

5,000

 

 

10,000

 

 

5,000

 

Litigation-related settlement

 

-

 

 

-

 

 

(30,000

)

 

-

 

Total operating expenses

 

91,612

 

 

74,556

 

 

132,438

 

 

137,696

 

Loss from operations

 

(36,760

)

 

(14,222

)

 

(26,968

)

 

(26,027

)

Non-operating expense:
Interest income

 

384

 

 

342

 

 

671

 

 

725

 

Interest expense

 

(3,414

)

 

(3,306

)

 

(6,830

)

 

(6,535

)

Other expense, net

 

(5,851

)

 

(88

)

 

(6,811

)

 

(1,627

)

Total non-operating expense

 

(8,881

)

 

(3,052

)

 

(12,970

)

 

(7,437

)

Loss before taxes

 

(45,641

)

 

(17,274

)

 

(39,938

)

 

(33,464

)

Income tax (benefit) provision

 

(105

)

 

208

 

 

221

 

 

487

 

Net loss

$

(45,536

)

$

(17,482

)

$

(40,159

)

$

(33,951

)

 
Basic and diluted net loss per share

$

(0.96

)

$

(0.38

)

$

(0.85

)

$

(0.74

)

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

 

47,356

 

 

46,306

 

 

47,205

 

 

46,011

 

GLAUKOS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
 
June 30, December 31,

2022

2021

(unaudited)
Assets
Current assets:
Cash and cash equivalents

$

102,553

 

$

100,708

 

Short-term investments

 

288,637

 

 

313,343

 

Accounts receivable, net

 

36,032

 

 

33,438

 

Inventory

 

27,842

 

 

23,011

 

Prepaid expenses and other current assets

 

16,033

 

 

15,626

 

Total current assets

 

471,097

 

 

486,126

 

Restricted cash

 

9,128

 

 

9,416

 

Property and equipment, net

 

80,921

 

 

68,969

 

Operating lease right-of-use asset

 

26,451

 

 

28,142

 

Finance lease right-of-use asset

 

47,812

 

 

49,022

 

Intangible assets, net

 

320,325

 

 

332,781

 

Goodwill

 

66,134

 

 

66,134

 

Deposits and other assets

 

9,410

 

 

9,108

 

Total assets

$

1,031,278

 

$

1,049,698

 

 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable

$

21,294

 

$

7,333

 

Accrued liabilities

 

48,214

 

 

56,027

 

Total current liabilities

 

69,508

 

 

63,360

 

Convertible senior notes

 

280,713

 

 

280,026

 

Operating lease liability

 

29,361

 

 

29,650

 

Finance lease liability

 

72,464

 

 

72,699

 

Deferred tax liability, net

 

7,307

 

 

7,318

 

Other liabilities

 

9,448

 

 

9,494

 

Total liabilities

 

468,801

 

 

462,547

 

 
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; 47,448 and 46,993 shares issued and 47,420 and 46,965 shares outstanding at June 30, 2022 and December 31, 2021, respectively

 

48

 

 

47

 

Additional paid-in capital

 

971,646

 

 

952,432

 

Accumulated other comprehensive (loss) income

 

(3,715

)

 

15

 

Accumulated deficit

 

(405,370

)

 

(365,211

)

Less treasury stock (28 shares as of June 30, 2022 and December 31, 2021)

 

(132

)

 

(132

)

Total stockholders' equity

 

562,477

 

 

587,151

 

Total liabilities and stockholders' equity

$

1,031,278

 

$

1,049,698

 

GLAUKOS CORPORATION
GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts and percentage data)
(unaudited)
 

Q2 2022

Q2 2021

 

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

 
Cost of sales

$

17,833

 

$

(5,546

)

(a)

$

12,287

 

$

17,759

 

$

(5,591

)

(a)

$

12,168

 

 
Gross Margin

 

75.5

%

 

7.6

%

 

83.1

%

 

77.3

%

 

7.1

%

 

84.4

%

 
Operating expenses:
Selling, general and administrative

$

49,900

 

$

(854

)

(b)

$

49,046

 

$

45,300

 

$

(1,666

)

(b)(d)

$

43,634

 

 
Research and development

$

31,712

 

$

-

 

$

31,712

 

$

24,256

 

$

(140

)

(c)

$

24,116

 

 
 
Loss from operations

$

(36,760

)

$

6,400

 

$

(30,360

)

$

(14,222

)

$

7,397

 

$

(6,825

)

 
Net loss

$

(45,536

)

$

6,400

 

(e)

$

(39,136

)

$

(17,482

)

$

7,397

 

(e)

$

(10,085

)

 
Basic and diluted net loss per share

$

(0.96

)

$

0.13

 

$

(0.83

)

$

(0.38

)

$

0.16

 

$

(0.22

)

(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 $5.5 million in Q2 2022 and $5.6 million in Q2 2021.

(b)

Avedro acquisition-related expenses, including amortization expense of customer relationship intangible assets and stock-based compensation expense related to replacement awards of $0.9 million in Q2 2022 and $1.0 million in Q2 2021.

(c)

Stock-based compensation expense related to replacement awards from the acquisition of Avedro .

(d)

Expenses related to the Company's patent infringement litigation and related matters of $0.7 million in Q2 2021.

(e)

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 2022 and 2021.

Note:

Beginning this quarter, we are no longer excluding certain in-process R&D charges for non-GAAP reporting and disclosure purposes in response to and in accordance with the Securities and Exchange Commission’s latest indsutry correspondance on this matter. We have conformed all prior period amounts included herein to this new presentation.

GLAUKOS CORPORATION
GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts and percentage data)
(unaudited)
 
Year-to-Date Q2 2022 Year-to-Date Q2 2021
 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Cost of sales

$

34,896

 

$

(11,097

)

(a)

$

23,799

 

$

34,392

 

$

(11,191

)

(a)

$

23,201

 

 
Gross Margin

 

75.1

%

 

7.9

%

 

83.0

%

 

76.5

%

 

7.6

%

 

84.1

%

 
Operating expenses:
Selling, general and administrative

$

93,849

 

$

(1,745

)

(b)

$

92,104

 

$

87,221

 

$

(2,886

)

(b)(e)

$

84,335

 

 
Research and development

$

58,589

 

$

(127

)

(c)

$

58,462

 

$

45,475

 

$

(290

)

(c)

$

45,185

 

 
Litigation-related settlement

$

(30,000

)

$

30,000

 

(d)

$

-

 

$

-

 

$

-

 

$

-

 

 
Loss from operations

$

(26,968

)

$

(17,031

)

$

(43,999

)

$

(26,027

)

$

14,367

 

$

(11,660

)

 
Net loss

$

(40,159

)

$

(17,031

)

(f)

$

(57,190

)

$

(33,951

)

$

14,367

 

(f)

$

(19,584

)

 
Basic and diluted net loss per share

$

(0.85

)

$

(0.36

)

$

(1.21

)

$

(0.74

)

$

0.31

 

$

(0.43

)

(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 $11.1 million year-to-date Q2 2022 and $11.2 million year-to-date Q2 2021.

(b)

Avedro acquisition-related expenses, including amortization expense of customer relationship intangible assets and stock-based compensationexpense related to replacement awards of $1.7 million year-to-date Q2 2022 and $2.0 million year-to-date Q2 2021.

(c)

Stock-based compensation expense related to replacement awards from the acquisition of Avedro of $0.1 million year-to-date Q2 2022 and $0.3 million year-to-date Q2 2021.

(d)

Settlement proceeds received related to the Company’s patent infringement litigation.

(e)

Expenses related to the Company's patent infringement litigation and related matters of $0.9 million year-to-date Q2 2021.

(f)

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 theCompany's U.S. taxable loss positions in both 2022 and 2021.

 

 

Note:

Beginning this quarter, we are no longer excluding certain in-process R&D charges for non-GAAP reporting and disclosure purposes in response to and in accordance with the Securities and Exchange Commission’s latest industry correspondance on this matter. We have conformed all prior period amounts included herein to this new presentation.
Reported Sales vs. Prior Periods (in thousands)
          Year-over-Year Percent Change   Quarter-over-Quarter Percent Change
 

2Q 2022

 

2Q 2021

 

1Q 2022

   

Reported

  Operations (1)   Currency (2)   Reported   Operations (1)   Currency (2)
                     
International Glaucoma  

$

17,867

 

$

16,411

 

$

17,648

   

8.9

%

 

19.7

%

 

(10.8

%)

 

1.2

%

 

6.4

%

 

(5.2

%)

                     
Total Net Sales  

$

72,685

 

$

78,093

 

$

67,681

   

(6.9

%)

 

(4.6

%)

 

(2.3

%)

 

7.4

%

 

8.7

%

 

(1.4

%)

(1)

Operational growth excludes the effect of translational currency

(2)

Calculated by converting the current period numbers using the prior period’s average foreign exchange rates

 

Chris Lewis
Vice President, Investor Relations & Corporate Affairs
(949) 481-0510
clewis@glaukos.com

Source: Glaukos Corporation