GLAUKOS Corp(GKOS)Q2 2026 法說會逐字稿

Hello, and welcome to Glaukos Corporation's Second Quarter 2026 Financial Results Conference Call. Copies of the company's press release and quarterly summary document, both issued after the market closed today, are available at www.glaukos.com. This call is being recorded, and an archived replay will be available online in the Investor Relations section at www.glaukos.com. I will now turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs.

Thank you, and good afternoon. Joining me today are Glaukos Chairman and CEO, Tom Burns; President and COO, Joe Gilliam; and CFO, Alex Thurman. Similar to prior quarters, the company has posted a document on its Investor Relations website under the Financials and Filings Quarterly Results section titled Quarterly Summary. This document is designed to be read by investors before the regularly scheduled quarterly conference call. Please note that all statements other than statements of historical facts made on this call that address activities, events or developments we expect, believe or anticipate will or may occur in the future are forward-looking statements. These include statements about our plans, objectives, strategies and prospects regarding, among other things, our sales, products, pipeline technologies and clinical trials, U.S. and international commercialization, market development efforts, product approvals, the efficacy of our current and future products, competitive market position, regulatory strategies and reimbursement for our products, financial condition and results of operations as well as the expected impact of general macroeconomic conditions, including foreign currency fluctuations on our business and operations.

These statements 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. Therefore, they may cause our actual results to differ materially from those expressed or implied by forward-looking statements. Please review today's press release and our recent SEC filings for more information about these risk factors. You'll find these documents in the Investors section of our website at www.glaukos.com. Finally, please note that during today's call, we will also discuss certain non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into Glaukos' ongoing results of operations, particularly when comparing underlying results from period to period.

Please refer to the tables and earnings press release available in the Investor Relations section of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I will turn the call over to Glaukos Chairman and CEO, Tom Burns.

Okay. Thank you, Chris. Good afternoon, and thank you all for joining us today. Today, Glaukos reported record second quarter consolidated net sales of $185.6 million, up 50% on a reported basis and 49% on a constant currency basis versus the year ago quarter. As a result of our second quarter outperformance, we are raising our full year 2026 net sales guidance to $680 million to $700 million, an increase of $60 million to $65 million over our prior guidance of $620 million to $635 million. Our second quarter results reflect strong performance across our global commercial and development priorities, underscoring the successful execution of our teams, the strength of our differentiated technology platforms and our continued evolution as an increasingly diversified leader in ophthalmology. Looking ahead, we believe we are well positioned to sustain this momentum, driven by two transformational growth drivers, including the further advancement of the interventional glaucoma treatment paradigm with iDose TR and the launch of Epioxa, establishing a new standard in interventional keratoconus and rare diseases.

Together, these compelling and durable market opportunities reinforce our confidence in our ability to deliver a best-in-class growth and margin profile well into the next decade. At the same time, we continue to invest strategically across our industry-leading pipeline and commercial infrastructure while maintaining a focus on disciplined capital allocation to support sustained operating leverage and cash flow. While our priority remains to maximize near- and long-term growth, we were pleased with our progress across our P&L in the second quarter. Now let's discuss our second quarter results in more detail. Within our U.S. glaucoma franchise, we delivered record second quarter net sales of $118.5 million on strong year-over-year growth of 64%, driven by growing contributions from iDose TR, which generated sales of approximately $74 million in the second quarter. iDose TR continues to deliver strong clinical outcomes that meaningfully improve patients' lives, resulting in strong physician interest and adoption while helping to accelerate a broader treatment paradigm shift towards earlier interventional glaucoma care.

From an execution standpoint, we remain focused on our key initiatives, including expanding our base of trained surgeons and active accounts, increasing utilization, broadening market access, scaling targeted commercial investments and expanding the robust and growing body of clinical evidence, which now includes 24 peer-reviewed publications, complemented by a broad portfolio of active Phase IV studies across diverse real-world clinical settings, further reinforcing its consistent performance in real-world practice. Earlier this month, CMS issued its proposed rules for 2027, which as drafted, largely maintain the 2026 APC assignments, associated facility payments and relative physician fee rates associated with our procedures across both the hospital outpatient and ASC settings. Additionally, as many of you know, during the quarter, five of the seven Medicare administrative contractors issued proposed local coverage determinations for iDose TR.

We were encouraged by the overwhelming support from physicians, medical societies and other stakeholders throughout the open meetings and public comment period, validating the meaningful clinical value that iDose TR is delivering to patients. We continue to believe that the strength of iDose TR's clinical evidence, real-world outcomes and broad stakeholder advocacy support appropriate Medicare coverage that preserves physician decision-making and patient access. Moving on. Our international glaucoma franchise delivered record net sales of $36.6 million on year-over-year growth of 17% on a reported basis and 16% on a constant currency basis. The strong growth was once again broad-based as we continue to scale our international infrastructure and execute our plans to drive MIGS forward as the standard of care in each region and major market in the world. As previously discussed, we continue to expect new competitive product trialing headwinds in some of our major international markets as we progress through 2026, partially offset by growing contributions from iStent infinite following its EU MDR certification and associated European commercial launches late last year.

We also expect the currency tailwinds to abate going forward based on the current rate environment. And finally, our Corneal Health franchise delivered net sales of $30.4 million on year-over-year growth of 48%, including Epioxa net sales of approximately $11 million. Turning to Epioxa. We remain very encouraged by the early progress of our commercial launch as the first and only FDA-approved epithelium-on corneal cross-linking therapy for keratoconus. Epioxa has been met with strong interest from surgeons and the broader ophthalmic community, reinforcing our confidence in its potential to redefine the treatment paradigm for this rare, sight-threatening disease that is currently far too often undiagnosed and untreated. Our launch priorities remain centered on expanding patient access, building awareness, optimizing referral networks and driving earlier diagnosis. We continue to make meaningful progress across each of these areas, including the ongoing expansion of our site of care network, establishing broad market access and the implementation of our specialty pharma infrastructure and robust patient support programs.

First, I'm proud to report that we've successfully established and continue to selectively expand our broad-reaching site of care network. Our acquired O2N systems are already actively deployed across locations serving roughly 85% of the U.S. population, with the pipeline progressing through various approval processes that we expect will expand our treatment center reach to approximately 95%. Next, we continue to make considerable progress with payers to secure access pathways or policy coverage for Epioxa, with access pathways now established for more than 125 million covered commercial lives in the United States, including with the five largest payers, reflecting encouraging initial receptivity of Epioxa's clinical value. While we expect the pace of policy adoption to build over time, we remain focused on driving broader coverage across both commercial payers and Medicaid programs to support more streamlined access pathways over time.

As anticipated, Epioxa's new product-specific J-code, J2789 became effective on July 1, 2026. While we expect it will take some time for this to be solidified operationally by providers and our specialty pharma partner, we believe this now effective code will help streamline the reporting and reimbursement processes for Epioxa among U.S. payers over time. Beyond market access, we're proud to lead the way once again in forging a new path for interventional keratoconus by advancing targeted marketing and direct-to-consumer initiatives to drive awareness, education and earlier detection, supported by greater optometric engagement and strengthened advocacy partnerships. Finally, we've launched a co-pay assistance program for eligible patients. While we remain in the early stages of the launch, we're encouraged by the solid progress we're making against our core launch priorities and remain very excited by the significant potential Epioxa offers to patients living with keratoconus.

Beyond Epioxa, we continue to advance a broad and differentiated clinical pipeline across our five novel therapeutic platforms, encompassing 13 publicly disclosed programs and additional undisclosed assets supported by a robust portfolio of active clinical and Phase IV studies. Within our iDose platform, we are advancing a Phase IIb/III clinical program for iDose TREX, our next-generation iDose therapy and patient follow-up in a Phase IIIb study for iDose TRIO with a targeted FDA approval by the end of 2027. We also continue to advance various additional Phase IV studies. Within our iLink platform, we remain on track for our planned commercial introduction of our KC screening device later this year and are preparing to commence a Phase III clinical program for our third-generation customized topographically guided iLink therapy in 2027. Within our iStent surgical glaucoma platform, we are advancing a PMA pivotal trial for iStent infinite in mild to moderate glaucoma patients and recently completed patient enrollment in our 510(k) pivotal study for the PRESERFLO MicroShunt.

Within our iLution platform, we recently completed patient enrollment in a Phase II study for Demodex blepharitis and expect to have top line results in hand by the end of this year. Finally, within our retinal platform, we are advancing a first-in-human clinical development program for GLK-401, our intravitreal multi-kinase inhibitor retinal program in wet AMD patients. We believe that each of these novel differentiated platforms has the potential to generate transformative therapies that significantly improve the existing treatment paradigms for patients suffering from chronic eye diseases. So in conclusion, at Glaukos, we're in the business of pioneering new marketplaces within ophthalmology. Our record second quarter performance highlights the strength of our strategy and execution as we continue evolving into an increasingly diversified ophthalmic leader with multiple transformational growth drivers in iDose TR and Epioxa as we advance our mission to transform vision therapies for the benefit of patients worldwide. So with that, I'll open the call for questions. Operator?

Your first question comes from the line of Tom Stephan with Stifel.

Congrats on the nice quarter here. Maybe on Corneal Health, nice start to the Epioxa launch. Joe, maybe for you. Can you talk about where your expectations now stand on 2026 Corneal Health revenue growth? I think previously, it was high single digits. And then if you can help us understand the puts and takes as we think about the Q3 and Q4 cadence. I know the earnings summary mentioned some transient headwinds in Q3 amidst the transition to Epioxa, but any more color on the cadence would be great. Congrats again.

Yes. Thanks, Tom. Happy to jump in there. Obviously, we were very encouraged by the contribution of Epioxa in its first full quarter really of commercial availability, particularly when you consider the unavoidable challenges that go along with the miscellaneous J-code period. As Tom mentioned, our primary focus today remains on those building blocks that we think really set up Epioxa for long-term success. As I think about the translation of how this plays out for the remainder of this year, orienting you back to where our focus is at is making sure that we get the right puzzle pieces in place to drive optimization in 2027 and beyond. We know that the third quarter will come with some transition as it relates to the permanent J-code. We've talked about that for some time. So you end the third quarter having largely sunset Photrexa while launching Epioxa in the permanent J-code setting. There will be some volatility around that.

It makes it more difficult than usual for us to forecast during that stretch. There is a wider variety of scenarios around the potential outcomes of Epioxa as we transition throughout the third quarter and into the fourth. I think as we get into the fourth quarter, we have more conviction that some of those J-code translation or transition-related issues should start to be behind us, and we should start to see that uptick as we move into the fourth quarter and beginning of next year. So I think we'll have some transition while we make our way through. We may ultimately deliver terrific results, but we want to stay somewhat conservative as we navigate what is a unique transition for us. For the full year as it relates to Epioxa and our overall Corneal Health franchise, we started this year saying we were confident we would still grow. We ultimately upgraded that to high single digits. Now, based on the strong Q2 performance and growing Epioxa contributions, we are confident that for the overall year, Corneal Health should grow roughly 20% year-over-year, plus or minus.

Again, items to factor in especially in Q3 include the impact from sunsetting Photrexa and shifting to the permanent J-code for Epioxa. It's possible we'll have an air pocket there in Q3, but we remain confident that air pocket will be behind us by Q4 and into next year.

Your next question is from the line of Adam Maeder of Piper Sandler.

Good afternoon, and thank you for taking the questions. Great quarter. I guess just one for me. I'm going to be pulling on the modeling thread question. You just talked about expectations for the Corneal Health business. But Joe, in the past, you've given a lot of really helpful color across the different segments. So just wanted to see if you could provide updated thoughts on how you're thinking about iDose contribution versus the stent business versus OUS in corneal health for the second half?

Yes, I'm happy to do that. As both you and Tom alluded, we were very pleased with the strong second quarter. Each of our franchises exceeded expectations. As a result, we're raising guidance to the $680 million to $700 million range. If you think about models by franchise, it requires adjustments across all franchises given the outperformance. First, on international glaucoma, we've increased our expectations to low- to mid-teens year-over-year growth for the overall year. In the second half dynamics, you do have FX tailwinds abating. We're past the FX benefit on a year-over-year basis, so that will be a relative headwind into the second half. We'll continue to navigate competitive dynamics in international markets and some reimbursement headwinds in Germany and Switzerland, but this is offset by continued growth of PreserFlo and iStent infinite and overall interventional glaucoma market development abroad.

For Corneal Health, reiterating the roughly 20% year-over-year growth expectation for the full year, plus or minus. Items to factor in, especially in Q3, include the impact from sunsetting Photrexa and shifting to the permanent J-code for Epioxa; it is possible we'll have an air pocket there in Q3, but we remain confident that will be behind us in Q4. Finally, on U.S. glaucoma, we now expect full year growth around 50%, driven by two things: low single-digit growth of our broader portfolio and the continued expansion of iDose TR. When you do the math, you should land somewhere in the $275 million to $280 million range for iDose in 2026.

Your next question comes from the line of Larry Biegelsen of Wells Fargo.

Pretty impressive quarter here, guys. I'll do the first ask about the iDose LCD. Since the open meetings for the iDose LCD, how has your confidence in the revised policy changed? Which provisions do you think are most likely to be changed in a potential final LCD? And if the proposed LCD stayed the same, how would that impact your thinking around iDose over the next few years?

Thanks, Larry. A lot has transpired between the draft LCD in May, the open meetings in June and the formal submissions in early July. We always had conviction around the evidence associated with iDose in multiple settings, and the open-label study that supported approval generated high-quality evidence. We were encouraged by the overwhelming support from physicians, medical societies and patients during the open meetings. We believe the MACs are digesting that evidence. While there's no statutory next step or timing, we believe the final LCD should be in a more favorable position compared to the draft. As for what may change, there was strong opposition during the meetings to the underlying criteria associated with each of the proposed provisions. There was particular pushback to the idea of multiple components to a step edit associated with both drops and SLT, and significant pushback around treating glaucoma as a disease where physician optionality to use complementary tools for treatment should be preserved.

All of those points had compelling evidence presented and are in play. Regarding the impact if the proposed LCD were to remain as drafted — while we think that's unlikely — it's important to note that the continued strength of the business shortens the bridge to prior expectations for 2027 and beyond. Even in an SLT world, there are 500,000 to 600,000 SLTs done annually, representing a large market of patients that iDose could address in both incident and prevalent pools. If a final LCD were not clinically aligned, we would object alongside medical societies and continue to present evidence to support appropriate coverage and patient access for interventional glaucoma.

Your next question comes from the line of Ryan Zimmerman with BTIG.

Let me echo my congrats. It's really impressive. Maybe turning back to Epioxa for a minute, Joe. You talked about some of the patient co-pay dynamics that you're standing up. I'm wondering if you could elaborate on how you think about the gross-to-net pricing for Epioxa over time? And second, when you think about the O2 placements and the 85% of the user base, what are you seeing? Are you seeing new users take over these systems? Are you seeing upticks in utilization in a select cohort of corneal surgeons early on among early adopters? Just reflect on that user base dynamic as well.

Of course. On Epioxa gross-to-net dynamics, that's something we'll be watching and Alex and I will be refining as market maturity increases. For now, a reasonable starting point is to think about a realized net around the mid-$60,000s, primarily reflecting the impact of Medicaid pricing and other required discounts at launch. We're not doing much beyond that at this stage. It comes down to mix among Medicaid and other government payers. We'll refine that over time. Regarding the O2N system deployment, we made considerable progress during the quarter and are ahead of expectations. Systems are deployed at locations serving roughly 85% of the U.S. population, with the pipeline progressing toward about 95% coverage. Geographically, that's quite comprehensive and favorable for an installed base at this stage of the launch. As the J-code went into effect, sites that were slower in approvals have picked up their pace.

It's not so much any particular cohort of patients or sites; we have private sites, large groups, hospitals and 340B institutions. We've focused on our prior customer base and leaned into Tier 1 and Tier 2 sites that historically provided optimal care and were high-conversion. Conversions on those have been extremely high. In terms of early utilization, it's been meaningful: many sites have started to put patients into the hub seeking approvals for Epioxa given the clear benefits over an epi-off solution like Photrexa.

Your next question comes from the line of Allen Gong with JPMorgan.

I think not only did the top line do quite well, it looks as though your performance down the P&L was also quite strong once we back out the one-time stock-based compensation charge that you recognized in SG&A. In the past, messaging has been a focus on reinvestment back in the pipeline. We saw that with R&D stepping up another $8 million sequentially. How should we think about the potential for profitability in the back half of the year? Is that something you're willing to let fall through, or are you going to ramp up investment even more to reflect your success?

Allen, thanks. We were pleased with the progress in the second quarter across the P&L, margins, operating expenses and bottom line, including cash generation. Given our gross margin profile, we have a clear line of sight toward Glaukos achieving profitability at some point in the future, and that is moving closer as revenues increase from our two transformative drivers. That said, our management focus remains on prioritizing and prudently investing back into the commercial business to support these two launches as well as supporting the R&D pipeline, particularly the growth in clinical trial programs Tom referenced. Those investments are intended to maximize both near-term and long-term top-line growth.

Your next question is from the line of Richard Newitter with Truist Securities.

Congrats on the quarter. I have two quick ones on iDose and Epioxa. On iDose, given the substantial sequential uplift, was there any pull-forward from your customer base related to the LCD process? I'm wondering if you're seeing any of that. And on Epioxa, from a 340B standpoint, is there anything we should be thinking about from an ASP standpoint or how that might impact pricing there?

Thanks, Richard. On iDose, we did not see LCD-related pull-forward dynamics in the quarter. Most surgeons' schedules are pushed out sufficiently far that any pull-forward would typically follow a proposed final rule. What we did see in the quarter was acceleration across various MACs, including recent additions of professional fees in NGS and Palmetto, and a nice uptick in activity among commercial and Medicare Advantage patient populations as more customers expanded iDose utilization into those segments. So it was a diversified performance. Given the strength of the quarter, we're being somewhat conservative about how that translates into Q3, which is seasonally down for ophthalmology procedures. Regarding Epioxa and 340B pricing, that is factored into the gross-to-net guidance we discussed earlier. When thinking about realized average ASP, the roughly $60,000 starting point accounts for the impact of 340B institutions and the discounts associated with selling product into those institutions.

Your next question is from the line of Joanne Wuensch with Citi.

I want to zero in on expense management. In particular, gross margins have reached a new high by my math. Last quarter you guided 84% to 86% gross margins for the year. Is that still consistent? And similarly, it looks like you are starting to leverage OpEx. What are your current thoughts for that?

Joanne, yes. We were pleased to see continued accretion in gross margin during the quarter. It landed at approximately 85%, up roughly 90 basis points from last quarter. That accretion was driven by growing contributions of iDose and Epioxa and the overall revenue mix. Looking ahead, we expect modest gross margin accretion over the remainder of the year and particularly in Q4 as iDose and Epioxa become a greater share of revenue. That said, we'll continue to stick with our targeted guidance range for the year of 84% to 86% gross margin and are holding that steady. On operating expenses, we're encouraged to see operating leverage in the quarter. Our philosophy remains the same: we'll continue to manage operating expenses to realize leverage while still investing in priorities around commercial and R&D. Coupled with cash management, our objective is to manage toward cash flow breakeven. For operating expenses for the year, given top-line outperformance, you can expect operating expenses to land somewhere around $600 million for the year.

Your next question is from the line of Mason Carrico with Stephens.

Appreciate the questions here. Going back to the guide, you called out iDose revenue in the $275 million to $285 million range this year. That seems to imply pretty minimal sequential growth from the Q2 numbers. Just to confirm, is that largely driven by your commentary around being conservative on commercial and Medicare Advantage volumes? Is there anything else in the back half we should be aware of?

Yes, Mason. There's nothing particular to call out beyond what we've discussed. When you have a quarter of this magnitude, and it's one of our strongest to date, we want to see another quarter or two of consistent performance before calling it a trend. We continue to see sequential growth and strong year-over-year growth in the launch, but Q2 was so strong that we prefer to be cautious translating that into Q3, especially given seasonality where volumes tend to be down in the third quarter.

Your next question is from the line of David Saxon with Needham & Company.

Obviously, a really strong quarter here. I wanted to ask on Epioxa. Could you talk about the cadence of prior authorization submissions you saw in Q2? Did you see any uptake in activity as the J-code became effective in July? And how is the backlog of eyes looking in the portal—the cases that are awaiting approvals—and could you provide color on cadence of approvals as you move through Q3 and into July?

David, in Q2 the majority of the approximately $11 million of Epioxa revenue realized was toward the latter part of the quarter, which is reasonable given the timing of FDA approval at the exit of Q1 and the time required for prior authorizations, contracting and ultimately treatment. We're now through that initial part of the process. The important milestone of the permanent J-code on July 1 shifts the environment: you had activity under the miscellaneous code and then a partial reset with the permanent J-code, which requires contract and prior authorization adjustments. That is why we called out potential volatility for Q3 as we reset. On backlog, along with progress on the payer network, site-of-care network and patient support, we've been extremely encouraged by the number of patients being submitted for Epioxa approvals. That is a positive leading indicator for the product's intermediate-term potential. The question becomes how quickly these patients can move from submission to approved treatment. As we move into 2027, improving that speed will be a focus, but current leading indicators are strong in terms of submission volumes.

Your next question comes from the line of Steven Lichtman with William Blair.

Thank you. Congratulations. On your Epioxa customers, how are they viewing the Specialty Pharmacy option versus buy-and-bill? Are most going to Specialty Pharmacy initially? How quickly are they gaining confidence to shift to buy-and-bill? Because obviously, that's another driver over the medium term.

Good question. It depends on the site of care. Institutions and groups with experience are more comfortable with buy-and-bill out of the gate and many have bypassed the Specialty Pharmacy option. Community-based practices are more likely to lean on Specialty Pharmacy early on. That doesn't mean they won't shift to buy-and-bill over time. It's early: the permanent J-code has been in place less than a month, and sites want to see consistent approvals through the Specialty Pharmacy pathway with individual payers before considering buy-and-bill. That will be a journey over the next several years and one we're prepared to support.

Your next question is from the line of Anthony Petrone with Mizuho Group.

Congrats on a solid quarter. I'll keep it to Epioxa. On the competitive landscape as it sits today and how it's going to evolve, do you think you're in a position to gain share from scleral lenses, which is an option ahead of corneal cross-linking? Are you seeing those patients come in? And there are some combination therapies under development; how do you think the cross-linking competitive landscape will shape out over the next couple of years, assuming potential entrants?

When you build a market, you should expect competition, and ideally responsible entrants help accelerate market growth. Today, we're at the beginning of a transformational launch and a shift in standard of care. When building the market, expansion and market growth should outweigh market-share dynamics for many years. Scleral lenses are not a direct competitive solution; patients often have scleral lenses even after therapy. The goal is to stabilize and arrest progression of a sight-threatening disease. A therapy that does not require removing the epithelium lowers the bar for earlier treatment. Epioxa should help solidify cross-linking as therapy of choice. We believe the market can expand from the current levels to potentially 50,000 to 100,000 annual eyes addressable over time. We must prove and build that market through hard work and investment.

I'll add that we spend significant time building new marketplaces and also on how to protect our market share as we grow them. We've already advanced a third-generation customized topographically guided iLink therapy, which we expect to enter clinical trials in 2027. If that product performs well, it could have greater reductions in Kmax and preferential treatment of peaks, potentially improving best-corrected visual acuity. Competitors would face a formidable commercial effort and potentially differentiated next-generation therapies. We intend both to build and protect this marketplace.

Your next question is from the line of Yi Chen with H.C. Wainwright.

Yi, are you there? Maybe on mute.

Yes. Apologies. Can you hear me? This is Katie on for Yi. Real quick on readministration and TREX: Is what you're seeing what you expected from early reimplantation data? Are you seeing any cannibalization among devices?

I'll start. As it relates to readministration, we're continuing to see successful procedures. It's somewhat limited so far because early commercial patients are only now entering the window for readministration, but where patients are eligible, we're seeing procedures done successfully. I don't see cannibalization; I see it as additive, with physicians and patients choosing to remain on therapy as initial iDose wears off. Regarding iDose TREX and future approvals, that should be additive in the overall algorithm for getting those patients on therapy initially and during readministration procedures.

This concludes our question-and-answer session. I will now turn the call back to the company for closing remarks.

I want to thank all of you for your time and attention today, and thank you for your continued interest and support of Glaukos. Goodbye.

This concludes today's call. Thank you for attending. You may now disconnect.