Glaukos Corporation 2026 Q3 Earnings Call

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. To ensure ample time and opportunity to address everyone's questions, we request that you limit yourself to only one question. If you still have additional questions, you may get back into the queue. 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 will find these documents in the investor 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 in our 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 third quarter consolidated net sales of $211 million, up 58% versus the year-ago quarter. As a result of our third quarter outperformance, we are raising our full year 2026 net sales guidance to $775 million-$785 million, an increase of $90 million at the midpoint over our prior guidance of $680 million-$700 million. We are also introducing highly preliminary 2027 revenue guidance of $1 billion. This preliminary outlook factors in our expectations as it relates to the continued commercial rollout for Epioxa and iDose TR, the surgical MIGS landscape, and our international glaucoma franchise. We expect to refine this guidance range and provide additional commentary as appropriate in the future.

Our record third 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. We are also encouraged by the tremendous progress across our P&L in the third quarter, reflecting the increasing scale and diversification of our business.

Highlights included nearly 400 basis points of year-over-year non-GAAP gross margin expansion to approximately 88%, continued operating leverage, more than $50 million in cash generation, $28.5 million in non-GAAP net income, and non-GAAP earnings per share of $0.47. While we believe our business is increasingly well-positioned to deliver sustained cash generation and profitability as we scale, we remind investors that our primary focus remains on maximizing near and long-term revenue growth and capitalizing on the significant opportunities in front of us. Accordingly, we remain committed to investing strategically across our industry-leading pipeline, commercial infrastructure, and market development initiatives to advance our innovative platforms, expand our addressable markets, and drive sustained top-line growth. We will continue to manage the business thoughtfully, balancing these strategic investments with disciplined expense management, capital allocation, and a focus on operational efficiency.

Ultimately, we believe this approach best positions us to bring transformational therapies to patients, strengthen our financial profile, and drive sustainable, substantial long-term growth in shareholder value. Now let's discuss our third quarter results in more detail. Starting with our corneal health franchise, we delivered record third-quarter net sales of $59 million on robust year-over-year growth of 154%, driven by Epioxa net sales of approximately $53 million. We remain very encouraged by the early progress of our commercial launch of Epioxa. As the first and only FDA-approved epithelium-on corneal cross-linking therapy for keratoconus, Epioxa has generated strong interest from surgeons in the broader ophthalmic community, reinforcing our confidence in its potential to redefine the treatment paradigm for this rare sight-threatening disease, which we believe remains significantly underdiagnosed and undertreated. 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, supported by the ongoing expansion of our site of care network, growing market access, and continued development of our specialty pharmacy and patient support infrastructure. First, we have successfully established and continue to selectively expand a broad-reaching site of care network. Our acquired O2N systems are already actively deployed across locations serving roughly 90% of the U.S. population, with a pipeline progressing through various approval processes that we expect will expand our treatment center reach to more than 95%. Next, we continue to make considerable progress with payers to secure access pathways and policy coverage for Epioxa, with access pathways now established for approximately 90% of commercial lives in the United States, including through the five largest payers and more than 80% of Medicaid lives, reflecting encouraging receptivity of Epioxa's clinical value.

We remain committed to securing access pathways with the remaining smaller and regional plans as we increasingly focus on pathway optimization and improving the time to treatment for patients. Following the July 1 effective date of Epioxa's product-specific J-code, J2789, we made encouraging progress during the third quarter in optimizing the operational processes supporting reporting and reimbursement. We remain focused on working with providers and our specialty pharmacy partner to further refine these workflows and facilitate a more efficient and predictable reimbursement process for Epioxa. Clinically, we continue to be encouraged by physician feedback and the outcomes they are seeing with Epioxa in practice. These real-world clinical observations are consistent with the positive results from our recently announced three-year phase III extension study, which demonstrated sustained improvements in corneal shape, meaningful visual acuity gains, and a favorable long-term safety profile following a single Epioxa treatment.

Together, these findings further reinforce Epioxa's potential to provide durable clinical benefits for patients living with keratoconus and meaningfully advance the treatment paradigm. During the third quarter, we took another important step in our efforts to expand the keratoconus market with the launch of our Could it be KC? disease awareness campaign in partnership with NBA champion Stephen Curry. Stephen's personal experience living with keratoconus, combined with his extraordinary platform and reach, gives us a unique opportunity to increase awareness of this underdiagnosed disease and to drive earlier detection and diagnosis. We view this as an important long-term investment in the KC market and an important component of our commitment to addressing the significant unmet need across the keratoconus care continuum, with additional campaign activities planned for 2027.

Complementing these efforts, we remain focused on deepening engagement with the optometric community, which we believe plays a critical role in identifying and referring patients with keratoconus. We remain on schedule to launch our KC screening device as we enter 2027, which we intend to leverage to raise disease awareness, facilitate more accessible screening and diagnosis, and to enable earlier identification of patients who may benefit from treatment. Together with our broader disease awareness initiatives and strengthened advocacy partnerships, we believe these efforts position us to meaningfully advance the KC care continuum and expand patient access to treatment. Finally, we continue to enhance and optimize our patient and physician support services, including our co-pay assistance program for eligible patients, to help facilitate access to Epioxa and to support patients throughout their treatment journey.

While we still remain in the early stages of the launch, we are encouraged by the solid progress we are making against our core launch priorities and remain very excited by the significant potential Epioxa offers to KC patients. Moving on. Our U.S. glaucoma franchise delivered record third quarter net sales of $118.6 million on strong year-over-year growth of 47%, driven by growing contributions from iDose TR, which generated sales of approximately $76 million in the third 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 body of clinical evidence supporting iDose TR. To that last point, we recently announced positive top-line results from our phase IV randomized control trial evaluating iDose TR in combination with cataract surgery. Study achieved its primary endpoint, demonstrating statistically significant superiority and a clinically meaningful IOP reduction compared to cataract surgery alone, with an 11.1 millimeter mercury mean reduction in IOP and a 3.6 millimeter mercury incrementally superior treatment effect at three months. These results further strengthen the extensive body of clinical evidence supporting iDose TR's efficacy, durability, and safety, while reinforcing the versatility of the therapy across different treatment settings.