Glaukos' Third Quarter 2026 Financial Results Conference Call - GLAUKOS CORP

Financial Performance:

• Reported record Q3 2026 net sales of $211 million, representing a 58% year-over-year increase.
• Adjusted non-GAAP gross margin expanded approximately 400 basis points year-over-year to 88%, driven by product mix.
• Generated over $50 million in cash flow for the quarter; reported non-GAAP net income of $28.5 million and EPS of $0.47.
• Corneal health franchise sales reached $59 million (+154% YoY), with Epioxa contributing ~$53 million.
• U.S. glaucoma franchise sales hit $118.6 million (+47% YoY), driven by I-Dose TR's $76 million contribution.
• International glaucoma franchise sales were $33.4 million (+13% reported, +15% constant currency).
• Operating expenses for the full year 2026 are projected to reach approximately $630 million, reflecting a 30%+ YoY growth while maintaining operating leverage.

Guidance and Future Outlook:

• Raised full-year 2026 net sales guidance to $775–$785 million, increasing the midpoint by $90 million.
• Introduced preliminary 2027 revenue guidance of $1 billion, factoring in Epioxa/I-Dose TR rollout, surgical mix, and international growth.
• I-Dose TR 2026 sales are now expected to reach the low $280 million range, more than doubling 2025 performance.
• Management remains confident in the $1 billion 2027 target even under downside scenarios, including potential restrictive Local Coverage Determinations (LCDs) for I-Dose TR.
• Operating expense growth for Q4 2026 is expected to moderate to 25–30% year-over-year as commercial investments for 2027 are not yet fully deployed.

Business Segments and Product Lines:

• Epioxa (Corneal Health): First FDA-approved epithelium-on-corrective cross-linking therapy for keratoconus; launched with a target of 300+ treatment centers covering 95% of the U.S. population.
• I-Dose TR (Glaucoma): Positive Phase 4 results announced showing statistically significant superior IOP reduction (11.1 mmHg reduction, 3.6 mmHg incremental benefit) when combined with cataract surgery.
• Pipeline Updates:
  • I-Dose T-Rex (Phase 2b/3) and I-Dose Trios (Phase 3b, targeting FDA approval end of 2027).
  • iSTEP Infinite (mild/moderate glaucoma) and Pressure Flow Micro Shunt studies completed enrollment; follow-up advancing.
  • ILINK platform: KC screening device launch scheduled for 2027; Phase 3 for 3rd-gen cross-linking therapy starting 2027.
  • Retinal platform: Exclusive licensing with RevOps Therapeutics for R0104 (tri-specific biologic) and RevMod platform; GLK401 wet AMD data expected end of year.
  • Demodex Blepharitis (ILLOusion): Phase 2 enrollment complete, top-line data expected by year-end.

Market and Competitive Landscape:

• Keratoconus market viewed as significantly underdiagnosed/undertreated; Epioxa launch aims to redefine the treatment paradigm.
• Launched "Could It Be KC" disease awareness campaign featuring NBA champion Stephen Curry to drive early detection.
• Established access pathways for 90% of U.S. commercial lives and 80% of Medicaid lives for Epioxa.
• Site of care network expanded to ~200 active sites with contracts for >300, while screening centers (>700) identified for optometric referral.
• I-Dose TR driving a shift toward earlier interventional glaucoma care; strong physician adoption despite seasonality.
• International expansion continues to scale MIGS as a standard of care in major global markets.

Risks and Challenges:

• Reimbursement/LCDs: Potential restrictive Medicare coverage decisions (LCDs) for I-Dose TR remain a primary variable; MACs have until May of the following year to finalize decisions.
• Launch Complexity: Early-stage Epioxa launch faces challenges with prior authorization timelines, varying payer processes, and "buy-and-bill" channel ramp-up compared to specialty pharmacy.
• Operational Scalability: Rapid demand exceeding initial forecasts has strained operations and field support teams, requiring rapid scaling.
• Market Adoption: Risk that the market perceives keratoconus as a "rare" rather than "rarely diagnosed" condition, potentially capping the total addressable market.

Management Commentary and Tone:

• Tone is highly confident and enthusiastic, citing "record" results and "transformational" growth drivers.
• Management emphasizes a disciplined approach to balancing heavy strategic investment (R&D, commercial infrastructure) with operational efficiency and capital discipline.
• CEO Tom Burns and CFO Alex Thurmond reiterated commitment to becoming a comprehensive leader across corneal, glaucoma, and retinal franchises, prioritizing organic development over M&A.
• Executives expressed strong belief in the durability of 88% gross margins as high-margin products (Epioxa, I-Dose TR) grow as a larger revenue mix.

Analyst Questions and Answers:

• 2027 Guidance Confidence: Confirmed $1B guidance accounts for all LCD scenarios, including restrictions, driven by Epioxa's early momentum and I-Dose TR's resilience.
• Epioxa ASP: Modeling should assume $65,000–$70,000 net ASP for the back half of 2026 and 2027; early trends may lean higher.
• Payer Access: Payers utilize prior authorization periods to educate themselves; volume and claims approval rates are expected to drive increased efficiency over time.
• I-Dose TR Buy-Ahead: Limited potential for Q4 buy-ahead due to surgeons' full surgical schedules; Q4 trends remain encouraging despite seasonality.
• Strategic Partnerships: Inorganic deals (e.g., RevOps) complement internal R&D but are not the primary strategy; focus remains on building internal pipeline capacity.

Other Key Points:

• Epioxa's J-code (J2789) implementation is progressing with focus on optimizing reimbursement workflows.
• Real-world clinical data supports Phase III extension study findings of sustained visual acuity gains and safety for Epioxa.
• Management highlighted a unique opportunity to expand the keratoconus market beyond traditional rare disease demographics through screening and awareness.
• The company is investing heavily in 2027 for disease awareness (KC) and brand initiatives (Glaucoma) to sustain growth trajectories.