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

Explicit Guidance:

• FY2026 Net Sales: Raised to $775–$785 million (midpoint $780M), representing a $90M increase from prior guidance ($680–$700M).
• FY2026 Operating Expenses: Expected to end FY2026 at approximately $630 million (±), reflecting year-over-year growth of ~30% and maintaining operating leverage.
• FY2027 Net Sales: Introduced preliminary, non-binding guidance of $1 billion.
• FY2026 EPS/Net Income: Non-GAAP net income of $28.5M reported for Q3; Non-GAAP EPS of $0.47 reported for Q3. No specific full-year EPS guidance provided in this transcript.
• FY2026 Gross Margins: Targeting sustained expansion driven by mix shift, with Q3 achieving ~88% non-GAAP gross margin.

Business-Segment Outlook:

• Corneal Health (Epioxa): Early-stage launch; Q3 sales of ~$53M. Expectation to deepen engagement with optometric community and launch KC screening devices in 2027. Goal to treat 50,000–100,000 eyes annually eventually; target 18,000+ eyes per year expected long-term.
• U.S. Glaucoma (I-Dose TR): Q3 sales ~$76M. Expected full-year 2026 revenue in the low $280 million range (up from prior $275–$280M). Management expects the business to double 2025 performance in 2026.
• International Glaucoma: Q3 sales $33.4M (+13% reported, +15% constant currency). Strategy to scale infrastructure and drive MIGS adoption globally.
• Pipeline Milestones (FDA Approvals/Readouts):
  • iDose TRIOS: Targeting FDA approval by end of 2027.
  • iDose T-Rex: Advancing Phase 2b/3 program.
  • iLink: Commencing Phase III program for third-generation cross-linking therapy in 2027.
  • iStep: Patient follow-up ongoing for pivotal trials (mild/moderate glaucoma and micro shunt); no specific approval date given.
  • Retinal (GLK401): First-in-human wet AMD program ongoing.
  • Retinal (RevOps): Exclusive rights to R0104 (JLK901) and RevMod platform; multiple next-gen biologics.
  • Illusion (Demodex): Phase 2 enrollment complete; top-line results expected by end of 2026.

Market and Competitive Outlook:

• Commercial Infrastructure: 200+ active sites of care serving ~90% of the U.S. population; contracts executed to expand to >300 sites. >700 screening centers established.
• Payer Access: Pathways established for 90% of commercial lives and 80% of Medicaid lives. Focus shifting from access establishment to pathway optimization and adjudication efficiency.
• Market Expansion: Launching "Could it be KC" disease awareness campaign in partnership with Stephen Curry; additional campaign activities planned for 2027.
• Product Mix: Shift toward higher-margin platforms (Epioxa and I-Dose TR) expected to drive margin durability.
• Competition: Management references "historical track record" regarding Eidos launch enthusiasm vs. reality, indicating caution on ramp speed expectations but confidence in long-term adoption.

Macro / Industry Outlook:

• Reimbursement (LCDs): Monitoring Proposed Local Coverage Determinations (LCDs) for I-Dose TR. MACs have a one-year statutory window from the May draft to act or abandon. Management believes clinical evidence supports appropriate Medicare coverage.
• ASP Modeling: Guidance for modeling Epioxa ASP at $65,000–$70,000 for the back half of 2026 and 2027, with trends expected to lean toward the higher end of this range in early stages.
• Operational Efficiency: Expecting continued operating leverage through 2026 with 40% gross margin durability assumptions.

Strategic Initiatives:

• Retinal Expansion: Significant capital allocation planned for new retinal franchises (iLink, iStep, Illusion, RevOps partnership), with individual projects requiring >$100M in investment.
• Organic Growth Strategy: Primary focus remains on internal R&D and organic development; M&A will be used to fill pipeline gaps rather than as a primary growth engine.
• Care Continuum: Investment in "Buy-and-Bill" channel infrastructure and specialty pharmacy partnerships to optimize patient access and reimbursement workflows.
• 2027 Marketing Spend: Significant increase in disease awareness and brand investment planned for 2027, including KC and interventional glaucoma initiatives.

Risks and Headwinds to Outlook:

• LCD Finalization: Potential for restrictive Local Coverage Determinations for I-Dose TR could impact U.S. glaucoma growth, though $1B 2027 guidance assumes some level of restriction or impact.
• Launch Ramp Uncertainty: Epioxa is in early launch stages; payer prior authorization delays and process inefficiencies could slow revenue recognition compared to historical launches (e.g., IOPex).
• Clinical Trial Outcomes: Future revenue depends on successful FDA approvals for iDose TRIOS (2027), iLink Phase III (2027), and positive results from Demodex (end of 2026) and retinal programs.
• Operational Strain: Rapid demand for Epioxa has already put pressure on operations and field support teams; scaling issues could hinder expansion.

Management Tone on the Future:

• Confidence Level: High confidence in delivering $1B revenue in 2027 even after factoring in "downside scenarios" regarding LCDs.
• Guidance Rationale: Preliminary 2027 guidance provided to establish a "measurable against" baseline for investors, acknowledging the early stage of the Epioxa ramp.
• Strategic Focus: Emphasis on balancing capital allocation between aggressive pipeline investment and disciplined expense management. Management expresses "tremendous progress" and "encouraged" sentiment regarding clinical data and commercial traction.
• Caution: Management explicitly states they will not provide granular franchise-level breakdowns for 2027 until the LCD situation clarifies, preferring to "hold off" on specific point estimates for next year to avoid over-promising.