GLAUKOS Corp 10-Q for FY2022 Q3

GLAUKOS Corp (GKOS)

10-Q 2022-11-04 For: 2022-09-30

Added on April 12, 2026

About this 10-Q

GLAUKOS Corp filed this 10-Q on November 4, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $71.27M; down 4.6% from $74.71M a year earlier
Net loss: $27.58M; compared with net income of $6.23M a year earlier
Diluted EPS: -$0.58; compared with $0.13 a year earlier

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Delaware	33-0945406
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Glaukos Way Aliso Viejo, California	92656
(Address of registrant’s principal executive offices)	(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		GKOS		New York Stock Exchange


		Page
PART I: FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II: OTHER INFORMATION		33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	34
Item 6.	Exhibits	49

SIGNATURES		50


	September 30,		December 31,
	2022		2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	104,018	$	100,708
Short-term investments		257,600		313,343
Accounts receivable, net		34,766		33,438
Inventory		34,182		23,011
Prepaid expenses and other current assets		18,275		15,626
Total current assets		448,841		486,126
Restricted cash		9,078		9,416
Property and equipment, net		87,307		68,969
Operating lease right-of-use assets		26,049		28,142
Finance lease right-of-use asset		47,206		49,022
Intangible assets, net		314,097		332,781
Goodwill		66,134		66,134
Deposits and other assets		9,756		9,108
Total assets	$	1,008,468	$	1,049,698

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	11,465	$	7,333
Accrued liabilities		49,150		56,027
Total current liabilities		60,615		63,360
Convertible senior notes		281,056		280,026
Operating lease liability		29,129		29,650
Finance lease liability		72,319		72,699
Deferred tax liability, net		7,301		7,318
Other liabilities		9,494		9,494
Total liabilities	$	459,914	$	462,547

Commitments and contingencies (Note 12)

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; 47,693 and 46,993 shares issued and 47,665 and 46,965 shares outstanding as of September 30, 2022 and December 31, 2021, respectively		48		47
Additional paid-in capital		985,407		952,432
Accumulated other comprehensive (loss) income		(3,823)		15
Accumulated deficit		(432,946)		(365,211)
Less treasury stock (28 shares as of September 30, 2022 and December 31, 2021)		(132)		(132)
Total stockholders' equity		548,554		587,151
Total liabilities and stockholders' equity	$	1,008,468	$	1,049,698


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net sales	$	71,269	$	74,710	$	211,635	$	220,771
Cost of sales		16,861		15,370		51,757		49,762
Gross profit		54,408		59,340		159,878		171,009
Operating expenses:
Selling, general and administrative		47,149		44,470		140,998		131,691
Research and development		28,870		28,846		87,459		74,321
In-process research and development		-		5,000		10,000		10,000
Litigation-related settlement		-		(30,000)		(30,000)		(30,000)
Total operating expenses		76,019		48,316		208,457		186,012
(Loss) income from operations		(21,611)		11,024		(48,579)		(15,003)
Non-operating expense:
Interest income		744		291		1,415		1,016
Interest expense		(3,481)		(3,413)		(10,311)		(9,948)
Other expense, net		(2,981)		(1,470)		(9,792)		(3,097)
Total non-operating expense		(5,718)		(4,592)		(18,688)		(12,029)
(Loss) income before taxes		(27,329)		6,432		(67,267)		(27,032)
Income tax provision		247		202		468		689
Net (loss) income	$	(27,576)	$	6,230	$	(67,735)	$	(27,721)
Basic and diluted net (loss) income per share	$	(0.58)	$	0.13	$	(1.43)	$	(0.60)
Weighted average shares used to compute basic net (loss) income per share		47,614		46,737		47,346		46,255
Weighted average shares used to compute diluted net (loss) income per share		47,614		49,320		47,346		46,255


						Accumulated
				Additional		other
	Common stock			paid-in		comprehensive		Accumulated		Treasury stock			Total
	Shares	Amount		capital		income (loss)		deficit		Shares	Amount		equity
Balance at December 31, 2021	46,993	$	47	$	952,432	$	15	$	(365,211)	(28)	$	(132)	$	587,151
Common stock issued under stock plans	124		—		1,515		—		—	—		—		1,515
Stock-based compensation	—		—		6,923		—		—	—		—		6,923
Other comprehensive loss	—		—		—		(3,402)		—	—		—		(3,402)
Net income	—		—		—		—		5,377	—		—		5,377
Balance at March 31, 2022	47,117	$	47	$	960,870	$	(3,387)	$	(359,834)	(28)	$	(132)	$	597,564
Common stock issued under stock plans	331		1		237		—		—	—		—		238
Stock-based compensation	—		—		10,539		—		—	—		—		10,539
Other comprehensive loss	—		—		—		(328)		—	—		—		(328)
Net loss	—		—		—		—		(45,536)	—		—		(45,536)
Balance at June 30, 2022	47,448	$	48	$	971,646	$	(3,715)	$	(405,370)	(28)	$	(132)	$	562,477
Common stock issued under stock plans	245				4,350		—		—	—		—		4,350
Stock-based compensation			—		9,411		—		—	—		—		9,411
Other comprehensive loss			—		—		(108)		—	—		—		(108)
Net loss			—		—		—		(27,576)	—		—		(27,576)
Balance at September 30, 2022	47,693	$	48	$	985,407	$	(3,823)	$	(432,946)	(28)	$	(132)	$	548,554


	Nine Months Ended September 30,
	2022		2021
Operating Activities
Net loss	$	(67,735)	$	(27,721)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		4,710		3,475
Amortization of intangible assets		18,684		18,684
Amortization of lease right-of-use assets		3,378		3,519
Amortization of debt issuance costs		1,030		1,030
Deferred income tax benefit		(17)		(72)
Gain on disposal of fixed assets		29		(3)
Stock-based compensation		26,873		22,921
Unrealized foreign currency losses		4,219		1,836
Amortization of premium on short-term investments		601		773
Other liabilities		-		1,951
Changes in operating assets and liabilities:
Accounts receivable, net		(3,121)		494
Inventory		(11,881)		(4,257)
Prepaid expenses and other current assets		(3,355)		(5,039)
Accounts payable and accrued liabilities		(1,847)		11,666
Other assets		(515)		102
Net cash (used in) provided by operating activities		(28,947)		29,359
Investing activities
Purchases of short-term investments		(47,256)		(191,756)
Proceeds from sales and maturities of short-term investments		97,494		182,356
Purchases of property and equipment		(22,044)		(38,458)
Proceeds from disposal of property and equipment		96		3
Investment in company-owned life insurance		(166)		(1,505)
Net cash provided by (used in) investing activities		28,124		(49,360)
Financing activities
Proceeds from exercise of stock options		2,871		24,383
Proceeds from share purchases under Employee Stock Purchase Plan		5,630		4,817
Payment of employee taxes related to vested restricted stock units		(2,399)		(3,670)
Principal paid on finance lease		(380)		(555)
Proceeds from tenant improvement allowance		-		12,668
Net cash provided by financing activities		5,722		37,643
Effect of exchange rate changes on cash and cash equivalents		(1,927)		(1,257)
Net increase in cash, cash equivalents and restricted cash		2,972		16,385
Cash, cash equivalents and restricted cash at beginning of period		110,124		106,162
Cash, cash equivalents and restricted cash at end of period	$	113,096	$	122,547
Supplemental disclosures of cash flow information
Taxes paid	$	372	$	307
Interest paid on convertible senior notes	$	3,953	$	3,953
Other interest paid	$	3,350	$	2,983
Supplemental schedule of noncash investing and financing activities
Purchases of property and equipment included in accounts payable and accrued liabilities	$	3,258	$	2,244


	At September 30, 2022
	Maturity	Amortized cost		Unrealized		Unrealized		Estimated
	(in years)	or cost		gains		losses		fair value
U.S. government bonds	less than 2	$	76,785	$	—	$	(960)	$	75,825
U.S. government agency bonds	less than 3		88,530		7		(2,834)		85,703
Bank certificates of deposit	less than 2		5,500		—		(22)		5,478
Corporate notes	less than 3		48,301		—		(1,191)		47,110
Asset-backed securities	less than 2		25,980		1		(406)		25,575
Municipal bonds	less than 3		18,421		—		(512)		17,909
Total		$	263,517	$	8	$	(5,925)	$	257,600

	At December 31, 2021
	Maturity	Amortized cost		Unrealized		Unrealized		Estimated
	(in years)	or cost		gains		losses		fair value
U.S. government agency bonds	less than 3		123,803		8		(540)		123,271
U.S. government bonds	less than 1	$	76,765	$	—	$	(240)	$	76,525
Bank certificates of deposit	less than 1		12,500		1		(9)		12,492
Commercial paper	less than 1		2,998		—		(1)		2,997
Corporate notes	less than 3		55,178		37		(183)		55,032
Asset-backed securities	less than 2		23,761		44		(31)		23,774
Municipal bonds	less than 3		19,350		—		(98)		19,252
Total		$	314,355	$	90	$	(1,102)	$	313,343


			At September 30, 2022
			Quoted prices		Significant
			in active		other		Significant
			markets for		observable		unobservable
	September 30,		identical assets		inputs		inputs
	2022		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents:
Money market funds ⁽ⁱ⁾	$	46,243	$	46,243	$	-	$	-
Available for sale securities:
U.S. government agency bonds ⁽ⁱⁱ⁾	$	85,703	$	-	$	85,703	$	-
U.S. government bonds ⁽ⁱⁱ⁾		75,825		-		75,825		-
Bank certificates of deposit ⁽ⁱⁱ⁾		5,478		-		5,478		-
Corporate notes ⁽ⁱⁱ⁾		47,110		-		47,110		-
Asset-backed securities ⁽ⁱⁱ⁾		25,575		-		25,575		-
Municipal bonds ⁽ⁱⁱ⁾		17,909		-		17,909		-
Investments held for deferred compensation plans		7,578		-		7,578		-
Total Assets	$	311,421	$	46,243	$	265,178	$	-
Liabilities
Deferred compensation plans	$	7,444	$	-	$	7,444	$	-
Total Liabilities	$	7,444	$	-	$	7,444	$	-


Maturity of Lease Liabilities	Operating		Finance
(in thousands)	Leases ^(a)		Leases ^(b)
Remainder of 2022	$	527	$	—
2023		2,864		6,264
2024		3,335		5,184
2025		3,291		5,340
2026		3,362		5,500
2027		3,467		5,665
Thereafter		33,759		101,880
Total lease payments	$	50,605	$	129,833
Less: imputed interest		21,307		57,514
Total lease liabilities	$	29,298	$	72,319


	Estimated	As of September 30, 2022						As of December 31, 2021
	Useful	Gross						Gross
	Life	Carrying		Accumulated		Net		Carrying		Accumulated		Net
	(in years)	Amount		Amortization		Amount		Amount		Amortization		Amount
Developed technology	11.4	$	252,200		(63,055)		189,145		252,200		(46,485)		205,715
Customer relationships	5.0		14,100		(8,048)		6,052		14,100		(5,934)		8,166
Intangible assets subject to amortization			266,300		(71,103)		195,197		266,300		(52,419)		213,881

In-process research and development	Indefinite	$	118,900		—		118,900		118,900		—		118,900

Goodwill	Indefinite	$	66,134		—		66,134		66,134		—		66,134

Total		$	451,334	$	(71,103)	$	380,231	$	451,334	$	(52,419)	$	398,915


	Amortization Expense
Remainder of 2022	$	6,228
2023		24,912
2024		24,619
2025		22,092
2026		22,092
Thereafter		95,254
Total amortization	$	195,197


	Three Months Ended
	September 30,
	United States				International				Total
	2022		2021		2022		2021		2022		2021

Glaucoma	$	37,214	$	43,381	$	16,532	$	15,099	$	53,746	$	58,480
Corneal Health		14,992		13,381		2,531		2,849		17,523		16,230
Total	$	52,206	$	56,762	$	19,063	$	17,948	$	71,269	$	74,710



	As of		As of
	September 30,		December 31,
	2022		2021
Convertible Notes	$	287,500	$	287,500
Less: Unamortized debt issuance costs		(6,444)		(7,474)
Carrying amount of Convertible Notes	$	281,056	$	280,026


	Three Months Ended
	September 30,				% Increase
(dollars in thousands)	2022		2021		(decrease)
Statements of operations data:
Net sales	$	71,269	$	74,710	(5)	%
Cost of sales		16,861		15,370	10	%
Gross profit		54,408		59,340	(8)	%
Operating expenses:
Selling, general and administrative		47,149		44,470	6	%
Research and development		28,870		28,846	-	%
In-process research and development		-		5,000	(100)	%
Litigation-related settlement		-		(30,000)	(100)	%
Total operating expenses		76,019		48,316	57	%
(Loss) income from operations		(21,611)		11,024	NM
Total non-operating expense, net		(5,718)		(4,592)	25	%
Income tax provision		247		202	22	%
Net (loss) income	$	(27,576)	$	6,230	NM


	September 30,		December 31,
	2022		2021
Finished goods	$	14,547	$	6,495
Work in process		9,051		7,010
Raw material		10,584		9,506
	$	34,182	$	23,011


		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit	Filing Date
2.1	Agreement and Plan of Merger, dated as of August 7, 2019, by and between Glaukos Corporation and Avedro, Inc.	8-K	1-37463	2.1	8/7/2019
3.1	Restated Certificate of Incorporation of the Registrant	8-K	1-37463	3.1	06/30/2015
3.2	Amended and Restated Bylaws of the Registrant	8-K	1-37463	3.2	11/20/2020

31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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GLAUKOS CORPORATION

By:	/s/ THOMAS W. BURNS
Thomas W. Burns
Chairman and Chief Executive Officer (Principal Executive Officer; Duly Authorized Officer)

By:	/s/ ALEX R. THURMAN
Alex R. Thurman
Senior Vice President & Chief Financial Officer (Principal Accounting and Financial Officer)