GLAUKOS Corp 10-Q for FY2025 Q3
GLAUKOS Corp (GKOS)
About this 10-Q
GLAUKOS Corp filed this 10-Q on October 31, 2025, covering the quarter ended September 30, 2025 (FY2025 Q3).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $133.54M
- up 38.1% from $96.67M a year earlier
- Net loss
- $16.23M
- compared with a net loss of $21.41M a year earlier
- Diluted EPS
- -$0.28
- compared with -$0.39 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
Commission file number:
GLAUKOS CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
| |
(Address of registrant’s principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act:
☒ | ☐ Accelerated filer | ☐ Non-accelerated filer | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 29, 2025, there were
GLAUKOS CORPORATION
Form 10-Q
For the Quarterly Period Ended September 30, 2025
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 26 | |
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2
Note Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act) All statements other than statements of historical or current facts included in this report are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "ongoing" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Any statements in this Quarterly Report on Form 10-Q regarding future operations, including our expectations for future expenses, capital expenditures and income, our expectations regarding the impact of the macroeconomic environment, our strategy for growth, product development activities, the impact of the regulatory environment, including the timing and likelihood of regulatory approvals and the impact of new or changing regulations and pricing, and market position are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions based on the information available to management at the time of this report. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these forward-looking statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.
You are urged to carefully review the disclosures we make concerning the risks we face and other factors that may affect the outcome of our forward-looking statements and our business and operating results, including the risks set forth in the “Risk Factors Summary” below and further described in the "Risk Factors" section of this report, which includes a discussion of important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate, and actual results may differ materially from those expressed or implied by the forward-looking statements. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. You are therefore cautioned not to place undue reliance on the forward-looking statements included in this report, which speak only as of the date of this document. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
We use Glaukos, our logo, iStent, iStent inject, iStent infinite, iPrism, iDose TR, iPRIME, MIGS, Avedro, Photrexa, iLink, KXL, Epioxa, iLution, PRESERFLO, Retina XR and other marks as trademarks. This report contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.
References throughout this document to “we,” “us,” “our,” the “Company,” or “Glaukos” refer to Glaukos Corporation and its consolidated subsidiaries.
3
Risk Factors Summary
Investing in our securities involves a high degree of risk. The following is a summary of the principal factors that make an investment in our securities speculative or risky, all of which are further described below in the section titled “Risk Factors” in Part II, Item 1A of this report. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing our business. In addition to the following summary, you should consider the information set forth in the “Risk Factors” section and the other information contained in this report before investing in our securities.
Risks Related to Our Business
| ● | Failure to achieve commercial success of iDose TR or Epioxa could materially impact our business. |
| ● | Downturns or volatility in general economic conditions and public health crises could harm our business. |
| ● | Supply and/or manufacturing disruptions impacting our principal revenue-producing products could reduce our gross margins and negatively impact our operating results. |
| ● | We may not reach sustained profitability. |
| ● | We may fail to generate sufficient sales of our commercialized products or to develop and commercialize additional products. |
| ● | We are subject to a variety of risks associated with our international operations. |
| ● | We may not meet our customers’ expectations for the quality or delivery of our products, which could harm our reputation and sales. |
| ● | If ophthalmic surgeons do not use or if they misuse our products, our business could be harmed. |
| ● | We may fail to manage our anticipated growth effectively and may not be able to meet customer demand. |
| ● | We may be unable to retain or recruit qualified personnel for growth. |
| ● | We have and may continue to enter into acquisitions, collaborations, in-licensing agreements, joint ventures, alliances or partnerships with third parties that could fail or result in litigation. |
| ● | Cybersecurity incidents, service interruptions, or data corruption could materially disrupt our operations and adversely affect our business. |
| ● | Failure to comply with data privacy and security laws could have a material adverse effect on our business. |
| ● | Our net operating loss tax carryforwards may not be available, or may be subject to certain limitations, to offset future taxable income. |
Risks Related to Our Indebtedness
| ● | If we incur future indebtedness, our debt service obligations could limit our cash flow, and may adversely affect our financial condition and operating results. |
| ● | The capped call transactions may affect the value of our common stock, par value $0.001 per share (Common Stock) and subject us to counterparty risk. |
Risks Related to Our Regulatory Environment
| ● | Healthcare legislative reform measures and changes in U.S. and international trade policies may have a material adverse effect on our business and results of operations. |
| ● | Compliance with applicable regulations can be costly and failure to comply with such regulations could harm our business, financial condition and operating results. |
| ● | Legislative or regulatory reform of the healthcare system could hinder or prevent our products’ commercial success. |
| ● | Inadequate or inconsistent reimbursement for our products may adversely impact our business. |
Risks Related to Our Intellectual Property
| ● | Failure to protect our intellectual property could substantially impair our ability to compete. |
| ● | Intellectual property claims or litigation could be costly, time-consuming and unsuccessful and could interfere with our ability to successfully commercialize our products. |
Risks Related to Our Common Stock
| ● | Provisions in our Certificate of Incorporation and Bylaws limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts. |
| ● | Our Certificate of Incorporation designates the sole and exclusive forum for certain types of actions and proceedings, which could limit our stockholders’ ability to obtain a favorable judicial forum. |
4
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
| | September 30, | | December 31, | | ||
| | 2025 | | 2024 | | ||
|
| (unaudited) |
| |
| ||
Assets | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | | | $ | | |
Short-term investments | | | | | | | |
Accounts receivable, net | | | | | | | |
Inventory | | | | | | | |
Prepaid expenses and other current assets | | | | | | | |
Total current assets | | | | | | | |
Restricted cash | | | | | | | |
Property and equipment, net | | | | | | | |
Operating lease right-of-use asset | | | | | | | |
Finance lease right-of-use asset | | | | | | | |
Intangible assets, net | | | | | | | |
Goodwill | | | | | | | |
Deposits and other assets | | | | | | | |
Total assets | | $ | | | $ | | |
| | | | | | | |
Liabilities and stockholders' equity | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | $ | | | $ | | |
Accrued liabilities | | | | | | | |
Total current liabilities | | | | | | | |
Operating lease liability | | | | | | | |
Finance lease liability | | | | | | | |
Deferred tax liability, net | | | | | | | |
Other liabilities | | | | | | | |
Total liabilities | | | | | | | |
| | | | | | | |
Commitments and contingencies (Note 13) | | | | | | | |
| | | | | | | |
Stockholders' equity: | | | | | | | |
Preferred stock, $ | | | | | | ||
Common stock, $ | | | | | | | |
Additional paid-in capital | | | | | | | |
Accumulated other comprehensive income | | | | | | | |
Accumulated deficit | | | ( | | | ( | |
Less treasury stock ( | | | ( | | | ( | |
Total stockholders' equity | | | | | | | |
Total liabilities and stockholders' equity | | $ | | | $ | | |
See accompanying notes to condensed consolidated financial statements.
5
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 |
| ||||
Net sales | | $ | | | $ | | | $ | | | $ | | |
Cost of sales | | | | | | | | | | | | | |
Gross profit | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | |
Selling, general and administrative | | | | | | | | | | | | | |
Research and development | | | | | | | | | | | | | |
Acquired in-process research and development | | | - | | | - | | | - | | | | |
Total operating expenses | | | | | | | | | | | | | |
Loss from operations | | | ( | | | ( | | | ( | | | ( | |
Non-operating income (expense): | | | | | | | | | | | | | |
Interest income | | | | | | | | | | | | | |
Interest expense | | | ( | | | ( | | | ( | | | ( | |
Charges associated with convertible senior notes | | | - | | | - | | | - | | | ( | |
Other (expense) income, net | | | ( | | | | | | | | | ( | |
Total non-operating income (expense) | | | | | | | | | | | | ( | |
Loss before taxes | | | ( | | | ( | | | ( | | | ( | |
Income tax provision | | | | | | | | | | | | | |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Basic and diluted net loss per share | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Weighted-average shares outstanding used to compute basic and diluted net loss per share | | | | | | | | | | | | | |
See accompanying notes to condensed consolidated financial statements.
6
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
(in thousands)
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 |
| ||||
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Other comprehensive income: | | | | | | | | | | | | | |
Foreign currency translation income (loss) | | | | | | ( | | | | | | | |
Unrealized income on short-term investments | | | | | | | | | | | | | |
Other comprehensive income | | | | | | | | | | | | | |
Total comprehensive loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
See accompanying notes to condensed consolidated financial statements.
7
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands)
| | | | | | | | | | 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, 2024 | | | | $ | | | $ | | | $ | | | $ | ( |
| ( | | $ | ( | | $ | |
Common stock issued under stock plans, net | | | | | | | | | | | - | | | - | | - | | | - | | | |
Stock-based compensation | | - | | | - | | | | | | - | | | - | | - | | | - | | | |
Other comprehensive loss | | - | | | - | | | - | | | ( | | | - | | - | | | - | | | ( |
Net loss | | - | | | - | | | - | | | - | | | ( | | - | | | - | | | ( |
Balance at March 31, 2025 | | | | $ | | | $ | | | $ | | | $ | ( |
| ( | | $ | ( | | $ | |
Common stock issued under stock plans, net | | | | | - | | | | | | - | | | - | | - | | | - | | | |
Stock-based compensation | | - | | | - | | | | | | - | | | - | | - | | | - | | | |
Other comprehensive income | | - | | | - | | | - | | | | | | - | | - | | | - | | | |
Net loss | | - | | | - | | | - | | | - | | | ( | | - | | | - | | | ( |
Balance at June 30, 2025 | | | | $ | | | $ | | | $ | | | $ | ( | | ( | | $ | ( | | $ | |
Common stock issued under stock plans, net | | | | | - | | | | | | - | | | - | | - | | | - | | | |
Stock-based compensation | | - | | | - | | | | | | - | | | - | | - | | | - | | | |
Other comprehensive income | | - | | | - | | | - | | | | | | - | | - | | | - | | | |
Net loss | | - | | | - | | | - | | | - | | | ( | | - | | | - | | | ( |
Balance at September 30, 2025 | | | | $ | | | $ | | | $ | | | $ | ( | | ( | | $ | ( | | $ | |
| | | | | | | | | | Accumulated | | | | | | | | | | | | |
| | | | | | | Additional | | other | | | | | | | | | | | | ||
| | Common stock | | paid-in | | comprehensive | | Accumulated | | Treasury stock | | Total | ||||||||||
|
| Shares |
| Amount |
| capital |
| income |
| deficit |
| Shares |
| Amount |
| equity | ||||||
Balance at December 31, 2023 | | | | $ | | | $ | | | $ | | | $ | ( |
| ( | | $ | ( | | $ | |
Common stock issued under stock plans, net | | | | | | | | | | | - | | | - | | - | | | - | | | |
Asset acquisition through issuance of common stock | | | | | - | | | | | | - | | | - | | - | | | - | | | |
Stock-based compensation | | - | | | - | | | | | | - | | | - | | - | | | - | | | |
Other comprehensive income | | - | | | - | | | - | | | | | | - | | - | | | - | | | |
Net loss | | - | | | - | | | - | | | - | | | ( | | - | | | - | | | ( |
Balance at March 31, 2024 | | | | $ | | | $ | | | $ | | | $ | ( |
| ( | | $ | ( | | $ | |
Common stock issued under stock plans, net | | | | | | | | | | | - | | | - | | - | | | - | |
| |
Issuance of common stock in exchange for convertible senior notes | | | | | | | | | | | - | | | - | | - | | | - | | | |
Stock-based compensation | | - | | | - | | | | | | - | | | - | | - | | | - | |
| |
Other comprehensive income | | - | | | - | | | - | | | | | | - | | - | | | - | |
| |
Net loss | | - | | | - | | | - | | | - | | | ( | | - | | | - | |
| ( |
Balance at June 30, 2024 | | | | $ | | | $ | | | $ | | | $ | ( | | ( | | $ | ( | | $ | |
Common stock issued under stock plans, net | | | | | - | | | | | | - | | | - | | - | | | - | | | |
Stock-based compensation | | - | | | - | | | | | | - | | | - | | - | | | - | | | |
Other comprehensive income | | - | | | - | | | - | | | | | | - | | - | | | - | | | |
Net loss | | - | | | - | | | - | | | - | | | ( | | - | | | - | | | ( |
Balance at September 30, 2024 | | | | $ | | | $ | | | $ | | | $ | ( | | ( | | $ | ( | | $ | |
See accompanying notes to condensed consolidated financial statements.
8
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| | Nine Months Ended September 30, | | ||||
|
| 2025 |
| 2024 |
| ||
Operating Activities | | | | | | | |
Net loss | | $ | ( | | $ | ( | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | |
Depreciation | | | | | | | |
Amortization of intangible assets | | | | | | | |
Amortization of right-of-use lease assets | | | | | | | |
Amortization of debt issuance costs | | | - | | | | |
Deferred income tax benefit | | | ( | | | ( | |
Loss on disposal of fixed assets | | | | | | | |
Stock-based compensation | | | | | | | |
Unrealized foreign currency (gain) loss | | | ( | | | | |
Amortization of premium on short-term investments | | | ( | | | ( | |
Other liabilities | | | | | | | |
Acquired in-process R&D acquired through the issuance of common stock | | | - | | | | |
Inducement expense related to exchange of convertible senior notes | | | - | | | | |
Allowance for doubtful accounts | | | | | | - | |
Changes in operating assets and liabilities: | | | | | | | |
Accounts receivable | | | ( | | | ( | |
Inventory | | | ( | | | ( | |
Prepaid expenses and other current assets | | | ( | | | ( | |
Accounts payable and accrued liabilities | | | | | | ( | |
Deposits and other assets | | | ( | | | ( | |
Net cash used in operating activities | | | ( | | | ( | |
Investing activities | | | | | | | |
Cash paid for acquisitions, net of cash acquired | | | ( | | | - | |
Purchase of real estate property | | | ( | | | - | |
Purchases of short-term investments | | | ( | | | ( | |
Proceeds from sales and maturities of short-term investments | | | | | | | |
Purchases of property and equipment | | | ( | | | ( | |
Proceeds from disposal of property and equipment | | | - | | | | |
Investment in company-owned life insurance | | | ( | | | ( | |
Other investing activities | | | ( | | | - | |
Net cash (used in) provided by investing activities | | | ( | | | | |
Financing activities | | | | | | | |
Proceeds from exercise of stock options | | | | | | | |
Proceeds from share purchases under Employee Stock Purchase Plan | | | | | | | |
Payment of employee taxes related to vested restricted stock units | | | ( | | | ( | |
Principal paid on finance lease | | | ( | | | ( | |
Net cash provided by financing activities | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | | | | ( | |
Net (decrease) increase in cash, cash equivalents and restricted cash | | | ( | | | | |
Cash, cash equivalents and restricted cash at beginning of period | | | | | | | |
Cash, cash equivalents and restricted cash at end of period | | $ | | | $ | | |
Supplemental disclosures of cash flow information | | | | | | | |
Taxes paid, net of refunds | | $ | | | $ | | |
Interest paid on convertible senior notes | | $ | - | | $ | | |
Other interest paid | | $ | | | $ | | |
Supplemental schedule of noncash investing and financing activities | | | | | | | |
Contingent consideration acquired | | $ | | | $ | - | |
Convertible senior notes exchanged for common stock, net of debt issuance costs | | $ | - | | $ | | |
Purchases of property and equipment included in accounts payable and accrued liabilities | | $ | | | $ | | |
See accompanying notes to condensed consolidated financial statements.
9
GLAUKOS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Organization and Basis of Presentation
Organization and business
Glaukos Corporation (Glaukos or the Company), incorporated in Delaware on July 14, 1998, is an ophthalmic pharmaceutical and medical technology company focused on developing novel dropless platform therapies and commercializing associated products for the treatment of glaucoma, corneal disorders, and retinal diseases. The Company first developed Micro-Invasive Glaucoma Surgery (MIGS) as an alternative to the traditional glaucoma treatment paradigm, launching its first MIGS device commercially in 2012. The Company also offers commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016. In 2024, the Company commenced controlled commercial launch activities for iDose TR. The Company is developing a portfolio of platforms to support ongoing pharmaceutical and medical device innovations. Products or product candidates for each of these platforms are designed to advance the standard of care through better treatment options across the areas of glaucoma; corneal disorders such as keratoconus, dry eye and refractive vision correction; and retinal diseases such as neovascular age-related macular degeneration, diabetic macular edema and retinal vein occlusion.
The accompanying condensed consolidated financial statements include the accounts of Glaukos and its wholly-owned subsidiaries. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. All intercompany balances and transactions among the consolidated entities have been eliminated in consolidation.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted (GAAP) in the U.S. for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.
As permitted by Form 10-Q and Article 10 of Regulation S-X, certain footnotes and other financial information that are normally required by GAAP have been condensed or omitted. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements. In the opinion of management, the unaudited interim financial statements reflect all adjustments necessary for the fair presentation of the Company’s financial information contained herein. All such adjustments are of a normal and recurring nature. The condensed consolidated balance sheet as of December 31, 2024 has been derived from audited financial statements at that date, but excludes disclosures required by GAAP for complete financial statements. These interim financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the fiscal year ended December 31, 2024, which are contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) on February 24, 2025. The Company’s results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other interim period.
Recent Developments
On May 16, 2025, pursuant to a definitive agreement and plan of merger (Mobius Agreement), the Company acquired all of the outstanding equity interests in Mobius Therapeutics, LLC (Mobius) for $
On April 4, 2025, the Company purchased certain real property consisting of an approximately
10
Building, which is currently occupied by several tenants whose leases, which were assumed by the Company, expire at various times over the next four years. See Note 5. Real Estate Acquisitions and Leases for additional details.
Note 2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates and assumptions used in the preparation of the accompanying condensed consolidated financial statements under different assumptions and conditions.
The Company’s condensed consolidated financial statements as of and for the three and nine months ended September 30, 2025 reflect the Company’s estimates of the impact of the macroeconomic environment, including the impact of inflation, supply shortages or delays, changes in supply and demand, foreign exchange rate fluctuations and other conditions which have led to disruptions in commerce and pricing stability. The Company is not aware of any specific event or circumstance that would require an update to its estimates, judgments and assumptions or a revision of the carrying value of the Company’s assets or liabilities as of September 30, 2025.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that equate to the amount reported in the condensed consolidated statements of cash flows as of the beginning and end of nine months ended September 30, 2025 (in thousands):
| | September 30, | | December 31, | | ||
| | 2025 | | 2024 | | ||
Cash and cash equivalents | | $ | | | $ | | |
Restricted cash | | | | | | | |
Cash, cash equivalents and restricted cash | | $ | | | $ | | |
The Company’s cash and cash equivalents include cash in readily available checking and money market accounts, as well as certificates of deposit. The Company maintains balances of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits.
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid by jurisdiction. The ASU is effective for public business entities’ annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this pronouncement and is evaluating the impact it will have on its upcoming annual filing on Form 10-K for the year ending December 31, 2025; however the Company currently does not believe the adoption will have a material impact on its consolidated financial statements and disclosures for that Form 10-K filing.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain costs and expenses on an interim and annual basis. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact of adopting ASU No. 2024-03 on its condensed consolidated financial statements.
11
Note 3. Balance Sheet Details
Short-term Investments
Short-term investments consisted of the following (in thousands):
| | At September 30, 2025 |
| ||||||||||||
| | Maturity | | Amortized cost | | Unrealized | | Unrealized | | Estimated |
| ||||
|
| (in years) |
| or cost |
| gains |
| losses |
| fair value |
| ||||
U.S. treasury securities | | less than | | $ | | | $ | | | $ | ( | | $ | | |
Bank certificates of deposit | | less than | | | | | | | | | - | | | | |
Commercial paper | | less than | |
| | |
| | |
| ( | |
| | |
Corporate notes | | less than | |
| | |
| | |
| ( | |
| | |
Asset-backed securities | | less than | |
| | |
| | |
| - | |
| | |
Municipal bonds | | less than | | | | | | | | | - | | | | |
Total | | | | $ | | | $ | | | $ | ( | | $ | | |
| | | | | | | | | | | | | | | |
| | At December 31, 2024 |
| ||||||||||||
| | Maturity | | Amortized cost | | Unrealized | | Unrealized | | Estimated |
| ||||
|
| (in years) |
| or cost |
| gains |
| losses |
| fair value |
| ||||
U.S. treasury securities | | less than | | $ | | | $ | | | $ | ( | | $ | | |
Bank certificates of deposit | | less than | | | | | | | | | - | | | | |
Corporate notes | | less than | |
| | |
| | |
| ( | |
| | |
Asset-backed securities | | less than | |
| | |
| | |
| ( | |
| | |
Municipal bonds | | less than | | | | | | | | | - | | | | |
Total | | | | $ | | | $ | | | $ | ( | | $ | | |
At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, and any significant deterioration in economic conditions.
The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest expense in the condensed consolidated statements of operations through an allowance for credit losses. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive loss. Unrealized losses on available-for-sale debt securities as of September 30, 2025 and December 31, 2024 were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. Further, the Company does not intend to sell these investments prior to maturity and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis. Accordingly, the Company did not record an allowance for credit losses with these investments as of September 30, 2025 and December 31, 2024.
Accounts Receivable, Net
Accounts receivable consisted of the following (in thousands):
| | | | | | | |
| | September 30, | | December 31, | | ||
|
| 2025 |
| 2024 |
| ||
Accounts receivable | | $ | | | $ | | |
Allowance for credit losses | | | ( | | | ( | |
| | $ | | | $ | | |
Accounts receivable, net increased as of September 30, 2025 compared to December 31, 2024 primarily due to an increased proportion of net sales from iDose TR during 2025 given iDose TR has extended payment terms and higher net sales price per unit than the Company’s other products. The Company’s allowance for credit losses represents
12
management’s estimate of current expected credit losses related to customer receivables. Bad-debt write offs charged during the nine months ended September 30, 2025 were not significant.
Additionally, no singular customer accounted for more than 10% of net accounts receivable as of September 30, 2025 or December 31, 2024.
Inventory
Inventory consisted of the following (in thousands):
| | | | | | | |
| | September 30, | | December 31, | | ||
|
| 2025 |
| 2024 |
| ||
Finished goods | | $ | | | $ | | |
Work in process | | | | | | | |
Raw material | | | | | | | |
| | $ | | | $ | | |
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
| | September 30, | | December 31, | ||
|
| 2025 |
| 2024 | ||
Accrued bonuses | | $ | | | $ | |
Accrued payroll taxes | | | | | | |
Accrued Employee Stock Purchase Plan liability | | | | | | |
Accrued sales rebates | | | | | | |
Accrued vacation benefits | | | | | | |
Other accrued liabilities | | | | | | |
| | $ | | | $ | |
Note 4. Fair Value Measurements
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.
The valuation of assets and liabilities is subject to fair value measurements using a three-tiered approach and fair value measurements are classified and disclosed by the Company in one of the following three categories:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
13
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):
| | | | At September 30, 2025 | ||||||||
| | | | | Quoted prices | | Significant | | | |||
| | | | | in active | | other | | Significant | |||
| | | | | markets for | | observable | | unobservable | |||
| | September 30, | | identical assets | | inputs | | inputs | ||||
|
| 2025 |
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Assets | | | | | | | | | | | | |
Cash equivalents: | | | | | | | | | | | | |
Money market funds (i) | | $ | | | $ | | | $ | - | | $ | - |
Available for sale securities: | | | | | | | | | | | | |
U.S. treasury securities (ii)(v) | | | | | | - | | | | | | - |
Commercial paper (ii) | | | | | | - | | | | | | - |
Bank certificates of deposit (ii) | | | | | | - | | | | | | - |
Corporate notes (ii) | | | | | | - | | | | | | - |
Asset-backed securities (ii) | | | | | | - | | | | | | - |
Municipal bonds (ii) | | | | | | - | | | | | | - |
Investments held for deferred compensation plans (iii) | | | | | | - | | | | | | - |
Total Assets | | $ | | | $ | | | $ | | | $ | - |
Liabilities | | | | | | | | | | | | |
Deferred compensation plans (iv) | | $ | | | $ | - | | $ | | | $ | - |
Contingent consideration (vi) | | $ | | | $ | - | | $ | - | | $ | |
Total Liabilities | | $ | | | $ | - | | $ | | | $ | |
| (i) | Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets. |
| (ii) | Included in short-term investments on the condensed consolidated balance sheets. |
| (iii) | Included in deposits and other assets on the condensed consolidated balance sheets. |
| (iv) | Included in other liabilities on the condensed consolidated balance sheets. |
| (v) |
| (vi) | Of the total $ |
14
| | | | At December 31, 2024 | ||||||||
| | | | | Quoted prices | | Significant | | | |||
| | | | | in active | | other | | Significant | |||
| | | | | markets for | | observable | | unobservable | |||
| | December 31, | | identical assets | | inputs | | inputs | ||||
|
| 2024 |
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Assets | | | | | | | | | | | | |
| | | | | | | | | | | | |
Cash equivalents: | | | | | | | | | | | | |
Money market funds (i) | | $ | | | $ | | | $ | - | | $ | - |
Available for sale securities: | | | | | | | | | | | | |
U.S. treasury securities (ii) | | $ | | | $ | - | | $ | | | $ | - |
Bank certificates of deposit (ii) | | | | | | - | | | | | | - |
Corporate notes (ii) | | | | | | - | | | | | | - |
Asset-backed securities (ii) | | | | | | - | | | | | | - |
Municipal bonds (ii) | | | | | | - | | | | | | - |
Investments held for deferred compensation plans (iii) | | | | | | - | | | | | | - |
Total Assets | | $ | | | $ | | | $ | | | $ | - |
Liabilities | | | | | | | | | | | | |
Deferred compensation plans (iv) | | $ | | | $ | - | | $ | | | $ | - |
Contingent consideration (iv) | | $ | | | $ | - | | $ | - | | $ | |
Total Liabilities | | $ | | | $ | - | | $ | | | $ | |
| (i) | Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets. |
| (ii) | Included in short-term investments on the condensed consolidated balance sheets. |
| (iii) | Included in deposits and other assets on the condensed consolidated balance sheets. |
| (iv) | Included in other liabilities on the condensed consolidated balance sheets. |
Money market funds are highly-liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.
U.S. government agency bonds, U.S. treasury securities, bank certificates of deposit, commercial paper, municipal bonds, corporate notes and asset-backed securities are measured at fair value using Level 2 inputs. The Company reviews trading activity and pricing for these investments as of each measurement date. Pursuant to the Company’s deferred compensation plan (the Deferred Compensation Plan), the Company has also established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The investments of the rabbi trust and Deferred Compensation Plan liability consist of company-owned life insurance policies (COLIs) and the pricing on these investments can be independently evaluated. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.
The Company’s acquisitions may include contingent consideration as part of the purchase price. The fair value of the contingent consideration is estimated as of the acquisition date based on significant inputs not observable in the market, which include the present value of the contingent payments to be made using a Monte Carlo simulation model, computation of net sales volatility, discount rates derived using internal rate of return analysis, the probability and timing of achieving certain future milestones, and to a lesser extent, Glaukos’ credit rating. Contingent consideration represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes a market participant would make. The Company assesses these estimates on an ongoing basis as it obtains additional data impacting the assumptions. Should actual results increase or decrease as compared to the assumptions used in the analysis, the fair value of the contingent consideration obligations will increase or decrease, up to the contracted limit, as applicable. Any changes in the fair value of contingent consideration related to updated assumptions and estimates are recognized within other income (expense), net in the condensed consolidated statements of operations. As of September 30, 2025 and December 31, 2024 the contingent
15
consideration liability was $
There were
Note 5. Real Estate Acquisitions and Leases
Real Estate Acquisitions
On April 4, 2025, the Company completed the acquisition of the Aliso Building, consisting of land, buildings and assumed leases, for a total purchase price of approximately $
The Company accounted for the purchase as an asset acquisition and allocated the purchase price to land, building, and identified intangible assets and liabilities, based in each case on their relative estimated fair values and without giving rise to goodwill. Intangible assets and liabilities represent the value of in-place leases and below-market leases. In making estimates of fair values, the Company used various sources, including data provided by independent third parties, as well as information obtained by the Company as a result of its due diligence, including expected future cash flows of the property and various characteristics of the markets where the property is located.
In allocating the fair value of the identified tangible and intangible assets and liabilities of the acquired property, land is valued based upon comparable market data or independent appraisals. Buildings are valued on an as-if vacant basis based on a cost approach utilizing estimates of cost and the economic age of the building or an income approach utilizing various market data. In-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the carrying costs that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition.
The following table presents the details of the tangible assets acquired and intangible lease liabilities assumed:
Component of Value |
| Assets |
| Liabilities | ||
Land |
| $ | |
| | - |
Building |
| | |
| | - |
Site improvements |
| | |
| | - |
Tenant improvements |
| | |
| | - |
Tangible assets | | $ | | | $ | - |
| | | | | | |
Leasehold improvements (below market) | |
| - | |
| ( |
Leases in place | |
| | |
| - |
Intangible assets | | $ | | | $ | ( |
| | | | | | |
Total fair value | | | | |
| ( |
Allocated purchase price | | $ | | | | |
Land, buildings, site improvements and tenant improvements are recorded and stated at cost and, except for land, are amortized using the straight-line method over the estimated remaining useful life of the assets, which is
The lease income and related lease expense associated with the
16
significant during the three months ended September 30, 2025 and will not be material for the full year ending December 31, 2025.
Leases
The Company has operating and finance leases for facilities and certain equipment. Leases with an initial term of 12 months or less are expensed and not recorded on the condensed consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
The Company’s leases have non-cancelable lease terms of approximately
The Company’s Aliso Facility is
The Company also leases
The Company’s remaining foreign subsidiaries’ leased office and warehouse space totals less than
The following table presents the maturity of the Company’s operating and finance lease liabilities within the condensed consolidated balance sheets:
| | | | | | |
Maturity of Lease Liabilities | | Operating | | Finance | ||
(in thousands) |
| Leases (a) | | Leases (b) | ||
Remainder of 2025 | | $ | | | $ | |
2026 | | | | | | |
2027 | | | | | | |
2028 | | | | | | |
2029 | | | | | | |
2030 | | | | | | |
Thereafter | | | | | | |
Total lease payments | | $ | | | $ | |
Less: imputed interest | | | | | | |
Total lease liabilities | | $ | | | $ | |
| (a) | Operating lease payments include $ |
| (b) | Finance lease payments include $ |
17
Note 6. Business Combinations
The Mobius acquisition is intended to expand the Company's portfolio of pharmaceutical products related to the treatment of glaucoma, as the lead Mobius product is Mitosol, the only FDA-approved ophthalmic formulation of mitomycin-C, which is often utilized as an adjunct in late-stage glaucoma filtration procedures.
The combined fair value of the consideration transferred at closing was $
|
| | |
Cash proceeds to seller | | $ | |
Repayment of sellers' closing debt | | | |
Reimbursement of sellers' transaction expenses | | | |
Escrow payments | | | |
Contingent consideration | | | |
Fair value of consideration transferred | | $ | |
The contingent consideration represents the fair value of: (i) potential future net sales-based milestone payments up to $
The Company performed a valuation analysis of the fair market value of Mobius’s assets and liabilities as of closing.
|
| | |
Assets Acquired | | | |
Cash and cash equivalents | | $ | |
Accounts receivable | | | |
Inventory | | | |
Prepaid expenses and other current assets | | | |
Intangible assets | | | |
Goodwill | | | |
Liabilities Assumed | | | |
Accounts payable | | | |
Accrued liabilities | | | |
Fair value of net assets acquired | | $ | |
Goodwill represents the excess of the Merger Consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed. Goodwill is attributable to the assembled workforce, intellectual property, and established processes at Mobius and expected synergies. The transaction is considered an asset acquisition for tax purposes. As such, goodwill will be deductible once the contingent consideration is paid, consistent with the tax treatment of asset acquisitions.
18
The fair value and estimated useful lives of the Mobius intangible assets acquired are as follows (in thousands, except where noted):
| | | | | Estimated |
| | Fair | | Useful Life | |
|
| Value |
| (in years) | |
Intangible assets subject to amortization: | | | | | |
Developed intellectual property | | $ | | | |
Customer relationships | | | | | |
Total | | $ | | | |
Note 7. Intangible Assets and Goodwill
Intangible assets
As part of the Mobius Merger, the Company acquired identifiable intangible assets for (i) developed technology related to Mitosol, an ophthalmic formulation of mitomyacin-C, which is often used as an adjunct in late-stage glaucoma filtration procedures, which will be amortized to cost of sales over a weighted-average estimated useful life of approximately
The fair value of developed technology and customer relationships assets were determined using an excess earnings methodology. Significant assumptions used in the valuations include: (i) the period in which material net cash inflows are expected to commence, which was estimated to be 2025 for both the developed technology and customer relationships, and (ii) the period in which the present value of cash inflows are expected to become immaterial, which was estimated to be 2054 for developed technology and 2044 for the customer relationships, and (iii) the discount rate of
Effective March 17, 2023, the Company entered into a sales agreement (Sales Agreement) with Celanese Canada ULC (Celanese) under which Celanese will make available and supply to the Company certain raw materials used to create a nanoporous membrane utilized in the iDose TR, and authorized the Company to reference its Drug Master File (DMF) with respect to such raw materials, which is required for the Company to commercialize iDose TR. The term of the Sales Agreement is
The Company evaluated its indefinite-lived intangible assets for impairment and concluded there were no indicators of impairment as of September 30, 2025.
Goodwill
The assessment of goodwill by reporting unit is performed annually, in the fourth quarter, or more frequently if events or circumstances indicate the carrying value may no longer be recoverable and that an impairment loss may have occurred. The Company considered the current and expected future economic and market conditions and its impact on the Company’s reporting unit. Based on interim assessments, the Company did not identify any “triggering” events which would indicate an impairment of goodwill as of September 30, 2025.
19
The following table presents the composition of the Company’s intangible assets and goodwill (in thousands):
| | Weighted- | | As of September 30, 2025 | | As of December 31, 2024 | ||||||||||||||
| | Average | | Gross | | | | | | Gross | | | | | ||||||
| | Amortization | | Carrying | | Accumulated | | Net | | Carrying | | Accumulated | | Net | ||||||
|
| Period (in years) |
| Amount |
| Amortization |
| Amount |
| Amount |
| Amortization |
| Amount | ||||||
Avedro developed technology | | | $ | | | $ | ( | | $ | | | $ | | | $ | ( | | $ | | |
License | | | | | | | ( | | | | | | | | | ( | | | | |
In place leases | | | | | | | ( | | | | | | - | | | - | | | - | |
Mobius developed technology and customer relationships | | | | | | | ( | | | | | | - | | | - | | | - | |
Intangible assets subject to amortization | | | | | | | | ( | | | | | | | | | ( | | | |
| | | | | | | | | | | | | | | | | | | | |
In-process research and development | | Indefinite | | $ | | | $ | - | | $ | | | $ | | | $ | - | | $ | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | $ | | | $ | ( | | $ | | | $ | | | $ | ( | | $ | |
| | | | | | | | | | | | | | | | | | | | |
Goodwill | | Indefinite | | $ | | | $ | - | | $ | | | $ | | | $ | - | | $ | |
As of September 30, 2025, expected amortization expense for unamortized finite-lived intangible assets for the next five years and thereafter is as follows (in thousands):
|
| Amortization Expense | |
Remainder of 2025 | | $ | |
2026 | | | |
2027 | | | |
2028 | | | |
2029 | | | |
Thereafter | | | |
Total amortization | | $ | |
Actual amortization expense to be reported in future periods could differ from these estimates as a result of asset impairments, acquisitions, or other facts and circumstances.
Note 8. Revenue from Contracts with Customers
The Company’s net sales are generated primarily from sales of iDose TR, its iStent family of products, Photrexa and associated drug formulations, and royalty income. The Company’s customers are primarily comprised of ambulatory surgery centers, hospitals and physician private practices, with third party distributors being used in certain international locations where the Company currently does not have a direct commercial presence.
The Company concluded that one performance obligation exists for the majority of its contracts with customers, which is to deliver products in accordance with the Company’s normal delivery times. Revenue is recognized when this performance obligation is satisfied, which is the point in time when the Company considers control of a product to have transferred to the customer. Revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for those products or services.
Revenue is recognized at an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services, and substantially all of the Company’s net sales for the three and nine months ended September 30, 2025 and September 30, 2024 are considered revenue from contracts with customers.
20
Disaggregation of Revenue
The Company’s revenues disaggregated by product category and geography for the three and nine months ended September 30, 2025 and September 30, 2024 were as follows (in thousands):
| | Three Months Ended | ||||||||||||||||
| | September 30, | ||||||||||||||||
| | United States | | International | | Total | ||||||||||||
|
| 2025 | | 2024 |
| 2025 | | 2024 |
| 2025 | | 2024 | ||||||
| | | |
| | | | | |
| | | | | |
| | |
Glaucoma | | $ | | | $ | | | $ | | | $ | |
| $ | | | $ | |
Corneal Health | | | | |
| | | | | |
| | | | | |
| |
Total | | $ | | | $ | | | $ | | | $ | |
| $ | | | $ | |
| | Nine Months Ended | ||||||||||||||||
| | September 30, | ||||||||||||||||
| | United States | | International | | Total | ||||||||||||
|
| 2025 | | 2024 |
| 2025 | | 2024 |
| 2025 | | 2024 | ||||||
| | | |
| | | | | |
| | | | | |
| | |
Glaucoma | | $ | | | $ | | | $ | | | $ | |
| $ | | | $ | |
Corneal Health | | | | |
| | | | | |
| | | | | |
| |
Total | | $ | | | $ | | | $ | | | $ | |
| $ | | | $ | |
Contract Balances
Contract Assets
Amounts are recorded as accounts receivable when the Company’s right to consideration becomes unconditional. Payment terms on invoiced amounts are typically between
Aside from the aforementioned contract assets, the Company does not have any contract assets given that the Company does not have any unbilled receivables and sales commissions on products are expensed within selling, general and administrative expenses within the condensed consolidated statements of operations when incurred as any incremental cost of obtaining contracts with customers would have an amortization period of less than
Contract Liabilities
Contract liabilities reflect consideration received from customers’ purchases allocated to the Company’s future performance obligations.
The Company has a performance obligation to issue a volume-based rebate to customers who may be eligible for such rebate at the conclusion of their contract term. This performance obligation is transferred over time and the Company’s method of measuring progress is the output method, whereby the progress is measured by the estimated rebate earned to date over the total rebate estimated to be earned over the contract period.
Additionally, the Company has performance obligations related to certain customers’ right to a future discount on single dose pharmaceutical purchases in the U.S., as well as voluntary patient assistance programs to provide financial assistance to qualified patients. Each of these performance obligations is expected to be recognized when the customer or patient elects to utilize the discount, which is generally within one year. The impact of these programs on revenue were not material for the periods presented.
21
Certain sales of the Company’s pharmaceutical products are subject to rebates under the Medicaid Drug Rebate Program (MDRP). The rebate accrual calculation requires management to estimate the volume of net sales that will be subject to these rebates. There can be significant time-lag in receiving rebate notices from each state (generally, several months or longer after a sale is recognized). Estimated MDRP rebates are recorded as a reduction of revenue in the period the related sale is recognized.
The Company’s total accrued volume-based rebates and MDRP allowances are included in accrued liabilities on the condensed consolidated balance sheets and estimated rebates accrued were $
| | September 30, | |
|
| 2025 | |
Sales rebate balance, December 31, 2024 | | $ | |
Current period provision | | | |
Payments and credits | | | ( |
Reserve balance, September 30, 2025 | | $ | |
During the three and nine months ended September 30, 2025 and September 30, 2024, the Company did not recognize any revenue related to material changes in transaction prices regarding its contracts with customers and did not recognize any material changes in revenue related to amounts included in contract liabilities at the beginning of the period.
The Company’s net sales within a fiscal year may be impacted seasonally, as demand for U.S. ophthalmic procedures is typically softer in the first quarter and stronger in the fourth quarter of a given year.
Note 9. Net Loss per Share
Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares that were outstanding for the period, without consideration for common stock equivalents. For periods when the Company realizes a net loss, no common stock equivalents are included in the calculation of weighted average number of dilutive common stock equivalents as the effect of applying the treasury stock method is considered anti-dilutive. Due to the Company’s net loss position, basic and diluted net loss per share for each of the three and nine months ended September 30, 2025 and September 30, 2024 are the same.
| | Three Months Ended | | Nine Months Ended | | ||||
| | September 30, | | September 30, |
| ||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | |
Convertible senior notes | | - | | | | - | | | |
Stock options outstanding | | | | | | | | | |
Unvested restricted stock units | | | | | | | | | |
Employee stock purchase plan | | | | | | | | | |
| | | | | | | | | |
Note 10. Convertible Senior Notes
In June 2024 the Company executed a Convertible Notes Exchange, whereby certain qualified institutional investors exchanged $
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Interest expense relating to the Convertible Notes in the condensed consolidated statements of operations for the three and nine months ended September 30, 2024 was $
Capped Call Transactions
On December 2, 2024, the Company entered into unwind agreements with certain financial institutions (Option Counterparties) to unwind
On December 6, 2024, the Capped Call Unwind Agreements were settled and the Company received $
Note 11. Stock-Based Compensation
The following table summarizes the allocation of stock-based compensation related to stock options and RSUs in the accompanying condensed consolidated statements of operations (in thousands):
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 |
| ||||
Cost of sales | | $ | | | $ | | | $ | | | $ | | |
Selling, general and administrative | | | | | | | | | | | | | |
Research and development | | | | | | | | | | | | | |
Total | | $ | | | $ | | | $ | | | $ | | |
At September 30, 2025, the total unamortized stock-based compensation expense was approximately $
Of the $
Of the $
The total stock-based compensation cost capitalized in inventory was not significant for the three and nine months ended September 30, 2025 and September 30, 2024.
Note 12. Income Taxes
For the three and nine months ended September 30, 2025, the Company recorded a provision for income taxes of $
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On July 4, 2025, House Resolution 1, commonly referred to as the One Big Beautiful Bill Act (OBBBA) was enacted into law. Key provisions of the OBBBA include the extension and modification of certain provisions of the Tax Cuts and Jobs Act of 2017, changes to bonus depreciation, adjustments to business interest expense limitations, and modifications to the treatment of research and development expenditures. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others becoming effective in 2026. In accordance with ASC 740, the effect of changes in tax rates and laws on deferred tax balances are recognized in the period when the legislation is enacted. The Company has reflected the effect on the OBBBA within the provision for income taxes and the deferred tax balances as of September 30, 2025. The OBBBA did not materially impact the Company's effective tax rate.
Note 13. Commitments and Contingencies
Secured Letter of Credit
The Company has a letter of credit that is related to its Aliso Facility. The letter of credit is secured with an amount of cash held in a restricted account of approximately $
Executive Deferred Compensation Plan
Pursuant to the Company’s Deferred Compensation Plan, eligible senior level employees are permitted to make elective deferrals of compensation to which he or she will become entitled in the future. The Company has also established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The investments of the rabbi trust consist of COLIs. The fair value of the Deferred Compensation Plan liability, included in other liabilities on the condensed consolidated balance sheets, was approximately $
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Note 14. Business Segment Information
The Company has
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
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| 2025 |
| 2024 | | 2025 |
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| | (in thousands) | | (in thousands) | ||||||||
Net sales |
| $ | |
| $ | | | $ | |
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Less: |
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| |
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Cost of sales |
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| | | | | |
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Sales, marketing & distribution |
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Research & development |
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Clinical |
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General & administrative |
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In-process research and development |
| | - |
| | - | | | - |
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Significant segment expenses |
| | |
| | | | | |
| | |
Interest income |
| | ( |
| | ( | | | ( |
| | ( |
Interest expense |
| | |
| | | | | |
| | |
Charges associated with convertible senior notes | | | - | | | - | | | - | | | |
Other expense (income), net |
| | |
| | ( | | | ( |
| | |
Income tax provision |
| | |
| | | | | |
| | |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | Property and equipment, net | | Depreciation and amortization | | Capital expenditures | ||||||||||||
| | September 30, | | December 31, | | Nine Months September 30, | | Nine Months September 30, | ||||||||||
| | 2025 | | 2024 | | 2025 | | 2024 | | 2025 | | 2024 | ||||||
| | | |
| | | | | | | | | | | | | | |
United States |
| $ | | | $ | |
| $ | | | $ | | | $ | | | $ | |
International | | | | |
| | |
| | | | | | | | | | - |
Total |
| $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Note 15. Subsequent Event
On October 20, 2025, the Company announced U.S. FDA approval for Epioxa indicated for the treatment of keratoconus. Epioxa represents an advancement in keratoconus care, offering an incision-free alternative to traditional corneal cross-linking procedures. Epioxa is the first U.S. FDA-approved, incision-free, topical drug therapy that does not require removal of the corneal epithelium and is designed to eliminate the pain associated with epithelium removal, streamline the procedure, and minimize recovery. The Company announced plans to begin commercializing Epioxa in the first quarter of 2026.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the United States (U.S.) Securities and Exchange Commission (SEC) on February 24, 2025 (Annual Report). The discussion and analysis below contains forward-looking statements within the meaning of federal securities laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. See “Note Regarding Forward-Looking Statements” preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.
Overview
We are an ophthalmic pharmaceutical and medical technology company focused on developing novel, dropless platform therapies and commercializing associated products for the treatment of glaucoma, corneal disorders, and retinal disease. We first developed Micro-Invasive Glaucoma Surgery (MIGS) as an alternative to the traditional glaucoma treatment paradigm, launching our first MIGS device commercially in 2012. In 2024, we commenced controlled commercial launch activities for iDose TR, an intracameral procedural pharmaceutical implant designed to continuously deliver therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time. We also offer commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016. Beyond our approved products, we continue to develop and advance a robust pipeline of novel, dropless platform technologies designed to advance the standard of care and improve outcomes for patients suffering from chronic eye diseases.
Financial Overview
The most important financial indicators that we use to assess our business are net sales, gross margin, operating expenses, and cash on hand.
| | Three Months Ended | | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | | September 30, | | September 30, | | ||||
|
| 2025 |
| 2024 | | | 2025 |
| 2024 | | ||||
Net sales | | $ | 133,537 | | $ | 96,670 | | | $ | 364,321 | | $ | 277,982 | |
Gross margin | | | 78 | % | | 77 | % | | | 78 | % | | 76 | % |
Operating expenses | | $ | 121,071 | | $ | 98,746 | | | $ | 344,010 | | $ | 306,290 | |
| | September 30, | | December 31, | | ||
| | 2025 | | 2024 | | ||
Cash, cash equivalents, short-term investments and restricted cash | | $ | 277,546 | | $ | 323,648 | |
Please see Results of Operations and Liquidity and Capital Resources below for a detailed discussion of each of the above items including analysis of the fluctuations from year to year.
We incurred net losses for the three and nine months ended September 30, 2025 of $16.2 million and $54.0 million, respectively, and incurred net losses of $21.4 million and $112.8 million for the three and nine months ended September 30, 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $799.5 million.
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Recent Developments
On October 20, 2025, we announced U.S. FDA approval for Epioxa indicated for the treatment of keratoconus. Epioxa represents an advancement in keratoconus care, offering an incision-free alternative to traditional corneal cross-linking procedures. Epioxa is the first FDA-approved, incision-free, topical drug therapy that does not require removal of the corneal epithelium and is designed to eliminate the pain associated with epithelium removal, streamline the procedure, and minimize recovery. We announced plans to begin commercializing Epioxa in the first quarter of 2026.
In June 2025, we received European Union (EU) Medical Device Regulation (MDR) certification for our iStent family of products, including the iStent infinite and the iStent inject W. We also received certification for our iStent products under the United Kingdom’s Medical Device Regulation. We commenced some commercial launch activities in certain of our key EU markets in the third quarter of 2025.
On May 16, 2025, pursuant to a definitive agreement and plan of merger (Mobius Agreement), we acquired all of the outstanding equity interests in Mobius Therapeutics, LLC (Mobius) for $12.4 million, net of cash acquired (Mobius Merger). Pursuant to the Mobius Agreement, we also agreed to pay the former Mobius equityholders contingent consideration in the form of single-digit royalty payments based on net sales of Mobius products for a period of four years, and additional performance-based payments of up to $80.0 million in aggregate upon the achievement of certain net sales milestones with respect to such Mobius products. Mobius’ lead product, Mitosol, is the only FDA-approved ophthalmic formulation of mitomycin-C, which is often utilized as an adjunct in late-stage glaucoma filtration procedures.
On April 4, 2025, we purchased certain real property consisting of an approximately 40,000 square foot, two-story building, located in Aliso Viejo, California (Aliso Building) and adjacent to our existing Aliso Viejo, California corporate headquarters (Aliso Facility). We paid a purchase price of $16.6 million for the Aliso Building, which is currently occupied by several tenants whose leases, which were assumed by us, run through 2029. The Aliso Building provides us with future expansion opportunities and potentially reduces future capital expenditures associated with construction of an additional building as part of the Aliso Facility.
Market and Business Update
Impact of the Current Global Economic Environment
As a result of the ongoing macroeconomic conditions, global and regional economies have continued to experience varying levels of inflation, supply shortages or delays, changes in supply and demand, foreign exchange rate fluctuations, new or increased tariffs, and other conditions that have led to disruptions in commerce and pricing stability. Additionally, some of our vendors are continuing to experience supply challenges, both in the acquisition of raw materials as well as due to labor shortages and other disruptions. These challenges have occasionally led to longer lead times and delays of certain components needed for the manufacture of our products, in some cases requiring us to find alternative sources for materials. As a result of these supply chain challenges and ongoing inflationary pressures, we have experienced higher costs for certain components and raw materials. While these supply challenges have generally stabilized over the course of 2025, if these supply issues persist or worsen in the future, they could impact our gross margins, our ability to ship some of our products to our customers, or bring some of our pipeline products to market, in a timely manner.
The U.S. government recently announced tariffs on product imports from certain countries, including higher tariff levels on those imported from Canada, Mexico and China. These actions have resulted, and are expected to further result, in retaliatory measures on U.S. goods by those countries and others. While we believe our exposure to these tariffs and the potential escalation of trade disputes is limited as we primarily source our raw materials and product components from the U.S., these tariffs, or the introduction of new or higher tariffs in other countries, could pose a risk to our business, or the businesses of our customers, that could affect our net sales and cost of sourcing materials. In addition, the U.S. government shutdown that started on October 1, 2025 and continues as of the date of this report has impacted certain regulatory agencies, such as the U.S. FDA. Significant changes to operations at or the funding of such regulatory agencies could cause decreases in staff who are able to provide reimbursement services or changes in policy and enforcement priorities. Hospitals, ambulatory surgery centers and other health care providers may not purchase our products if they do not receive adequate reimbursement from third-party payors for procedures using our products. We have not yet experienced an adverse impact on our business operations due to this shutdown, but if it continues for a prolonged period of time, or if a widespread freeze on federal funding occurs, it could significantly
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impact the ability of the FDA to timely review and process our regulatory submissions or negatively affect sales of our products. We will continue to evaluate the impacts of tariffs and government shutdowns on our business and results of operations.
The effects of foreign currency fluctuations are most notably experienced in our international glaucoma business. Our annual growth rate of net sales of our international glaucoma franchise for the three and nine months ended September 30, 2025 were positively affected by approximately 330 and 120 basis points, respectively, primarily related to the Euro and Japanese yen. For the three and nine months ended September 30, 2024, net sales of our international glaucoma business were negatively impacted by approximately 20 and 210 basis points, respectively, primarily related to the Japanese Yen.
Developments Impacting Reimbursement Rates and Coverage
In the U.S., healthcare providers use separate billing codes to report the provision of medical procedures and use of supplies to third-party payors, such as government programs or private insurance, and seek reimbursement for all or a portion of those costs. Physician fee payment rates for procedures covered by temporary Current Procedural Terminology (CPT) codes in the Medicare Fee for Service setting, such as a standalone trabecular micro-bypass procedure utilizing the iStent infinite, along with the procedural component of iDose TR, are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims. MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.
In October and November 2023, five of the seven MACs released final local coverage determinations (LCDs) confirming reimbursement coverage of the standalone procedure utilizing the iStent infinite, which received FDA clearance in August 2022. These LCDs also indicated that surgical MIGS procedures should not be performed in combination with certain other MIGS procedures. In December 2023, prior to their respective effective dates, those five MACs rescinded the final LCDs and determined there would be no change in the current status of coverage for MIGS. In April 2024, the same five MACs released new draft LCDs that would confirm reimbursement coverage of the standalone procedure utilizing the iStent infinite, and that would confirm non-coverage for surgical MIGS procedures in combination with other surgical MIGS procedures (but did not prohibit coverage for use of a procedural pharmaceutical such as our iDose TR, in combination with surgical MIGS procedures). These draft LCDs were finalized and took effect in November 2024. The other two MACs have taken preliminary steps to assess coverage of iStent infinite through temporary local coverage article (LCA) updates in which coverage of the iStent infinite is currently determined on a case-by-case basis.
The unique, permanent Healthcare Common Procedure Coding System (HCPSC) J-code for iDose TR, indicated for the reduction of intraocular pressure in patients with open-angle glaucoma or ocular hypertension, J7355, became effective July 1, 2024. J-codes are used by U.S. government and commercial payers, to streamline the billing and reimbursement process for procedural pharmaceuticals administered by a healthcare professional, such as iDose TR. In addition to the J-code, on March 21, 2024, CMS assigned the temporary CPT codes that are designed to be used to cover the procedural component of iDose TR, 0660T and 0661T, to ambulatory payment classification 5492 (Level 2 Intraocular Procedures), retroactively effective as of January 1, 2024. As of September 30, 2025, the professional fees associated with an iDose TR procedure have been published by four of the seven MACs.
Now that Epioxa, our new CXL procedure, has been approved by the U.S. FDA, reimbursement will mostly involve updates to third-party commercial insurance policies as the vast majority of patients who are diagnosed with, and then treated for, keratoconus are below the Medicare age. Therefore, the procedural component of Epioxa will be covered by a temporary Category III CPT code, 0402T. Next, we will apply for a permanent HCPCS J-Code for Epioxa and we will seek coverage by third-party commercial payers. The professional fees associated with the CXL procedure will be determined by each payer. Coverage and reimbursement can differ significantly from payer to payer, and payers can change or deny coverage for new or existing products without notice.
On July 14, 2025 and July 15, 2025, the U.S. Centers for Medicare & Medicaid Services’ (CMS’) published its proposed rules on 2026 Medicare physician fee and facility fee payment rates (2026 Proposed Rules), respectively. The 2026 Proposed Rules reflected a modest increase with respect to facility fee payment rates in both the ASC and hospital outpatient setting over the 2025 Medicare facility fee payment rates with respect to procedures using our glaucoma
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products. The 2026 Proposed Rule also reflected reductions with respect to physician fee payment rates over the 2025 Medicare physician payment rates with respect to several Category I CPT codes across ophthalmology, including for cataract and surgical MIGS procedures specifically. The physician fee rules contained in the 2026 Proposed Rules do not affect the physician fees paid under temporary CPT codes for iDose TR and iStent infinite, because as explained above, those rates are determined on a MAC-by-MAC basis.
We estimate that approximately 80% of procedures utilizing our iStent family of products in the U.S. have been performed in the ASC setting and the remaining estimated 20% of procedures have been performed in the hospital.
Business Outlook
As discussed above, establishment of reimbursement for the iDose TR and its associated procedure has been an ongoing effort since its commercial launch in the first quarter of 2024. As reimbursement for the iDose TR procedure continues to become a more timely and consistent process across all MACs, we anticipate utilization of iDose TR by our customers will increase accordingly.
CMS physician fee payment rate decreases, along with the finalization in late 2024 of recent LCDs issued by five of the seven MACs, have disrupted traditional customer ordering patterns and may have resulted in certain of our customers’ utilization of competitive products, which has reduced U.S. Glaucoma sales volumes of our iStent family of products used in conjunction with cataract surgery in each of the three and nine months ended September 30, 2025 and September 30, 2024. Additionally, the royalty income we received pursuant to a settlement agreement entered into during 2021 with Ivantis, Inc. (acquired by Alcon in 2022) relating to sales of the Hydrus® Microstent contractually expired on April 26, 2025.
Our corneal health net sales have experienced sporadic headwinds in recent years due to U.S. commercial payer volatility, as well as the impact of revenue adjustments related to the Company’s entry into the Medicaid Drug Rebate Program (MDRP) in the first quarter of 2024.
The approval of Epioxa provides keratoconus patients and the ophthalmic community with the first FDA-approved, surgery free, topical drug therapy catalyzed by oxygen and light that does not require the removal of the corneal epithelium, the outermost layer of the front of the eye. Because Epioxa is designed to preserve the corneal epithelium, streamline the procedure, improve patient comfort and shorten recovery time, we anticipate some potential disruption within our U.S. Corneal Health franchise as the market transitions from Photrexa to Epioxa following its approval and as we prepare for our planned controlled commercial launch in the first quarter of 2026.
Additionally, we have received a Prescription Drug User Fee Act (PDUFA) date of January 2026 relating to our supplemental new drug application (NDA) filed with the FDA for the re-administration of iDose TR to patients who have previously received an iDose TR implant. There can be no assurance that we will receive approval of this supplemental NDA.
For additional information, see the section titled Risks Related to Our Business within Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.
Components of Results of Operations
Net Sales
Our net sales are generated primarily from sales of iDose TR, our iStent family of products, Photrexa and other associated drug formulations, and our proprietary bioactivation systems. Customers are primarily comprised of ambulatory surgery centers, hospitals, and physician private practices, with independent distributors being used in certain international locations where we currently do not have a direct commercial presence. We currently operate in one operating and reportable segment and our primary business activity is the development and commercialization of therapies across several end markets within ophthalmology.
We sell the majority of our products through a direct sales organization in the United States. Internationally, we sell our products primarily through direct sales subsidiaries and through independent distributors in certain countries
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in which we do not have a direct presence or only maintain a modest commercial presence. The primary end-user customers for our products are surgery centers, hospitals and physician private practices.
Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration to which we expect to be entitled in exchange for those products or services, which includes estimates of reductions to revenue for commercial and governmental rebates owed, variable consideration for product returns and warranty replacements and other discounts and incentives.
Cost of Sales
Cost of sales reflects the aggregate costs to manufacture our products and includes raw material costs, labor costs, manufacturing overhead expenses and the effect of changes in the balance of reserves for excess and obsolete inventory.
Due to the relatively low production volumes of our iStent family of products, iDose TR and our KXL systems compared to our potential capacity for those products, a significant portion of our per unit costs is comprised of manufacturing overhead expenses. These expenses include quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management.
Cost of sales includes amortization of the $252.2 million and $17.8 million developed technology intangible assets recorded as a result of our acquisitions of Avedro, Inc. (Avedro) and Mobius, respectively, and our sales agreement with Celanese Canada ULC (Celanese Agreement). For the three months ended September 30, 2025 and September 30, 2024, the amortization expense was $6.1 million and $5.5 million, respectively, and for the nine months ended September 30, 2025 and September 30, 2024, amortization expense was $17.5 million and $16.6 million, respectively.
Our future gross profit as a percentage of net sales, or gross margin, will be impacted by numerous factors including commencement of sales of new products currently in our pipeline, or any other future products, which may have higher pricing, or conversely, higher product costs. Our gross margin will also be affected by manufacturing or supply chain costs, disruptions or inefficiencies that we may experience as we attempt to manufacture our products on a larger scale, manufacture new products and change our manufacturing capacity, processes, or output. Additionally, our gross margin will continue to be affected by amortization of Avedro and Mobius developed technology and Celanese Agreement intangible assets, the impact of rebates and allowances associated with government and commercial programs and by royalty expenses on current or future products associated with various licensing agreements. Our gross margin in future periods may also be impacted by other factors adversely affecting our net sales in future periods such as the impact of government pricing programs and reductions of payment rates for certain of our products and related services, and inflationary pressures.
Selling, General and Administrative
Our selling, general and administrative (SG&A) expenses primarily consist of personnel-related expenses, including salaries, sales commissions, bonuses, fringe benefits and stock-based compensation for our executive, sales, marketing, market access, financial, legal, and other administrative functions. Other significant SG&A expenses include marketing programs; advertising; post-approval clinical studies; conferences and congresses; travel expenses; costs associated with obtaining and maintaining our patent portfolio; professional fees for accounting, auditing, consulting and legal services; costs associated with our global enterprise systems and information systems; and allocated facility expenses.
SG&A expenses also included amortization of the $14.1 million and $0.4 million customer relationships intangible assets recorded as a result of our acquisitions of Avedro, Inc. (Avedro) and Mobius, respectively, as well as the $0.7 million in-place lease intangible asset from the Aliso Building acquisition. During the three months ended September 30, 2025, amortization expense was $0.3 million. The Avedro intangible asset was fully amortized as of December 31, 2024, and such amortization expense was $0.7 million and $2.1 million for the three and nine months ended September 30, 2024.
We expect SG&A expenses to continue to grow as we increase our infrastructure for our global sales and marketing functions, commercial support organizations, and general administration departments. We also expect other non-employee-related costs, including sales and marketing program activities for new products, market access efforts, outside services, accounting services and general legal costs to increase as our overall operations grow. The timing of
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these increased expenditures and their magnitude are primarily dependent on the commercial success and sales growth of our products, as well as on the timing of any new product launches and other potential business and operational activities.
Research and Development
Our research and development (R&D) activities primarily consist of new product development projects, pre-clinical studies, Investigational New Drug studies, and clinical trials. Our R&D expenses primarily consist of personnel-related expenses, including salaries, fringe benefits and stock-based compensation for our R&D employees; research materials; supplies and services; in-licenses, including event-based milestones; and the costs of conducting clinical studies, which include payments to investigational sites and investigators, clinical research organizations, consultants, and other outside technical services; and the costs of materials, supplies and travel. We expense R&D costs as they are incurred. We expect our R&D expenses to continue to increase as we initiate and advance our development programs, including our expanding pharmaceutical development efforts and clinical trials across the glaucoma, corneal health and retinal disease spectrums.
Costs for our clinical development programs include expenses for all activities necessary for obtaining regulatory approvals. Our research programs vary significantly for each current and future product candidate and completion dates are difficult to predict. As a result, while we expect our R&D costs to continue to increase for the foreseeable future, we cannot estimate with any degree of certainty the timing or the amount of costs we will incur in connection with the development of our product candidates. We anticipate we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, the availability of funding resources, as well as ongoing assessments as to each current or future product candidate’s commercial potential and our likelihood of obtaining necessary regulatory approvals. We are not currently able to fully track expenses by product candidate.
Acquired In-Process Research and Development
Our acquired in-process research and development (IPR&D) expenses generally relate to acquisitions of technologies that management determines are not a business combination and do not have any alternative future uses. Future costs to develop these assets are expensed as R&D when incurred. We may have ongoing milestone and royalty payment obligations depending on the success, development, regulatory approval and commercialization of the proprietary technologies we have acquired.
Non-Operating Income (Expense), Net
Non-operating expense, net primarily consists of interest expense associated with our finance lease for our Aliso Facility and for our previously outstanding 2.75% convertible notes due 2027 (Convertible Notes), interest income derived from our short-term investments, and unrealized gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar, primarily related to intercompany loans.
Income Taxes
Our tax provision is primarily comprised of state and foreign income taxes, offset by release of uncertain tax positions for which the statute of limitations has expired. Our net deferred tax liability of $6.9 million at September 30, 2025 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets. We continue to provide a full valuation allowance against our other net deferred tax assets.
We record reserves for uncertain tax positions where we believe the ability to sustain the tax position does not reach a more likely than not threshold.
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Results of Operations
Comparison of Three Months Ended September 30, 2025 and September 30, 2024 (in thousands):
| | Three Months Ended | | | | ||||
| | September 30, | | % Increase | | ||||
(dollars in thousands) |
| 2025 |
| 2024 |
| (decrease) |
| ||
Statements of operations data: | | | | | | | | | |
Net sales | | $ | 133,537 | | $ | 96,670 | | 38 | % |
Cost of sales | | | 28,831 | | | 22,584 | | 28 | % |
Gross profit | | | 104,706 | | | 74,086 | | 41 | % |
Operating expenses: | | | | | | | | | |
Selling, general and administrative | | | 82,999 | | | 64,000 | | 30 | % |
Research and development | | | 38,072 | | | 34,746 | | 10 | % |
Total operating expenses | | | 121,071 | | | 98,746 | | 23 | % |
Loss from operations | | | (16,365) | | | (24,660) | | (34) | % |
Total non-operating income, net | | | 368 | | | 3,428 | | (89) | % |
Income tax provision | | | 234 | | | 177 | | 32 | % |
Net loss | | $ | (16,231) | | $ | (21,409) | | (24) | % |
Net Sales
Net sales for the three months ended September 30, 2025 and September 30, 2024 were $133.5 million and $96.7 million, respectively, increasing by approximately 38% primarily related to the factors listed below.
Net sales of glaucoma products in the United States were $80.8 million and $51.6 million for the three months ended September 30, 2025 and September 30, 2024, respectively, increasing by 57%. This increase is primarily due to higher volume of sales of iDose TR, which has a higher net sales price than our other products, partially offset by lower volumes sold of our iStent family of products primarily due to the MIGS restrictions associated with the final LCDs issued by the five MACs as described above in the Market and Business Update section.
International sales of glaucoma products for the three months ended September 30, 2025 and September 30, 2024 were $29.4 million and $24.5 million, respectively, increasing by 20%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, primarily the United Kingdom, Japan, France, and Germany, the dollar-based results of which were modestly affected by favorable foreign exchange rates, primarily related to the Euro and Japanese Yen, during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.
Net sales of corneal health products were $23.3 million and $20.6 million for the three months ended September 30, 2025 and September 30, 2024, respectively, increasing by 13%. Of the $2.7 million increase in net sales generated by our corneal health products, $2.4 million related to U.S. net sales of Photrexa using direct sales operations, which was positively impacted by higher realized average sales prices of Photrexa along with slight increases in sales to existing customers and new account starts, partially offset by accrued rebates related to the impact of our participation in MDRP. Our net sales of iLink devices in the U.S. remained consistent for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Our international corneal health sales increased $0.5 million during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.
Cost of Sales
Cost of sales for the three months ended September 30, 2025 and September 30, 2024 were $28.8 million and $22.6 million, respectively, reflecting an increase of approximately $6.2 million that is generally proportionate to the increase in net sales for the corresponding period, as well as from contributions from increased iDose TR production volumes and iDose TR net sales. Our gross margin was 78% for three months ended September 30, 2025 and 77% for the three months ended September 30, 2024.
Selling, General and Administrative Expenses
SG&A expenses for the three months ended September 30, 2025 and September 30, 2024 were $83.0 million and $64.0 million, respectively, reflecting an increase of $19.0 million or 30%.
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Of the total $19.0 million increase in SG&A expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, $4.1 million related to increased compensation and related employee costs, the majority of which was associated with stock-based compensation related to certain performance equity awards that were achieved during the quarter. The residual increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.
The remaining increase of $14.6 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities, and allocated expenses; as well as reserves for accounts receivable, which are objectively calculated based on our accounts receivable reserve methodology.
Research and Development Expenses
R&D expenses for the three months ended September 30, 2025 and September 30, 2024 were $38.1 million and $34.7 million, respectively, reflecting an increase of $3.3 million or 10%.
During the three months ended September 30, 2025, we incurred $26.9 million in core R&D expenses and $11.2 million in clinical expenses, comprised of $22.3 million in compensation and related employee expenses with the remaining $15.5 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generation iDose products; Epioxa; and our earlier stage programs for glaucoma, corneal, retinal and other therapeutic investments. For the three months ended September 30, 2024, we incurred $22.3 million in core R&D expenses and $12.4 million in clinical expenses, comprised of $20.4 million in compensation and related employee expenses with the remaining $14.3 million spent on the above-mentioned programs.
Non-Operating Income (Expense), Net
We had non-operating income, net of $0.4 million and $3.4 million for the three months ended September 30, 2025 and September 30, 2024, respectively. The change primarily relates to a change in unrealized foreign currency amounts recognized of approximately $4.2 million due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the three months ended September 30, 2024, partially offset by a decrease of $0.5 million in interest expense on our Convertible Notes.
Income Tax Provision
Our effective tax rate for the third quarter of 2025 and 2024 was (1.46)% and (0.83)%, respectively. For each of the three months ended September 30, 2025 and September 30, 2024, we recorded a provision for income taxes of $0.2 million which was primarily comprised of state and foreign income tax expense, offset by release of uncertain tax positions for which the statute of limitations has expired.
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Comparison of Nine Months Ended September 30, 2025 and September 30, 2024 (in thousands):
| | Nine Months Ended | | | | | ||||
| | September 30, | | % Increase | | | ||||
(dollars in thousands) |
| 2025 |
| 2024 |
| (decrease) | |
| ||
Statements of operations data: | | | | | | | | | | |
Net sales | | $ | 364,321 | | $ | 277,982 | | 31 | % | |
Cost of sales | | | 80,043 | | | 65,392 | | 22 | % | |
Gross profit | | | 284,278 | | | 212,590 | | 34 | % | |
Operating expenses: | | | | | | | | | | |
Selling, general and administrative | | | 237,047 | | | 192,163 | | 23 | % | |
Research and development | | | 106,963 | | | 99,898 | | 7 | % | |
Acquired in-process research and development | | | - | | | 14,229 | | (100) | % | |
Total operating expenses | | | 344,010 | | | 306,290 | | 12 | % | |
Loss from operations | | | (59,732) | | | (93,700) | | (36) | % | |
Total non-operating income (expense), net | | | 6,506 | | | (18,207) | | NM | | |
Income tax provision | | | 808 | | | 885 | | (9) | % | |
Net loss | | $ | (54,034) | | $ | (112,792) | | (52) | % | |
Net Sales
Net sales for the nine months ended September 30, 2025 and September 30, 2024 were $364.3 million and $278.0 million, respectively, increasing by approximately 31% primarily related to the factors listed below.
Net sales of glaucoma products in the United States were $212.2 million and $143.3 million for the nine months ended September 30, 2025 and September 30, 2024, respectively, increasing by 48%. This increase is primarily due to higher volumes sold of iDose TR, which has a higher net sales price than our other products, partially offset by lower volumes sold of our iStent family of products primarily due to the MIGS restrictions associated with the final LCDs issued by the five MACs as described above in the Market and Business Update section.
International sales of glaucoma products for the nine months ended September 30, 2025 and September 30, 2024 were $89.7 million and $75.8 million, respectively, increasing by 18%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, most notably from France, Japan, and the United Kingdom, the dollar-based results of which were modestly affected by favorable foreign exchange rates, primarily related to the Euro and Japanese Yen, during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.
Net sales of corneal health products were $62.4 million and $58.8 million for the nine months ended September 30, 2025 and September 30, 2024, respectively, increasing by 6%. Of the $3.6 million increase in net sales generated by our corneal health products, $3.8 million related to an increase in U.S. net sales of Photrexa using direct sales operations, which was positively impacted by higher realized average sales prices of Photrexa along with increases in sales to existing customers and new account starts, partially offset by accrued rebates related to the impact of our participation in the MDRP. Our sales of iLink devices decreased $0.2 million during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.
Cost of Sales
Cost of sales for the nine months ended September 30, 2025 and September 30, 2024 were $80.0 million and $65.4 million, respectively, reflecting an increase of approximately $14.7 million that is proportionate to the increase in net sales for the corresponding period, as well as from contributions from increased iDose TR production volumes. Our gross margin was 78% and 76% for the nine months ended September 30, 2025 and September 30, 2024, respectively.
Selling, General and Administrative Expenses
SG&A expenses for the nine months ended September 30, 2025 and September 30, 2024 were $237.0 million and $192.2 million, respectively.
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Of the total $44.9 million increase in SG&A expenses for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, $17.1 million related to increased compensation and related employee costs, with $6.0 million of the incremental amount related to an increase in stock-based compensation expense. This increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.
The remaining increase of $27.5 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities and allocated expenses, as well as reserves on our accounts receivable.
Research and Development Expenses
R&D expenses for the nine months ended September 30, 2025 and September 30, 2024 were $107.0 million and $99.9 million, respectively.
During the nine months ended September 30, 2025, we incurred $75.6 million in core R&D expenses and $31.4 million in clinical expenses, comprised of $67.4 million in compensation and related employee expenses with the remaining $39.3 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generation iDose products; Epioxa; and our earlier stage programs for glaucoma, corneal, retinal and other therapeutic investments. For the nine months ended September 30, 2024, we incurred $60.6 million in core R&D expenses and $39.3 million in clinical expenses, comprised of $59.1 million in compensation and related employee expenses with the remaining $40.8 million spent on the above-mentioned programs.
Acquired In-process Research and Development
During the nine months ended September 30, 2024, we issued $5.0 million of our common stock and paid approximately $5.1 million in cash, in connection with the asset acquisition of 100% of the outstanding equity interests in a clinical stage biopharma company focused on developing novel therapeutics for ophthalmic diseases, including all related patents and patent applications, technology and know-how. Also included in IPR&D for the nine months ended September 30, 2024 is $1.3 million of contingent consideration related to our Sales Agreement with Celanese and our $2.5 million upfront payment related to a prior year license agreement, pursuant to which we obtained an exclusive, worldwide license to develop and commercialize drug products incorporating certain proprietary technology.
Non-Operating Income (Expense), Net
We had non-operating income, net of $6.5 million and non-operating expense, net of $18.2 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. The change primarily relates to a decrease of $18.0 million of expense related to our June 2024 Convertible Notes exchange, a decrease of $5.0 million in interest expense on our Convertible Notes, and a change in unrealized foreign currency amounts recognized of approximately $1.4 million due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the three months ended September 30, 2024.
Income Tax Provision
Our effective tax rate for the nine months ended September 30, 2025 and September 30, 2024 was (1.52)% and (0.79)%, respectively. For the nine months ended September 30, 2025 and September 30, 2024, we recorded a provision for income taxes of $0.8 million and $0.9 million, respectively, which was primarily comprised of state and foreign income tax expense, offset by release of uncertain tax positions for which the statute of limitations has expired.
Liquidity and Capital Resources
Our principal sources of liquidity are our existing cash, cash equivalents and short-term investments, and generally cash generated from operating, financing and investing activities. Our primary uses of cash have been for commercial activities, acquired in-process research and development, clinical and research and development programs, general and administrative expenses, and capital expenditures.
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The following table summarizes our cash and cash equivalents, short-term investments and selected working capital data as of September 30, 2025 and December 31, 2024 (in thousands):
| | September 30, | | December 31, | | ||
|
| 2025 |
| 2024 | | ||
Cash and cash equivalents | | $ | 98,246 | | $ | 169,626 | |
Short-term investments | | | 175,466 | | | 149,289 | |
Accounts receivable, net | | | 98,684 | | | 60,744 | |
Inventory | | | 63,863 | | | 57,678 | |
Accounts payable | | | 19,883 | | | 13,026 | |
Accrued liabilities | | | 67,633 | | | 62,099 | |
Working capital (1) | | | 367,252 | | | 374,667 | |
| (1) | Working capital consists of total current assets less total current liabilities per our condensed consolidated balance sheets. |
Main Sources of Liquidity
We plan to fund our operations, commitments for capital expenditures and other short and long-term known contractual and other obligations using existing cash and investments and, to the extent available, cash received from commercial operations as well as cash generated from employee stock option exercises.
We may seek to obtain additional financing in the future through other debt or equity financings. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, or at all and although we have been profitable for certain periods in our operating history, there can be no assurance that we will be profitable or generate cash from operations.
Cash, Cash Equivalents, Short-term Investments and Restricted Cash
As of September 30, 2025, our cash, cash equivalents and short-term investments totaled approximately $273.7 million and our restricted cash totaled approximately $3.8 million.
Cash Flow used in Operations
For the nine months ended September 30, 2025, our operating activities used $21.6 million in net cash.
Short-term Liquidity Requirements
Our short-term liquidity requirements primarily consist of regular operating costs, R&D project funding, capital expenditures as we continue the development of our manufacturing facilities and office spaces, operating and financing lease obligations, government rebate obligations, and other firm purchase commitments. As of September 30, 2025, we had net working capital of $367.3 million, which indicates that our current assets are sufficient to cover our short-term liabilities.
Long-term Liquidity Requirements
Our long-term liquidity requirements primarily consist of capital expenditures for the continued development of our manufacturing facilities and office spaces, potential future payments related to our licensing agreements and acquisitions, and firm purchase commitments. As demand grows for our products, we will continue to expand global operations to meet demand through investments in our manufacturing capabilities. To that end, we entered into agreements with the city of Huntsville, Alabama that provide the opportunity to develop a new 200,000 square foot R&D and manufacturing facility, which is anticipated to result in more than $80.0 million in capital expenditures over the multi-year project. We expect construction to begin in 2026.
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Cash Flows
Our historical cash outflows have primarily been associated with cash used for operating activities such as the expansion of our commercial and R&D activities; purchase of and growth in inventory; accounts receivable and other working capital needs; the acquisition of intellectual property and businesses; and expenditures related to property, equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency and for overall facility expansion.
The following table is a condensed summary of our cash flows for the periods indicated:
| | Nine Months Ended | | ||||
| | September 30, | | ||||
(in thousands) |
| 2025 |
| 2024 |
| ||
Net cash (used in) provided by: | | | | | | | |
Operating activities | | $ | (21,632) | | $ | (61,825) | |
Investing activities | | | (61,723) | | | 36,044 | |
Financing activities | | | 9,459 | | | 31,427 | |
Exchange rate changes | | | 1,617 | | | (93) | |
Net (decrease) increase in cash, cash equivalents and restricted cash | | $ | (72,279) | | $ | 5,553 | |
At September 30, 2025, our cash and cash equivalents were held for working capital purposes. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity.
Operating Activities
In the nine months ended September 30, 2025 and September 30, 2024, our operating activities used $21.6 million and $61.8 million of net cash, respectively.
For the nine months ended September 30, 2025, our net cash used in operating activities reflected our net loss of $54.0 million, adjusted for non-cash items of $78.3 million, primarily consisting of stock-based compensation expense of $45.9 million, depreciation of $8.2 million, amortization of intangible assets of $17.8 million, noncash lease expense of $3.2 million, other liabilities of $1.1 million, allowance for doubtful accounts of $7.3 million, and amortization of premium on short-term investments of $2.7 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $45.9 million, which resulted primarily from an increase in accounts receivable of $42.8 million primarily due to increased iDose TR sales during the nine months ended September 30, 2025 given iDose TR sales have extended terms, an increase in accounts payable and accrued liabilities of $7.0 million, an increase in inventory of $3.7 million, an increase in other assets of $1.3 million, and an increase in prepaid expenses and other current assets of $5.8 million.
For the nine months ended September 30, 2024, our net cash used in operating activities reflected our net loss of $112.8 million, adjusted for non-cash items of $92.3 million, primarily consisting of inducement expense related to the Convertible Notes exchange of $17.4 million, stock-based compensation expense of $36.9 million, depreciation of $8.2 million, amortization of intangible assets of $18.7 million, noncash lease expense of $3.2 million, amortization of debt issuance costs of $0.7 million, other liabilities of $5.0 million, amortization of premium on short-term investments of $3.2 million and IPR&D acquired through issuance of common stock of $5.0 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $41.4 million, which resulted primarily from an increase in inventory of $18.2 million, an increase in accounts receivable of $16.5 million, an increase in other assets of $2.0 million, a decrease in accounts payable and accrued liabilities of $4.4 million, partially offset by a decrease in prepaid expenses and other current assets of $0.3 million.
Investing Activities
In the nine months ended September 30, 2025 and September 30, 2024 our investing activities used $61.7 million and provided $36.0 million of net cash, respectively.
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For the nine months ended September 30, 2025, we used cash of approximately $192.1 million for purchases of short-term investments, approximately $16.6 million related to the purchase of certain real property consisting of land, a building and certain assumed leases, approximately $12.4 million related to the Mobius Merger, approximately $4.8 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; approximately $4.0 million related to investments in company-owned life insurance, and $0.8 million in other investing activities and we received cash of approximately $169.0 million from sales and maturities of short-term investments.
For the nine months ended September 30, 2024, we used cash of approximately $123.1 million for purchases of short-term investments, approximately $4.6 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; and approximately $3.2 million related to investments in company-owned life insurance, and we received cash of approximately $166.9 million from sales and maturities of short-term investments.
We expect levels of our capital expenditures to be higher in 2025 than in 2024 as we upgrade certain manufacturing facilities and continue investing in R&D equipment needed to advance our pipeline.
Financing Activities
In the nine months ended September 30, 2025 and September 30, 2024, our financing activities provided $9.5 million and $31.4 million of net cash, respectively.
For the nine months ended September 30, 2025, we received $18.2 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $7.9 million for payment of employee taxes related to restricted stock unit vesting and paid $0.8 million in principal on our finance lease.
For the nine months ended September 30, 2024, we received $36.9 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $4.8 million for payment of employee taxes related to restricted stock unit vesting and paid $0.7 million in principal on our finance lease.
We do not have any off-balance sheet arrangements.
Material Cash Requirements
With the exception of the cash used for the property and building purchase, and the business combination, both previously described in “Recent Developments”, there have been no significant changes to our material cash requirements, including commitments for capital expenditures and known contractual and other obligations, as of September 30, 2025 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 24, 2025.
We believe that cash from operating, financing and investing activities, together with our cash and investment balances, will be sufficient to meet ongoing operations, capital expenditures, commitments, working capital requirements and other known contractual and other obligations and satisfy our liquidity requirements for at least the next 12 months and the foreseeable future.
Critical accounting policies and significant estimates
Management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the condensed consolidated financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to our financial position and results of operations.
Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Estimates” included in Part II, Item 7 of our Annual Report.
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There have been no material changes to our critical accounting policies and estimates as disclosed therein, during the three and nine months ended September 30, 2025, as compared with those disclosed in our Annual Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in our exposure to market risk since December 31, 2024.
Refer to Item 7A “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 24, 2025 for further detail.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level, as of September 30, 2025.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified by management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during our third fiscal quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
The risks and uncertainties discussed below update, supersede and replace the risks and uncertainties previously disclosed in Part I, Item IA of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, which was filed with the United States (U.S.) Securities and Exchange Commission (SEC) on August 4, 2025 (Quarterly Report). These risks and uncertainties are not the only ones facing our business but do represent those risks that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business. Please read the cautionary notice regarding forward-looking statements preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.
Other than the update of certain risk factors listed under “Risks Related to Our Business” below with respect to risks regarding the commercial success of our newly commercialized products, we do not believe any of the changes constitute material changes from the risk factors previously disclosed in the Quarterly Report.
Risks Related to Our Business
The commercial success of our iDose TR and Epioxa products is dependent upon multiple factors, the failure of any one of which could materially impact the prospects of these products and our business.
Our iDose TR travoprost intracameral implant was approved for sale in the U.S. by the FDA in December 2023 and we began commercializing the product in a controlled manner in February 2024. In October 2025, the FDA approved Epioxa, an innovation in keratoconus care, offering an incision-free alternative to traditional corneal cross-linking procedure, which the Company plans to begin commercializing in early 2026. The ultimate commercial success of these products will depend upon a number of factors, including physician training on and adoption of their use, establishment of consistent reimbursement, our ability to manufacture product in volumes sufficient to meet customer demand, marketing in compliance with label restrictions, satisfactory patient outcomes, particularly as we continue our commercial launch, product pricing, duration of efficacy, and the availability and maintenance of commercial payor coverage and adequate reimbursement for the product. Our failure to successfully commercialize the iDose TR or Epioxa based upon these or other factors could materially adversely impact our net sales, our business, our stock price or our financial condition.
Unfavorable global and regional conditions have adversely affected, and could in the future materially and adversely affect, our business, results of operations, financial condition, liquidity, and cash flows.
Geopolitical conflicts, natural disasters and public health crises, such as COVID-19, and changes in U.S. trade policies that have occurred in recent years have led to or exacerbated certain unfavorable global and regional macroeconomic conditions, including inflation, volatility in the financial and credit markets, higher interest rates and capital costs, labor shortages, increased energy costs, and currency fluctuations. These unfavorable global and regional conditions have had, and could continue to have, an adverse effect on the global economy, the regional economies that we serve and our business, results of operations, financial condition, liquidity and ability to access our existing cash, cash equivalents and investments. Continuation or worsening of these unfavorable global and regional conditions, or similar new events or crises, could have a material adverse effect on our operations, including through foreign exchange rate headwinds, higher operating expenses and lower operating margins, and cause us to need to seek additional capital, which may not be available to us on favorable terms or at all.
Additionally, the U.S. government shutdown that started on October 1, 2025 and continues as of the date of this report has impacted certain regulatory agencies, such as the U.S. FDA. Significant changes to operations at or the funding of such regulatory agencies could cause decreases in staff or changes in policy and enforcement priorities. Hospitals, ambulatory surgery centers and other health care providers may not purchase our products if reductions in agency staffing results in adequate reimbursement from third-party payors for procedures using our products. If this shutdown continues for a prolonged period of time, or if a widespread freeze on federal funding occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions or negatively affect sales of our products.
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In recent years, unfavorable economic conditions have also adversely impacted several financial institutions, including some financial institutions with whom we have banking relationships, and some banks have recently failed and gone into receivership. If banks and other financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash and cash equivalents to the extent those funds are not insured or otherwise protected by the FDIC.
Public health crises, such as the COVID-19 pandemic, have adversely affected, and could in the future adversely affect, our business, results of operations, financial condition, liquidity, and cash flows.
We are subject to risks associated with public heath crises, such as those experienced due to the COVID-19 pandemic. In particular, we have experienced, and may in the future experience, financial or operational impacts as a result of such public health crises which may be material, including:
| ● | Impacts or delays to our product development efforts, including due to slowdown of new patient enrollment in clinical trials such as we experienced in our 2020 and 2021 iDose clinical trial, or regulatory clearances and approvals; |
| ● | Costs associated with protecting the health of our employees and adhering to any guidance or orders of various governmental authorities, such as masking, testing, and social distancing requirements; |
| ● | Risks associated with remote work, including increased cybersecurity risk; |
| ● | Widespread staffing shortages and turnover, including in ambulatory surgery centers, and mandatory and voluntary quarantining, which may impact elective procedures; |
| ● | Outbreaks of disease in our facilities, which could require us to temporarily shut down manufacturing operations or cause a disruption to, or shortage in, our workforce; |
| ● | Delays in shipments of our products, which could harm our customer relations and adversely impact our competitive positioning and sales, including as a result of longer lead times, delays, higher prices and unfulfilled deliveries of our supply chain and development partners, each of which we continued to experience in 2024 and some of which we anticipate will continue into the near future; |
| ● | Restrictions on our personnel’s ability to access customers and clinical sites for training and support; and |
| ● | Volatility in credit or financial markets. |
If the supply and/or manufacture of our principal revenue-producing products, the iStent family of products, our Photrexa therapies, or the iDose TR, or our recently-approved Epioxa therapies, is materially disrupted, it may adversely affect our ability to manufacture products and could reduce our gross margins and negatively impact our operating results.
Our sole manufacturing location for our iStent and iDose products is an approximately 120,000 square foot campus located in San Clemente, California, where we manufacture, inspect, package, release and ship nearly all of our implanted device products. We conduct substantially all of our research and development (R&D) activities, customer and technical support, and management and administrative functions at our corporate headquarters in Aliso Viejo, California (Aliso Facility). If either of our San Clemente or Aliso Facility suffers a crippling event or a natural disaster such as an earthquake, fire or flood, or if we lose insurance coverage for or are unable to renew insurance on these facilities, as some California residents have experienced, this could materially impact our ability to operate.
Additionally, we rely on a limited number of third-party suppliers, in some cases sole suppliers, to supply components for the iStent, the iStent inject models, the iStent infinite, the iDose TR, and our other pipeline products. If any one or more of our suppliers cease to provide us with sufficient quantities of components or drugs in a timely manner or on terms acceptable to us, we would have to seek alternative sources of supply. Because of factors such as the proprietary nature of our products, our domestic and international quality control standards and regulatory requirements including the FDA’s Quality System Regulation, the European Union’s Medical Device Regulation, and Current Good Manufacturing Practices (cGMP) regulations, we may be unable to obtain components or quickly engage replacement suppliers, who may not have access to previous suppliers’ proprietary processes, if our component suppliers are found to be in violation of such standards, which could delay or impact our business, including regulatory approval timelines. If our manufacturing facilities or those of any of our component suppliers or contract facilities are found to be in violation of applicable laws and regulations or fail to adequately remediate any issues discovered during an audit, the FDA or other regulatory bodies could take enforcement action. Despite our efforts to maintain an adequate supply of inventory, the loss of these suppliers, or their inability to provide us with an adequate supply of components
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or products, could cause delay in the manufacture of our products, thereby impairing our ability to meet the demand of our customers and causing significant harm to our business. Any disruption of this nature or increased expense could harm our commercialization efforts and adversely affect our operating results.
Our corneal health Photrexa therapies, and our Epioxa pharmaceutical therapies, which were approved by the FDA in October 2025, are produced by a small number of contract manufacturing organizations. The systems that bio-activate our Photrexa and Epioxa therapies are primarily manufactured in Burlington, Massachusetts. Any material disruption to the manufacture of these corneal health products could also adversely affect our operating results and clinical efforts.
We have incurred significant losses since inception and our operating results can be unpredictable and may fluctuate significantly from quarter to quarter, requiring substantial capital and operating expenditures for our business to operate and grow. These factors could adversely affect our business, financial condition, results of operations and the trading price of our common stock, and limit our ability to reach sustained profitability.
Since the Company’s inception in 1998, we have incurred significant operating losses. Although we have been profitable for certain periods in our operating history, there can be no assurance that we will be profitable or generate cash from operations in the future. As of September 30, 2025, we had an accumulated deficit of approximately $799.5 million, principally comprised of costs incurred in our clinical trials, R&D programs, our selling, general and administrative expenses, and from amortization expense related to our acquired developed technology intangible assets included in cost of sales. We have funded our operations to date from the sale of equity securities, including our June 2015 initial public offering, the issuance of notes payable, cash exercises of stock options and warrants to purchase equity securities, cash generated from commercial operations and the issuance of the Company’s 2.75% convertible notes due 2027 (Convertible Notes), which were fully exchanged, converted or redeemed in 2024. Our operations to date have been, and our future growth and success will be, impacted by our ability to expand our business, including the success of our marketing and sales efforts, our timely satisfaction of regulatory requirements, and our overall ability to maintain a competitive position. To implement our global business strategies we have made, and expect to continue to make, significant investments in R&D activities, clinical studies, expanding our manufacturing capabilities, growing our sales and marketing organization, engaging in market access activities, enforcing and defending our intellectual property rights, acquiring companies or in-license products and intellectual property, building our general and administrative infrastructure, and obtaining regulatory clearance or approval to commercialize our pipeline product globally and expand our existing products into international markets or products We expect our expenses will continue to increase as we pursue these objectives. While we believe we have sufficient cash to fund our operations for at least the next 12 months from the date our condensed consolidated financial statements for the quarter ended September 30, 2025 are made publicly available, our ability to reach sustained profitability and generate positive cash flow in the future is highly uncertain.
Additionally, our net sales have in the past and may in the future experience volatility due to a number of factors, many of which are beyond our control, including, among other things, fluctuating demand, pricing pressures applicable to our products, changes in foreign currency exchange rates, Medicare payment rates established by U.S. Centers for Medicare & Medicaid Services (CMS) or Medicare Administrative Contractors (MACs) or changes in such rates or coverage, commercialization of our new products, the marketing of competitive products, transition-related sales disruptions when introducing new products, results of clinical research and trials, regulatory approval requirements and timings, legislative changes affecting our products, variances in the sales terms, an increase in demand for our patient assistance and/or free drug programs, supply chain and inventory management, shortage or increased cost of raw materials, seasonality in the timing or volume of customer orders, the length of our sales cycle, and reductions in revenue associated with our participation in Medicaid Drug Rebate Program (MDRP), which varies and may be unpredictable. For example, certain local coverage determinations (LCDs) finalized by five of the seven MACs in November 2024 that confirm non-coverage for surgical MIGS procedures in combination with other surgical MIGS procedures disrupted traditional customer ordering patterns and may have adversely impacted U.S. Glaucoma sales in 2024, 2025, and into the future. As a result, you should not rely solely on our results in any past period as an indication of future results and you should anticipate that fluctuations in our quarterly and annual operating results may continue and could generate volatility in the price of our common stock. We believe that quarterly comparisons of our financial results should not be relied upon as an indication of our future performance.
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Our success depends on our ability to continue to generate sales of our commercialized products and develop and commercialize additional products, which we may not be able to accomplish.
Our primary sales-generating commercial products have been the iStent, the iStent inject and its successor, the iStent inject W, as well as our Photrexa therapies, which we acquired in connection with our acquisition of Avedro, Inc. (Avedro) in 2019. While we expect to continue to derive a significant portion of our net sales from the iStent, the iStent inject models, the iStent infinite and the Photrexa therapies, as well as our iDose TR product, which was approved by the FDA in December 2023 and which we began commercializing in a controlled manner in February 2024 and our Epioxa therapies, which were approved by the FDA in October 2025 and which we plan to begin commercializing in a controlled manner in early 2026, it is important that we continue to build a more complete product offering. Developing additional products is expensive and time-consuming. Our research programs may fail to yield product candidates for clinical development despite showing initial promise. If we are unable to successfully commercialize additional products, our business prospects would be materially affected. Even if we are successful in developing our additional pipeline products, the success of our new product offerings is inherently uncertain and our products, or the expansion of labeling of our products, may not receive regulatory approval, may receive approval that requires restrictive labeling, may not be profitable, or may be subject to transition-related sales disruptions when we introduce new products that are intended to replace or supersede our existing commercial products. Any current or new products could also quickly be rendered obsolete by changing customer preferences, third party payor reimbursement levels, or the introduction of competing products that (i) embody superior technologies, features, safety, quality or efficacy, (ii) reflect a broader label indication, or (iii) are available at lower prices. Our competitors include large publicly traded companies or divisions thereof and have more resources, greater name recognition, longer operating histories, more established relationships with healthcare professionals, customers and third-party payors, broader products lines, more established sales and marketing programs and distribution networks, and greater experience in obtaining regulatory clearance or approval. Additionally, the period of orphan drug exclusivity with respect to our Photrexa pharmaceutical therapy expired in 2023, which has enabled third parties to develop potentially-competitive products.
As our growth strategy turns increasingly global, we are, and will continue to be, subject to a variety of risks associated with our international operations, which could adversely impact our results of operations and financial condition.
Our existing foreign operations, as well as our planned international growth, expose us to additional uncertainty and risks beyond regulatory authorization and reimbursement levels. We sell our products through direct sales organizations and a network of third-party distribution partners in other markets. These international operations expose us and our subsidiaries and third-party distributors to a variety of risks including, without limitation, the following:
| ● | different, and in some cases more exacting and lengthy, regulatory approval processes, regulations and laws, pricing and reimbursement systems, and rebate requirements applicable to us, our suppliers and distributors; |
| ● | reduced or varied protection for intellectual property rights or difficulties enforcing our intellectual property rights and defending against third-party threats and intellectual property enforcement actions against us, our distributors, or any of our third-party suppliers; |
| ● | pricing pressure or longer sales and payment cycles; |
| ● | different competitive dynamics, including smaller market sizes, which we may not be able to fully appreciate before entering certain foreign markets; |
| ● | a shortage of qualified sales personnel and distributors; |
| ● | the challenges of managing foreign operations; |
| ● | relative disadvantages compared to competitors with more recognizable names, longer operating histories and better established distribution networks and customer relationships; |
| ● | political and economic instability, international terrorism and anti-U.S. sentiment, or the imposition of U.S. or international sanctions that could restrict or prohibit continued business; |
| ● | changes or increases in duties and tariffs, reciprocal and retaliatory tariffs, license obligations, importation laws and other non-tariff barriers to trade; |
| ● | scrutiny of foreign tax authorities that could result in significant fines, penalties and additional taxes; |
| ● | different cultural norms which may impact how business is conducted; |
| ● | laws and business practices favoring local companies; |
| ● | difficulties in maintaining consistency and compliance with our internal guidelines; |
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| ● | difficulties in enforcing agreements and collecting receivables through foreign legal systems; |
| ● | risks of money laundering, bribery and corruption practices, off-label promotion or breach of sanction regulations by our personnel or distributors, which may be difficult for us to discover or prevent; |
| ● | failures by our third-party partners to properly assist us with local guidance on operations, financial and other reporting, accounting, tax, payroll, legal and regulatory matters; and |
| ● | costly and complex export requirements and restrictions, particularly relating to technology. |
If we experience any of these risks, our sales in non-U.S. jurisdictions may be harmed, our results of operations would suffer, and our reputation and business prospects would be negatively impacted. Additionally, we are exposed to changes in foreign currencies relative to the U.S. dollar, which are references to the differences between the foreign-exchanges rates we use to convert the financial results of our international operations from local currencies into U.S. dollars for financial reporting purposes. This impact of foreign-exchange rate changes is calculated based on the difference between the current period’s currency exchange rates and that of the comparable prior period. Further, significant foreign exchange rate fluctuations resulting in a decline in the respective local currency may decrease our revenues and earnings from our foreign operations. As a result of our global operations, our revenue, gross margins, operating expense and operating income in some international markets have been and may continue to be affected by foreign currency fluctuations.
If the quality or delivery of our products does not meet our customers’ expectations, our reputation could suffer and ultimately our sales and operating earnings could be negatively impacted.
As a manufacturer, we have addressed and must continue to address quality issues associated with our products, including in our engineering, design, manufacturing and delivery processes, as well as issues with third-party pharmaceuticals or components included in our products. Because our products are highly complex, the occurrence of performance issues may increase as we continue to introduce new products and rapidly scale up manufacturing to meet increased demand. Although we have established internal procedures to minimize risks that may arise from product quality issues, there can be no assurance that we will be able to eliminate or mitigate occurrences of these issues and associated liabilities. In addition, identifying the root cause of performance or quality issues, particularly those affecting third-party components or other elements, may be difficult, which increases the time needed to address quality issues as they arise and increases the risk that similar problems could recur. Finding solutions to quality issues can be expensive and we may incur significant costs, lost revenue or reputational damage in connection with, for example, shipment holds, product recalls and warranty or other service obligations. Quality issues can also impair our relationships with new or existing customers or result in product liability suits against us, which may be expensive to defend and could impact the reimbursement coverage of our products, our product liability insurance rates and/or our cash reserves in the event our existing insurance coverage is insufficient. The occurrence of any of the foregoing could harm our reputation as a producer of high-quality products and could adversely affect our business, financial condition or results of operations.
Ophthalmic surgeons may not use our products if they do not believe they are safe, efficient, effective and preferable alternatives to other treatment solutions in the market or may use our products without being adequately trained, which could result in inferior clinical outcomes.
We believe that ophthalmic surgeons and other healthcare providers will not use our products unless they conclude that our products provide a safe, efficient, effective and preferable alternative to currently available treatment options. Publications of clinical results by us, our competitors and other third parties may impact whether, and the degree to which, our products are used by physicians and the procedures and treatments those physicians choose to administer to their patients. If ophthalmic surgeons determine that any of our products are not sufficiently effective, efficient or safe, whether based on longer-term patient studies or clinical experience or unsatisfactory patient outcomes or patient injury, our sales would be harmed. Surgeons may base such determination on patient outcomes that are the result of other unqualified surgeons performing procedures for which they haven’t been trained. It is also possible that as our products become more widely used, latent defects could be identified, creating negative publicity and liability problems for us and adversely affecting demand for our products. If an increasing number of ophthalmic surgeons do not continue to adopt the use of our products, our operating and financial results will be negatively impacted.
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If we fail to manage our anticipated growth effectively, we may not be able to meet customer demand for our products and our business could suffer.
Since the commercial launch of the iStent in 2012, we have seen significant period-to-period growth in our business, both organically and through transactions, and we must continue to grow in order to meet our business and financial objectives. However, continued growth creates numerous challenges, including, among others, new and increased responsibilities for our management team; increased competition; increased and, with respect to new products such as the iDose TR, uncertain product demand which could strain our manufacturing capacity or create product shortages; the management of an increasing number of customer, supplier and other relationships; increased pressure on our operating, financial and reporting systems; entry into new international territories with unfamiliar regulations and business approaches; and the need to hire, train and manage additional qualified personnel. If we fail to manage any of these challenges effectively, our business may be harmed.
If we are unable to retain or recruit qualified personnel for growth, our business results could suffer.
We have benefited substantially from the leadership and performance of our senior management and other key employees. For example, our chief executive officer, as well as other key members of our senior management, has experience successfully developing novel technologies and scaling early-stage medical device and pharmaceutical companies to achieve profitability. We also rely on our qualified sales representatives and on consultants and advisors in our research, operations, clinical and commercial efforts to grow our business, develop and commercialize new products and implement our business strategies. Our success will depend on our ability to retain our current management and key employees, consultants and advisors, and to attract and retain qualified personnel in the future, including by providing competitive compensation and benefit programs, flexible work arrangements, career advancement prospects and sufficient opportunities to develop leadership, managerial and other valuable skills. The loss of services of these personnel, which could occur without notice and without cause, could prevent or delay our growth plans and the implementation of our strategic objectives, or divert management’s attention to seeking qualified replacements. Our U.S. employees, including our senior management, are not subject to non-competition agreements. Accordingly, the adverse effect of losing key personnel could be compounded by our inability to prevent them from competing with us.
We have and may continue to enter into acquisitions, collaborations, in-licensing agreements, joint ventures, alliances or partnerships with third parties that could fail or result in litigation.
We have and may continue to enter into acquisitions, collaborations, in-licensing agreements, joint ventures and partnerships in order to retain our competitive position within the marketplace, develop new products or expand into new markets. Examples include our acquisitions of Mobius Therapeutics, LLC, DOSE Medical, and Avedro, as well as our licensing of Santen’s PRESERFLO® Microshunt® (Preserflo MicroShunt), the Intratus drug delivery platform and the Attillaps, iVeena, Stuart and Ripple pharmaceutical compounds and our collaboration agreement with Radius XR to promote its wearable patient engagement and diagnostic system. However, we cannot assure you that we will be able to successfully complete any future acquisition we may pursue, or that we will be able to successfully integrate any acquired business, product or technology in a cost-effective and non-disruptive manner. Our future successes will depend, in part, on our ability to manage an expanded business, which may pose substantial challenges for our management, such as increased costs and complexity. There can be no assurances that we will be successful in managing such expanded business or that we will realize the expected economies of scale, synergies and other benefits currently anticipated from recent or future acquisitions or strategic transactions. Additionally, these collaborations, joint ventures, and partnerships may fail to result in any commercialized product, including due to delays in or failures to obtain regulatory approvals, such as the failure to receive approval of the PreserFlo MicroShunt in the U.S., and could require us to invest a substantial amount of resources only to ultimately change regulatory strategies or to fail. In addition, these arrangements may be terminated before we are able to realize net sales to sufficiently cover the costs associated therewith, or result in disputes between the parties that ultimately results in litigation, which could materially impact our business. We cannot assure you that any such transaction would result in the benefits expected from the transaction, including revenue growth, increased profitability or an enhancement in our business prospects. Further, pursuing acquisitions, collaborations, in-licensing agreements, joint ventures, alliances or partnerships with third parties, whether or not completed, is costly and time-consuming and could distract Company management from the operation of the business, which could negatively impact our operating results.
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Failure to protect our information systems against cybersecurity threats, cybersecurity incidents, service interruptions, or data corruption could materially disrupt our operations and adversely affect our business, operating results, or the effectiveness of our internal controls over financial reporting.
The efficient operation of our global business depends on our information systems, including telecommunications, the internet, network communications, email and various computer hardware and software applications. We rely on our information systems to effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, quality systems, customer service and technical support functions. Our information systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, data corruption and security breaches or other cybersecurity incidents, some of which we have experienced and continue to monitor and expect may experience in the future. Cybersecurity incidents can include ransomware, computer denial-of-service attacks, worms, and other malicious software programs introduced to our computers and networks, including intrusions that are designed to evade detection for an extended period of time, phishing attacks, social engineering attacks, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities or weaknesses, as well as intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage. Additionally, cybersecurity threats and the techniques used in cyberattacks change, develop and evolve rapidly, including from emerging technologies, such as advanced forms of artificial intelligence (AI) and quantum computing. Further, use of AI by our employees, third-party service providers, strategic partners or other contractors or consultants, whether authorized or unauthorized, increases the risk that our intellectual property and other proprietary information will be unintentionally disclosed. While none of the cybersecurity incidents or service interruptions that we have experienced to date have had a material adverse impact on our business, financial condition or operations, the preventative measures we have implemented to date may not be sufficient to prevent, mitigate or offset a future incident that may materially and adversely impact us and the cybersecurity insurance we have obtained may or may not cover such an incident. In addition, some of our software systems are cloud-based data management applications, hosted by third-party service providers whose security and information technology systems are subject to similar risks. The failure to protect either our or our service providers’ information technology infrastructure could disrupt our entire operation, resulting in decreased sales, increased overhead costs, product shortages, or loss or misuse of intellectual property or proprietary, confidential, sensitive or personal information, all of which could have a material adverse effect on our reputation, business, financial condition and operating results or result in investigations, claims and administrative penalties by regulators.
Our enterprise resource planning (ERP) system is integral to our ability to accurately and efficiently maintain our books and records, record transactions, and prepare our financial statements. Any disruptions or difficulties that may occur in connection with our ERP system (whether in connection with the regular operation, periodic enhancements or upgrades of such systems, or due to cybersecurity incidents) could adversely affect our ability to provide services, fulfill contractual obligations, file reports with the SEC in a timely manner, operate our business or otherwise affect our controls environment. If our independent registered public accounting firm determines that we have a material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the New York Stock Exchange, the SEC, or other regulatory authorities. Any of these events could have an adverse effect on our operating results and financial condition.
Failure to comply with data privacy and security laws could have a material adverse effect on our business.
We are subject to state, federal and foreign laws relating to data privacy and security in the conduct of our business, including state breach notification laws, the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, the European Union’s General Data Protection Regulation (GDPR), the U.K. Data Protection Act and the U.K. GDPR, the California Consumer Privacy Act, and the California Privacy Rights Act, among others. These laws affect how we collect and use data of our employees, consultants, customers and other parties, including patients treated with our products. They may further restrict our transfer and use of such data, and may allow individuals to make requests or exercise rights that could limit use of data and require the expenditure of significant resources and time and effort to address. In addition, as a result of the release and availability of AI technologies, including generative AI platforms, we have seen a global trend toward more comprehensive and refined regulation of AI that may impact our business, such as the EU AI Act, that are designed to ensure the ethical use, security, and privacy of AI and create standards for transparency, accountability, and fairness. These laws, as well as similar laws being enacted by other states and countries, impose substantial
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requirements that involve the expenditure of significant resources and the investment of significant time and effort to comply. We also rely on third parties to host or otherwise process some of this data. In some instances, these third parties have experienced failures to protect data privacy. Our failure or the failure of these third parties to comply with these laws or prevent security breaches of such data could result in significant liability, fines and penalties under applicable data privacy laws, cause disruption to our business, harm our reputation and have a material adverse effect on our business.
We cannot be certain that our net operating loss tax carryforwards will be available to offset future taxable income.
At December 31, 2024, we had approximately $527.5 million, $437.0 million and $6.5 million of net operating loss (NOL) carryforwards for federal, state and foreign purposes, respectively. Portions of federal NOL carryforwards incurred prior to 2018 will expire annually, if unused, while $322.8 million will not expire but can only be used to offset 80 percent of federal taxable income. Additionally, portions of state and foreign NOL carryforwards will expire annually, if unused.
At December 31, 2024, we had federal and state R&D credit carryforwards of approximately $48.2 million and $28.6 million, respectively. Portions of federal and $4.6 million of state R&D credits will expire annually, if unused, while $24.0 million of state R&D credits carry forward indefinitely. Additionally, at December 31, 2024, we had California economic development credit carryforwards of $3.0 million. These economic development credits can only be used to offset California taxable income and begin to expire in 2028, if unused.
We continue to provide a valuation allowance against a portion of these tax attributes because we believe that uncertainty exists with respect to their future realization. Utilization of these tax attributes may be subject to annual limitations under Internal Revenue Code Sections 382 and 383 if we experience an ownership change. To the extent available, we intend to use these NOL and credit carryforwards to offset future taxable income and/or income tax liabilities associated with our operations. There can be no assurance that we will generate sufficient taxable income in the carry forward period to utilize the remaining tax attributes before they expire.
Risks Related to Indebtedness
If we incur future indebtedness, our obligation to service the indebtedness could limit the cash flow available for our operations and have other consequences that could adversely affect our business, and we may not have sufficient cash flow from our business to pay our debt obligations.
We may in the future incur indebtedness to meet future financing needs. Interest payments, fees, covenants and restrictions under agreements governing future indebtedness could have significant consequences, including the following: impairing our ability to successfully continue to commercialize our future products; limiting our ability to obtain additional financing on satisfactory terms; increasing our vulnerability to general economic downturns, competition and industry conditions; requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness; and inhibiting our flexibility to plan for, or react to, changes in our business. The occurrence of any one of these events could have an adverse effect on our business, financial condition, operating results or cash flows.
Our ability to make scheduled payments of the principal and interest on, or to refinance the amounts payable under, future indebtedness while still making necessary investments in our business, will depend on our operating and financial performance, including our ability to generate sufficient cash flow from operations, which may be subject to economic, financial, competitive and other factors beyond our control. If we are unable to generate such cash flow, we may be required to sell assets, restructure existing debt or obtain additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or secure desirable terms, which could result in a default on our debt obligations.
The capped call transactions may affect the value of our common stock, and subject us to counterparty risk.
In connection with the issuance of the Convertible Notes, we entered into capped call transactions with certain option counterparties. The capped call transactions initially covered, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Notes. The capped call transactions were expected
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generally to reduce the potential dilution of our common stock upon any conversion of the Convertible Notes or at our election (subject to certain conditions), offset any cash payments we would be required to make in excess of the aggregate principal amount of converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap. We have been advised that the option counterparties or their respective affiliates have established initial hedges of the capped call transaction, and may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the Convertible Notes. In December 2024, we unwound a portion of capped call transactions corresponding to fifty percent of the number of shares of the Company’s common stock initially underlying the Convertible Notes. However, the remaining capped call transaction may still modify their hedge positions and such hedge modification activity could impact the market price of our common stock.
The option counterparties to the capped call transactions are financial institutions, and we are subject to the risk that any or all of them might default under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the capped call transactions with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price of our common stock, subject to the cap and in the volatility of our common stock. We can provide no assurances as to the financial stability or viability of the option counterparties.
Risks Related to Our Regulatory Environment
Healthcare legislative reform measures and changes in U.S. and international trade policies may have a material adverse effect on our business and results of operations.
The current administration has enacted or proposed legislative, administrative and executive actions and regulatory changes that could affect our ability to profitably sell our commercialized products or products for which we obtain marketing approval. For example, changes in government budget and funding levels for the FDA and other government agencies could negatively impact the ability of the FDA to review and approve new products due to staffing and other resource limitations, the inability to hire or retain key personnel, as well as the imposition of statutory, regulatory and policy changes. Such changes could prevent or delay marketing approval of our current or future pipeline products, restrict or regulate post-approval activities and affect our ability to profitably sell any product for which we obtain marketing approval, each of which may negatively impact our business. Further, there have been, and may continue to be, legislative and regulatory proposals at the U.S. federal and state levels and in foreign jurisdictions directed at broadening the availability and containing or lowering the cost of healthcare including plans announced by the current administration to reform the U.S. pharmaceutical pricing system significantly through rulemaking and executive orders. In addition, existing legislation aimed at patient affordability in the United States such as the Patient Protection and Affordable Care Act may be repealed or replaced. The continuing efforts of the government, insurance companies and third-party payors to contain or reduce costs of healthcare may adversely affect our ability to set prices for our products that would allow us to achieve or sustain profitability. In addition, governments may impose price controls on any of our products, which may adversely affect our future profitability. These risks may also impact the development decisions we make with respect to our pipeline products.
Additionally, the U.S. government recently announced changes to its trade policies, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements. The current tariff environment is dynamic and uncertain, as the U.S. government has imposed, modified and paused tariffs multiple times since the beginning of 2025. Changes to tariffs and other trade restrictions can be announced at any time with little or no notice. We cannot predict with certainty the future trade policy of the U.S. or other countries. Although we believe our exposure to the current tariff environment is limited as we primarily source products and product components from the U.S., such tariffs may cause (i) increases in manufacturing costs, (ii) disruptions or delays to our supply chain, (iii) limitations on our ability to sell our products domestically or abroad, and (iv) reductions in sales volumes and gross margins for our products, any of which could negatively affect our business, results of operations and financial condition.
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Our business, products and processes are subject to extensive regulation both in the U.S. and abroad and it can be costly to comply with these regulations. Any failure to adhere to applicable regulations could harm our business, financial condition and operating results.
Our medical devices, drugs, drug/device combination products and other products are subject to extensive government regulation in the U.S. by the FDA, state regulatory authorities and foreign regulatory authorities in the countries in which we conduct business. These regulations relate to, among other things, approval or clearance of our products for sale, R&D, labeling, advertising, promotion, pricing and discounts, recordkeeping, reporting, import and export, post-approval studies and the sale and distribution of our products. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” in our Annual Report on Form 10-K filed with the SEC on February 24, 2025 (Annual Report) for additional information. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, or state or foreign regulatory authorities, which may include, among other things, warning letters, fines, injunctions, recalls, refusals to grant or delays in granting requests, civil fines and penalties, operating restrictions, withdrawal of approvals and even criminal prosecution.
The process of obtaining clearances or approvals to market our products can be expensive and lengthy, and we cannot guarantee that our current products will receive clearance or approval for additional indications or that our future products will receive clearance or approval on a timely basis, or without restrictions, if at all. Additionally, our pipeline products that are determined to be drug-device combination products, such as our iDose TR product, require review and coordination by each of FDA’s drug and device centers prior to approval, which may delay approval of our future products. In some instances, we or our partners have pursued, and may in the future pursue, a regulatory clearance or approval that proves unsuccessful, such as the FDA’s failure to approve the PreserFlo Microshunt in the U.S. and our determination to conduct a second pivotal confirmatory study of our Epioxa pharmaceutical therapy based on recommendations from the FDA in pre-NDA submission meetings. When this occurs, the time and financial resources required to obtain FDA or other regulatory approval may substantially increase or new competitive products could reach the market faster than our product candidate, which could materially adversely impact our competitive position and prospects.
Before we can obtain regulatory approval for any product candidate, we may have to undertake complex, time-consuming and expensive clinical testing in humans to demonstrate safety and efficacy, the outcomes of which are inherently uncertain and may never result in approved products or commercial sales. We have experienced in the past, and could experience in the future, delays in the commencement or completion of clinical trials or testing that could significantly affect our product development costs. We do not know whether planned clinical trials will begin on time, need to be redesigned, enroll an adequate number of patients in a timely manner or be completed on schedule, if at all, or be deemed insufficient by the FDA, which may require additional lengthy, time-consuming and expensive trials, which would further delay approval. We may suffer significant setbacks in clinical trials, even after earlier trials showed promising results, and failure can occur at any time during the clinical trial process. We, the clinical trial investigators, the independent review board overseeing the trial, the FDA, or another regulatory authority may suspend, delay or terminate clinical trials at any time due to a number of factors, including failure to conduct the trial in accordance with applicable regulatory requirements or trial protocols, failure to demonstrate a benefit from using the product, lack of sufficient funding, medical device product malfunctions, adverse events, or to avoid exposing trial participants to unacceptable health risks. Any delay or failure in clinical trials would delay or prevent our ability to obtain necessary regulatory approvals, which would have a material adverse effect on our business, financial condition and prospects.
If our facilities, or those of our third-party manufacturers or suppliers, fail to meet the FDA’s Quality System Regulation or cGMP regulations, as applicable, or other standards required by the FDA, we could experience a delay in obtaining the necessary regulatory clearances or approvals to commercialize our pipeline products, which could have a material adverse effect on our business and financial condition and results.
We have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations and we may also be required to seek additional regulatory approvals to modify our approved products or their manufacturing processes or indications, which may entail significant time and expense. We and our suppliers are subject to extensive post-marketing regulatory requirements and failure to comply with applicable requirements in a timely manner could subject us to enforcement actions, including recall or product approval withdrawals. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA. Other post-market requirements on our products include reporting of adverse events and device malfunctions,
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product tracing, reporting of corrections and removals (recalls), labeling requirements, and promotional restrictions. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement – Post-Market Regulation” in the Annual Report for additional information. Additionally, any recall or product withdrawal, whether required by the FDA, another regulatory authority or initiated by us, could harm our reputation with customers, cause us to incur significant expense and negatively affect our sales.
In addition, our promotional materials, sales techniques, pricing programs and training methods must comply with FDA and other applicable laws and regulations, including increased scrutiny on direct to consumer advertising of pharmaceutical products. The FDA or other regulatory authorities may limit the indications for use of our products, thereby restricting our ability to promote the drug or device. Physicians may use our products, particularly newly-approved products, off-label or in combination with other products that are not indicated or appropriate, as the FDA does not restrict or regulate a physician's choice of treatment within the practice of medicine. However, if the FDA determines that our promotional materials, sales techniques, pricing programs or training constitutes promotion of an off-label use or encourages over-utilization of our products or use of our products in combinations that are not indicated or appropriate, it could request that we modify our materials, techniques, programs or training or subject us to enforcement actions.
We are subject to healthcare fraud and abuse, anti-kickback, false claims and transparency laws and regulations, among others, which are enforced by federal, state and international governments with respect to our marketing, training, customer arrangements, discount, rebate and pricing programs, product bundling, financial arrangements with physicians, patient assistance programs, reimbursement support services, and other practices. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in the Annual Report for additional information about the laws and regulations which apply to us. The U.S. Department of Justice has increased its scrutiny of interactions between manufacturers and healthcare providers, as well as various patient, product and reimbursement support programs and speaker bureaus, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Although we try to structure our arrangements within available safe harbors whenever possible, we may nevertheless become subject to government scrutiny or investigation. Violations may result in civil monetary penalties, criminal penalties, and exclusion from participation in government healthcare programs, including Medicare and Medicaid, all of which would have an adverse effect on our business.
We are also subject to compliance with various anti-bribery laws and regulations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar anti-bribery laws in other jurisdictions, which generally prohibit companies and their agents from making bribes or other improper payments to officials for the purpose of obtaining or retaining business. We are also subject to limitations on trade with persons in sanctioned countries. Our sales in international markets increase the inherent risks of encountering such issues. While our employees, distributors and agents are required to comply with these laws and regulations, no assurance can be given that our training efforts and internal policies and procedures will prevent violations of these laws. Any actual or alleged violations of these laws and regulations could subject us to government investigations, criminal sanctions, severe fines and penalties that could have a material adverse impact on our reputation, financial condition, results of operations and cash flows.
The scope and enforcement of each of the laws applicable to our business and products is uncertain and subject to rapid change in the current environment of healthcare reform. Responding to a government investigation is time and resource intensive, and may cause harm to our business and reputation even if we are able to successfully defend against it. Additionally, resolution of any such investigation may require agreement to onerous corporate integrity agreements or other compliance or reporting requirements, which may negatively affect our business.
Legislative or regulatory reform of the healthcare system could hinder or prevent our products’ commercial success.
In the U.S. and in certain states and foreign jurisdictions, there have been a number of legislative and regulatory proposals and adoptions to change the healthcare systems in ways that could impact our ability to sell our products profitably, if at all. In addition, new regulations and interpretations of existing healthcare statutes and regulations are frequently adopted and we may not be able to comply with the changed laws, they could increase the cost of manufacturing, marketing or selling our product, could make approvals of pipeline products more difficult or prevent us from selling at all. We expect there will continue to be a number of legislative and regulatory changes to the U.S. health care system that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof and may impose additional costs or
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lengthen review times of planned or future products. It is also difficult to predict whether and how the policies and priorities of a new administration could materially impact the regulation governing our products. A new U.S. administration may propose policy changes that create additional uncertainty for our business, such as changes to the level of scrutiny to enforce the 340B drug pricing program (340B program) non-compliance, new price restrictions on products we sell to Medicaid, Medicare or other government purchasers, or other regulatory changes impacting reimbursement or competitive dynamics in the markets in which we operate. The extent to which such policy changes impact the healthcare regulatory environment remains uncertain and could materially impact our business and operations.
Additionally, in its June 2024 decision in Loper Bright Enterprises v. Raimondo (“Loper decision”), the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper decision could result in additional legal challenges to regulations and guidance issued by federal agencies applicable to our operations, including those issued by the FDA and CMS. Further, the Loper decision may result in increased regulatory uncertainty, inconsistent judicial interpretations and other impacts to the agency rulemaking process. We cannot predict which additional measures may be adopted or the impact of current and additional measures on the marketing, pricing and demand for our products, which could have a material adverse effect on our business, financial condition and results of operations.
We are also subject to the EU’s Medical Devices Regulation (MDR) and the United Kingdom’s Medical Device Regulation (UKMDR), each of which could result in substantial additional costs of compliance. In addition, our products could be reclassified in international markets, which would impose an entirely new regulatory framework on us and our contract manufacturers and compliance may prove costly and difficult or may not be achievable at all. Our failure, or the failure of our contract manufacturers, to obtain CE marks for all of our products under MDR or the UKMDR on a timely basis, or to comply with MDR, UKMDR or applicable European Medicines Agency regulations regarding drug products, could restrict our ability to sell our products in the EU or other parts of the world, which would have a material adverse effect on our business and financial results.
From time to time, we increase the prices of our products, as we have previously done with our Photrexa therapies, or set pricing for new products. Drug pricing by pharmaceutical manufacturers is subject to federal and state reporting requirements and is currently, and is expected to continue to be, under close scrutiny, including with respect to manufacturers that increase the price of products after acquiring those products from other companies. In some cases, such scrutiny has resulted in congressional inquiries and federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturers’ patient support programs, and reform government program reimbursement methodologies for products. Although our pricing is in part based upon third party studies of the projected economic value of our products to the healthcare system, it may still become subject to such scrutiny.
As a condition of having our iDose TR product covered under certain federal healthcare programs such as Medicare and Medicaid, we are required to participate in the MDRP with respect to all of our pharmaceutical products, which requires us to calculate and report certain pricing metrics to the government, comply with certain pricing limitations and pay a rebate to each state Medicaid program for our covered products based on utilization of our products by Medicaid beneficiaries. Any company that participates in the MDRP also must participate in the 340B program. The 340B program, which is administered by the Health Resources and Services Administration, requires participating companies to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs. The 340B program ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the MDRP.
Additionally, the U.S. Inflation Reduction Act of 2022, which is designed to, among other things, have a direct impact on drug prices and reduce drug spending by the federal government, requires drug manufacturers to pay rebates to Medicare if they increase prices faster than inflation for certain drugs used by Medicare beneficiaries. The expansion of inflation-based rebates may complicate our pricing strategies. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” in the Annual Report for more information on the MDRP. To the extent applicable, these and other similar legislation or regulations will reduce the prices we can charge, and impact the rebate amount we must pay, on sales of our products subject to that act, particularly on sales to our customers if they qualify as covered entities eligible to receive the discounted 340B ceiling price. Compliance with these laws and programs may reduce our net sales, and could require significant resources, which would reduce our profitability. Further, we cannot predict how
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our participation in, or how future CMS guidance or rules governing, MDRP will affect our profitability (including the potential for increases in our overall Medicaid rebate liability and the obligation to charge reduced prices to covered entities). Any changes to the limitations, calculations, or scope of these programs could negatively impact the results of our operations. Additionally, pricing and rebate calculations are complex and often subject to interpretation by the manufacturer, governmental agencies and courts. A manufacturer that becomes aware that its Medicaid reporting for a prior was incorrect or has changed as a result of a recalculation of pricing data is obligated to resubmit corrected data up to three years after the data was originally due. Restatements and recalculations may result in an overage or shortfall in our rebate liability for prior periods, and may affect our 340B ceiling price and therefore liability under the 340B program.
If we cannot sell our products profitably, whether due to our own inability to comply with, or the inability of other economic operators in our supply chain to qualify under, any legislative reform or pricing programs, our business would be harmed. In addition, any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products.
Inadequate or inconsistent reimbursement for our products may adversely impact our business.
Our ability to successfully commercialize and achieve market acceptance of our products and compete against other therapies designed to address the same disease states depends in significant part on adequate financial coverage and reimbursement from third party payors, including governmental payors (such as the Medicare and Medicaid programs in the U.S.), managed care organizations and private health insurers. See Item 1, Business, “Government Regulation – U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in the Annual Report for additional information. Payors continually review the clinical evidence for new therapies and can change their coverage policies without notice or deny payment if the product was not used in accordance with the payor’s coverage policy. Therefore, coverage for our products can differ significantly from payor to payor. As a result, the coverage determination process is often time-consuming and costly and requires us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage will be obtained or will be maintained once it is obtained.
In addition to uncertainties surrounding coverage policies, there are uncertainties regarding appropriate reimbursement for the procedures associated with certain of our products like iAccess, a precision blade, iPRIME, a viscoelastic delivery system, and iStent infinite and iDose TR, as well as sporadic volatility in reimbursement levels of existing products, including our Photrexa therapy and the procedures associated with our existing products, such as our iStent family of products. For example, in 2022 the CMS’ payment rates significantly lowered the Medicare physician fee payment rates and slightly lowered the Medicare facility fee payment rates related to the implantation of trabecular bypass stents, such as our iStent family of products, in conjunction with cataract surgery, furnished in the ambulatory surgery center setting, which we believe disrupted traditional customer ordering patterns and resulted in certain of our customers’ utilization of competitive products, causing reduced glaucoma sales volumes in the U.S. in 2022 and 2023. Additionally, the facility fee payment rates for the standalone procedure that hospitals and ambulatory surgery centers will use with Glaukos’ iStent infinite product were lower than anticipated for 2022 and were not significantly modified by CMS for 2023 facility fee payment rates, which had an adverse impact on procedural iStent family product volumes and our revenues and net income.
The demand for, and the profitability of, our products could be materially harmed if the Medicaid program, Medicare program, other healthcare programs in the U.S. or elsewhere, or third party commercial payors in the U.S. or elsewhere, deny reimbursement for our products, limit the indications for which our products will be reimbursed, are unclear on appropriate reimbursement codes or provide reimbursement only on unfavorable terms. For example, in June 2023 five MACs, which set physician fee payment rates for products covered by temporary CPT Category III codes, published proposed LCDs that deemed certain ophthalmic procedures, including the procedures using our iAccess product, investigational and therefore not covered by Medicare and not reimbursed, which LCD was ultimately adopted and then reversed by these MACs. This non-coverage determination was not included in the proposed LCDs subsequently finalized by the five MACs in November 2024. Additionally, the physician fee payment rates for the procedures using our iDose TR product will be determined by the MACs, several of which have not yet published this rate. Also, when procedures associated with our products transition from temporary CPT Category III codes to permanent CPT Category I codes, the physician and facility reimbursement levels associated with the procedures using these products could be decreased, such as the decreased payment rates for procedures using our iStent-related products,
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in conjunction with cataract surgery, established by CMS for 2022 and 2023, as discussed above. Even when a permanent billing code has been assigned to a product, there is no guarantee that coverage will be provided. If we are unable to maintain our existing codes or obtain new permanent codes for procedures using our products, use existing codes for new products or obtain new reimbursement codes for our products in development, we may be subject to significant pricing pressure, that could harm our results of operations, financial condition and prospects. In the foreign markets in which we operate, different pricing and reimbursement systems, could result in lower reimbursement, harming our ability to operate our business.
We cannot predict to what extent current global economic conditions may disrupt healthcare systems and access to our products or result in a widespread loss of individual health insurance coverage due to unemployment, a shift from commercial payor coverage to government payor coverage, or an increase in demand for patient assistance or free drug programs, any of which could adversely affect our net revenue. In addition, payers consistently engage in cost containment efforts, which could result in decreased reimbursement levels for prescription drugs and the imposition of prior authorization for the use of our products. We cannot predict actions that third party payors may take, including limiting access to or the level of reimbursement for our products or refusal to provide any approvals or coverage.
Risks Related to Our Intellectual Property
If we are unable to adequately protect our intellectual property, our competitors and other third parties could develop and commercialize products similar or identical to ours, which would substantially impair our ability to compete.
Our success and ability to compete depends significantly upon our ability to obtain, maintain and protect our proprietary rights and licensed intellectual property rights to the technologies and inventions used in or embodied by our products. We rely on a combination of patents and trademark rights, and to a lesser extent on trade secrets and copyrights, together with licenses and nondisclosure agreements to protect our technologies. These legal means, however, afford only limited protection and may not adequately protect our business. We also have not pursued or maintained, and may not pursue or maintain in the future, patent protection for our products in every country or territory in which we sell or will in the future sell our products. In addition, we cannot be sure that any of our pending patent applications or pending trademark applications will issue or issue in a form that will be advantageous to us.
Despite our efforts, we cannot guarantee that we will be able to adequately protect our proprietary rights, which could substantially impair our ability to compete. Our patents may be challenged and held invalid or we may be unable to extend the protection on products with expiring patents. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Competitors could purchase our products and attempt to replicate some or all of the competitive advantages we derive from our development efforts, infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. Further, although it is our policy to require each of our employees, consultants and any other parties who may be involved in the development of intellectual property on our behalf to execute proprietary information and inventions agreements, we may be unsuccessful in doing so with each party who in fact develops intellectual property that we regard as our own. The relevant assignment provisions may not be self-executing or may be breached, resulting in ownership disputes and/or litigation.
We have many foreign patents and patent applications, and expect to pursue patent protection in the most significant markets in which we do business. The laws of other countries in which our products are or may be sold may not protect our product offerings and intellectual property to the same extent as U.S. laws, if at all. Many companies have encountered significant difficulties in obtaining, protecting and defending such rights in international markets. In addition, many countries limit the enforceability of patents against other parties, including government agencies or government contractors. In these countries, the patent owner may have limited remedies, and certain countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to other parties. We also may be unable to protect our rights in trade secrets and unpatented proprietary technology in these countries. If we encounter such difficulties or are otherwise precluded from effectively protecting our intellectual property rights in these countries, our business, financial condition and results of operations could be substantially harmed.
We may not be able to accurately estimate or control our future operating expenses in relation to obtaining, enforcing and/or defending intellectual property, which could lead to cash shortfalls. Our operating expenses may fluctuate significantly in the future as a result of the costs of preparing, filing, prosecuting, defending and enforcing
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patent claims and other patent related costs, including litigation costs and the results of such litigation or costs associated with administrative proceedings and the results of such proceedings.
We have been and may in the future become involved in patent and other intellectual property litigation or administrative proceedings relating to our intellectual property rights, which could be costly, time consuming and unsuccessful and could interfere with our ability to successfully commercialize our products.
Intellectual property rights are essential to our business. We have asserted and may in the future need to assert claims of infringement against third parties to protect our rights, or to invalidate or challenge the intellectual property rights of a third party, including those rights owned by our competitors. Additionally, third parties could assert infringement or misappropriation claims against us with respect to our current or future commercial products and seek to invalidate one or more of our patents or trademarks. Such claims could arise in situations where certain employees, consultants or contractors were previously, or are currently, employed by other medical device, biotechnology or pharmaceutical companies, including our competitors or potential competitors; we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information, of these other employers.
There is no guarantee that we would be successful enforcing or defending our intellectual property rights in court. A court could hold that some or all of our asserted intellectual property rights are not infringed, or could invalidate our rights, hold our rights unenforceable, or substantially narrow the scope of protection. Further, we could be prohibited from manufacturing or selling our products or a court could order us to pay substantial compensatory damages as well as other penalties and fines. Any such adverse result would undermine our competitive position. Regardless of the final outcome, any litigation to enforce our intellectual property rights in patents, copyrights, trade secrets or trademarks is highly unpredictable and could result in substantial costs and diversion of resources, which could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Our Common Stock
Anti-takeover provisions in our Charter and Bylaws and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.
Provisions in our Restated Certificate of Incorporation (Charter) and amended and restated bylaws (Bylaws) may have the effect of delaying or preventing a change of control or changes in our management. Our Charter and Bylaws include provisions that:
| ● | authorize our board of directors to issue, without further action by the stockholders, up to 5,000,000 shares of undesignated preferred stock; |
| ● | require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent; |
| ● | specify that special meetings of our stockholders may be called only by our board of directors, the chairman of the board of directors, the chief executive officer or the president; |
| ● | establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors; |
| ● | divide our board of directors into three classes, with each class serving staggered three year terms; |
| ● | provide that our directors may be removed only for cause by a supermajority vote of our stockholders; |
| ● | provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; |
| ● | specify that no stockholder is permitted to cumulate votes at any election of directors; and |
| ● | require a supermajority vote of the stockholders and a majority vote of the board to amend certain of the above-mentioned provisions and our Bylaws. |
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.
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The exclusive forum provisions in our organizational documents could limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or other employees.
Our Charter and Bylaws provide that, unless the Company consents in writing, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company or its stockholders, (iii) any action or proceeding asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our Charter or Bylaws, or (iv) any action or proceeding asserting a claim governed by the internal affairs doctrine (the Delaware Exclusive Forum Provision). The Delaware Exclusive Forum Provision is intended to apply to claims arising under Delaware state law and would not apply to claims brought pursuant to the Exchange Act or the Securities Act, or any other claim for which the federal courts have exclusive jurisdiction.
Further, our Bylaws provide that the federal district courts of the U.S. will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action under the Securities Act (the Federal Forum Provision). Our decision to adopt the Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law and means that suits brought by stockholders to enforce any duty or liability created under the Securities Act must be brought in federal court and cannot be brought in state court.
The exclusive forum provisions in our Charter and Bylaws will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder and, accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal courts. Our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations. The exclusive forum provisions in our Charter and Bylaws may limit a stockholder's ability to bring a claim in a judicial forum of its choosing for disputes with the Company or its directors, officers or other employees, which may discourage such lawsuits. In addition, stockholders who do bring a claim in the Court of Chancery of the State of Delaware pursuant to the Delaware Exclusive Forum Provision could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The court in the designated forum under our exclusive forum provisions may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to the Company than to our stockholders. Further, the enforceability of similar exclusive forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that a court could find any of our exclusive forum provisions to be inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings. If a court were to find all or any part of our exclusive forum provisions to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions.
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Item 5. Other Information
Insider Trading Arrangements
During the three months ended September 30, 2025, none of the Company’s directors or executive officers
Item 6. Exhibits
| | | | Incorporated by Reference | ||||||
Exhibit No. | | Description | | Form | | File No. | | Exhibit | | Filing Date |
3.1 | | | 8-K | | 1-37463 | | 3.1 | | 06/30/2015 | |
3.2 | | | 8-K | | 1-37463 | | 3.1 | | 12/21/2022 | |
31.1* | | | | | | | | | | |
31.2* | | | | | | | | | | |
32.1** | | | | | | | | | | |
32.2** | | | | | | | | | | |
101.INS* | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | | | | | | | | |
101.SCH* | | XBRL Taxonomy Schema Linkbase Document | | | | | | | | |
101.CAL* | | XBRL Taxonomy Calculation Linkbase Document | | | | | | | | |
101.DEF* | | XBRL Taxonomy Definition Linkbase Document | | | | | | | | |
101.LAB* | | XBRL Taxonomy Labels Linkbase Document | | | | | | | | |
101.PRE* | | XBRL Taxonomy Presentation Linkbase Document | | | | | | | | |
104 | | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | | | | | | | | |
+ Indicates a management contract or compensatory plan or arrangement
* Filed Herewith.
** Furnished Herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Aliso Viejo, State of California, on October 30, 2025.
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) | ||
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Exhibit 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
I, Thomas W. Burns, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Glaukos Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 30, 2025
/s/ THOMAS W. BURNS |
Name: Thomas W. Burns |
Chairman and Chief Executive Officer |
Exhibit 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
I, Alex R. Thurman, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Glaukos Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 30, 2025
/s/ ALEX R. THURMAN |
Name: Alex R. Thurman |
Senior Vice President & Chief Financial Officer |
Exhibit 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
I, Thomas W. Burns, Chairman and Chief Executive Officer of Glaukos Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | the Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 30, 2025
/s/ THOMAS W. BURNS |
Name: Thomas W. Burns |
Chairman and Chief Executive Officer |
This certification accompanies and is being “furnished” with this Report, shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.
Exhibit 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
I, Alex R. Thurman, Senior Vice President & Chief Financial Officer of Glaukos Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | the Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 30, 2025
/s/ ALEX R. THURMAN |
Name: Alex R. Thurman |
Senior Vice President & Chief Financial Officer |
This certification accompanies and is being “furnished” with this Report, shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.