Glaukos Corporation Announces Second Quarter 2020 Financial Results

SAN CLEMENTE, Calif.–(BUSINESS WIRE)–Glaukos Corporation (NYSE: GKOS), an ophthalmic medical technology and pharmaceutical company focused on novel therapies for the treatment of glaucoma, corneal disorders and retinal diseases, today announced financial results for the second quarter ended June 30, 2020. Key highlights include:

  • Q2 2020 net sales of $31.6 million, compared to $58.6 million in Q2 2019.
  • Glaucoma Q2 2020 net sales of $24.9 million, compared to $58.6 million in Q2 2019.
  • Corneal Health Q2 2020 net sales of $6.6 million.

“I am extremely proud of the actions, focus and accomplishments of our employees, who have remained dedicated to advancing our key strategic objectives while navigating the unique challenges associated with the COVID-19 pandemic,” said Thomas Burns, Glaukos president and chief executive officer. “We are encouraged with the initial return of elective procedures around the world and remain well-positioned to provide our essential ophthalmic therapies to our customers and their patients during the ongoing recovery period. I am confident the longer-term fundamental prospects of our business remain strong as we advance our mission to transform the treatment of chronic eye diseases with novel therapies that provide sustainable solutions to important clinical needs.”

Second Quarter 2020 Financial Results

Net sales decreased 46% in the second quarter of 2020 to $31.6 million, compared to $58.6 million in the same period in 2019. The decrease was driven primarily by disruptions associated with COVID-19, partially offset by contribution from the Avedro acquisition.

Gross margin for the second quarter of 2020 was approximately 31%, compared to approximately 87% in the same period in 2019. Non-GAAP gross margin for the second quarter of 2020 was approximately 78%, compared to approximately 87% in the same period in 2019.

Selling, general and administrative (SG&A) expenses for the second quarter of 2020 rose 1% to $38.1 million, compared to $37.7 million in the same period in 2019. Non-GAAP SG&A expenses for the second quarter of 2020 rose 2% to $33.6 million, compared to $33.0 million in the same period in 2019.

Research and development (R&D) expenses in the second quarter of 2020 rose 11% to $19.0 million, compared to $17.1 million in the same period in 2019. Non-GAAP R&D expenses for the second quarter of 2020 rose 9% to $18.6 million, compared to $17.1 million in the same period in 2019.

Loss from operations in the second quarter of 2020 was $47.2 million, compared to an operating loss of $6.2 million in the second quarter of 2019. Non-GAAP loss from operations in the second quarter of 2020 was $27.6 million, compared to non-GAAP operating income of $0.7 million in the second quarter of 2019.

Net loss in the second quarter of 2020 was $39.9 million, or ($0.90) per diluted share, compared to a net loss of $6.3 million, or ($0.17) per diluted share, in the second quarter of 2019. Non-GAAP net loss in the second quarter of 2020 was $27.0 million, or ($0.61) per diluted share, compared to non-GAAP net income of $0.6 million, or $0.01 per diluted share, in the second quarter of 2019.

The company ended the second quarter of 2020 with $404.3 million in cash and cash equivalents, short-term investments and restricted cash, which includes total net proceeds of approximately $242.2 million associated with the company’s convertible senior debt offering and capped call transactions completed during the second quarter.

2020 Revenue Guidance

As previously announced in a press release issued on March 24, 2020, due to the rapidly evolving environment and continued uncertainties from the impact of COVID-19, Glaukos has withdrawn its previously announced annual guidance for 2020, which was issued on February 27, 2020. At this date, Glaukos cannot predict the specific extent, or duration, of the impact of the COVID-19 outbreak on its financial and operating results.

Webcast & Conference Call

The company will host a conference call and simultaneous webcast today at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss the results and provide additional information about the company’s financial outlook. A link to the webcast is available on the company’s website at http://investors.glaukos.com. To participate in the conference call, please dial 866-324-3683 (U.S.) or 509-844-0959 (international) and enter Conference ID 4185965. A replay of the webcast will be archived on the company’s website following completion of the call.

About Glaukos

Glaukos (www.glaukos.com) is an ophthalmic medical technology and pharmaceutical company focused on novel therapies for the treatment of glaucoma, corneal disorders and retinal diseases. The company pioneered Micro-Invasive Glaucoma Surgery, or MIGS, to revolutionize the traditional glaucoma treatment and management paradigm. Glaukos launched the iStent®, its first MIGS device, in the United States in July 2012 and launched its next-generation iStent inject® device in the United States in September 2018. In corneal health, Glaukos’ proprietary suite of single-use, bio-activated pharmaceuticals are designed to strengthen, stabilize and reshape the cornea through a process called corneal collagen cross-linking to treat corneal ectatic disorders and correct refractive conditions. Glaukos is leveraging its platform technology to build a comprehensive and proprietary portfolio of micro-scale surgical and pharmaceutical therapies in glaucoma, corneal health and retinal disease.

Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of federal securities laws. All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements are based on management’s current expectations, assumptions, estimates and beliefs. Although we believe that we have a reasonable basis for forward-looking statements contained herein, we caution you that they are based on current expectations about future events affecting us and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that may cause our actual results to differ materially from those expressed or implied by forward-looking statements in this press release. These potential risks and uncertainties that could cause actual results to differ materially from those described in forward-looking statements include, without limitation, uncertainties regarding the duration and severity of the COVID-19 pandemic and its impact on our business or the economy generally; uncertainties about our dependence on the success and market acceptance of the iStent and the iStent inject; our ability to reach sustained profitability; our ability to leverage our sales and marketing infrastructure to increase market penetration and acceptance of our products both in the United States and internationally; our ability to bring our pipeline products to market; our dependence on a limited number of third-party suppliers, some of which are single-source, for components of our products; the occurrence of a crippling accident, natural disaster, pandemic (including an outbreak of COVID-19) or other disruption at our primary facility, which may materially affect our manufacturing capacity and operations; maintaining adequate coverage or reimbursement by third-party payors for procedures using the iStent, the iStent inject, our corneal cross-linking products or other products in development; our ability to properly train, and gain acceptance and trust from, ophthalmic surgeons in the use of our products; our ability to successfully develop and commercialize additional products; our ability to compete effectively in the highly competitive and rapidly changing medical device industry and against current and future competitors (including MIGS competitors) that are large public companies or divisions of publicly traded companies that have competitive advantages; the timing, effect, expense and uncertainty of navigating different regulatory approval processes as we develop additional products and penetrate foreign markets; the impact of any product liability claims against us and any related litigation; the effect of the extensive and increasing federal and state regulation in the healthcare industry on us and our suppliers; the lengthy and expensive clinical trial process and the uncertainty of timing and outcomes from any particular clinical trial; the risk of recalls or serious safety issues with our products and the uncertainty of patient outcomes; our ability to protect, and the expense and time-consuming nature of protecting, our intellectual property against third parties and competitors that could develop and commercialize similar or identical products; the impact of any claims against us of infringement or misappropriation of third party intellectual property rights and any related litigation; the market’s perception of our limited operating history as a public company; our ability to service our indebtedness; and potential disruptions from the acquisition of Avedro that may divert management attention from other important business objectives. These and other known risks, uncertainties and factors are described in detail under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for 2019, which was filed with the Securities and Exchange Commission (SEC) on March 2, 2020, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which was filed with the SEC on May 7, 2020, and will also be included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, which we expect to file on or before August 10, 2020. Our filings with the Securities and Exchange Commission are available in the Investor Section of our website at www.glaukos.com or at www.sec.gov. In addition, information about the risks and benefits of our products is available on our website at www.glaukos.com. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. You are cautioned not to place undue reliance on the forward-looking statements in this press release, which speak only as of the date hereof. We do not undertake any obligation to update, amend or clarify these forward-looking statements whether as a result of new information, future events or otherwise, except as may be required under applicable securities law.

In addition, with respect to COVID-19, we are currently unable to reasonably estimate the specific extent, or duration, of the impact of the COVID-19 outbreak on our financial and operating results. We are also unable to predict how the outbreak will continue to affect restrictions and advisories on elective procedures and therapies, the availability of physicians and/or their treatment prioritizations or the impact of the outbreak on the overall healthcare infrastructure. In addition to an impact on procedure volumes, we are experiencing and may experience other disruptions as a result of the COVID-19 outbreak. For example, it is possible our suppliers will incur challenges supplying the materials needed for the manufacture of our product. In addition, our clinical trials may be adversely affected. Other disruptions or potential disruptions include restrictions on the ability of Company personnel to travel and access customers for training and case support; delays in approvals by regulatory bodies; delays in product development efforts; and additional government requirements to “shelter at home” or other incremental mitigation efforts that may further impact our capacity to manufacture, sell and support the use of our products. The total impact of these disruptions could have a material impact on the Company’s financial condition, cash flows and results of operations.

Statement Regarding Use of Non-GAAP Financial Measures

To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), the Company uses certain non-GAAP historical financial measures. Management makes adjustments to the GAAP measures for items (both charges and gains) that (a) do not reflect the core operational activities of the Company, (b) are commonly adjusted within the Company’s industry to enhance comparability of the Company’s financial results with those of its peer group, or (c) are inconsistent in amount or frequency between periods (albeit such items are monitored and controlled with equal diligence relative to core operations). The Company uses the term “Non-GAAP” to exclude intellectual property litigation income and expenses, amortization of intangible assets, fair value adjustments to contingent consideration liabilities arising from acquisitions, costs and expenses associated with acquisitions and integration, costs associated with enterprise system upgrades, certain inventory write-off charges, in-process R&D charges, amortization of debt discount and associated issuance costs related to the company’s convertible senior debt offering, significant discrete income tax adjustments related to transactions as well as changes in estimated acquisition-date tax effects associated with business combinations, and the impact from implementation of tax law changes and settlements. See “GAAP to Non-GAAP Reconciliations” for a reconciliation of each non-GAAP measure presented to the comparable GAAP financial measure.

GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
 
 

Three Months Ended

 

Six Months Ended

June 30,

 

June, 30

 

 

 

 

 

 

 

2020

 

2019

 

2020

 

2019

Net sales

$

31,558

 

 

$

58,600

 

 

$

86,894

 

 

$

112,626

 

Cost of sales

 

21,668

 

 

 

7,870

 

 

 

54,197

 

 

 

14,981

 

Gross profit

 

9,890

 

 

 

50,730

 

 

 

32,697

 

 

 

97,645

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

38,116

 

 

 

37,656

 

 

 

88,662

 

 

 

72,581

 

Research and development

 

18,971

 

 

 

17,069

 

 

 

43,844

 

 

 

30,999

 

In-process research and development

 

 

 

 

2,245

 

 

 

 

 

 

2,245

 

Total operating expenses

 

57,087

 

 

 

56,970

 

 

 

132,506

 

 

 

105,825

 

Loss from operations

 

(47,197

)

 

 

(6,240

)

 

 

(99,809

)

 

 

(8,180

)

Non-operating income (expense):

 

 

 

 

 

 

 

Interest income

 

590

 

 

 

800

 

 

 

1,286

 

 

 

1,588

 

Interest expense

 

(3,090

)

 

 

(1,013

)

 

 

(3,971

)

 

 

(1,013

)

Other income, net

 

2,419

 

 

 

216

 

 

 

708

 

 

 

148

 

Total non-operating (expense) income

 

(81

)

 

 

3

 

 

 

(1,977

)

 

 

723

 

Loss before taxes

 

(47,278

)

 

 

(6,237

)

 

 

(101,786

)

 

 

(7,457

)

Income tax (benefit) provision

 

(7,384

)

 

 

72

 

 

 

(7,834

)

 

 

194

 

Net loss

$

(39,894

)

 

$

(6,309

)

 

$

(93,952

)

 

$

(7,651

)

 

 

 

 

 

 

 

Basic and diluted net loss per share

$

(0.90

)

 

$

(0.17

)

 

$

(2.13

)

 

$

(0.21

)

 

 

 

 

 

 

 

Weighted average shares used to compute basic and diluted net loss per share

 

44,335

 

 

 

36,470

 

 

 

44,078

 

 

 

36,338

 

GLAUKOS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
 
June 30, December 31,

2020

2019

(unaudited)
Assets
Current assets:
Cash and cash equivalents

$

266,974

 

 

$

62,430

 

Short-term investments

 

127,966

 

 

 

111,553

 

Accounts receivable, net

 

26,730

 

 

 

38,417

 

Inventory, net

 

21,088

 

 

 

42,578

 

Prepaid expenses and other current assets

 

10,464

 

 

 

7,900

 

Total current assets

 

453,222

 

 

 

262,878

 

Restricted cash

 

9,326

 

 

 

9,326

 

Property and equipment, net

 

23,210

 

 

 

22,056

 

Operating lease right-of-use asset

 

14,328

 

 

 

15,704

 

Finance lease right-of-use asset

 

52,833

 

 

 

54,048

 

Intangible assets, net

 

370,149

 

 

 

382,605

 

Goodwill

 

66,134

 

 

 

66,134

 

Deposits and other assets

 

6,531

 

 

 

5,649

 

Total assets

$

995,733

 

 

$

818,400

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,233

 

 

$

5,781

 

Accrued liabilities

 

45,598

 

 

 

51,919

 

Total current liabilities

 

54,831

 

 

 

57,700

 

Long-term debt

 

183,999

 

 

 

 

Operating lease liability

 

13,305

 

 

 

14,195

 

Finance lease liability

 

60,435

 

 

 

58,435

 

Deferred tax liability, net

 

15,250

 

 

 

9,632

 

Other liabilities

 

5,489

 

 

 

5,166

 

Total liabilities

 

333,309

 

 

 

145,128

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

Common stock, $0.001 par value; 150,000 shares authorized; 44,578 and 43,530 shares issued and 44,550 and 43,502 shares outstanding as of June 30, 2020 and December 31, 2019, respectively

 

45

 

 

 

44

 

Additional paid-in capital

 

943,706

 

 

 

861,740

 

Accumulated other comprehensive income

 

2,467

 

 

 

1,330

 

Accumulated deficit

 

(283,662

)

 

 

(189,710

)

Less treasury stock (28 shares as of June 30, 2020 and December 31, 2019)

 

(132

)

 

 

(132

)

Total stockholders’ equity

 

662,424

 

 

 

673,272

 

Total liabilities and stockholders’ equity

$

995,733

 

 

$

818,400

 

GLAUKOS CORPORATION
GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
(Unaudited)
 
 
Q2 2020 Q2 2019
 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Cost of sales

$

21,668

 

 

$

(14,785

)

(a)(b)(e)

$

6,883

 

 

$

7,870

 

 

 

$

7,870

 

 

 

 

 

 

 

 

 

Gross profit

$

9,890

 

 

$

14,785

 

$

24,675

 

 

$

50,730

 

 

 

$

50,730

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

$

38,116

 

 

$

(4,473

)

(c)(d)(e)

$

33,643

 

 

$

37,656

 

$

(4,653

)

(h)(i)

$

33,003

 

 

 

 

 

 

 

 

 

Research and development

$

18,971

 

 

$

(338

)

(e)

$

18,633

 

 

$

17,069

 

 

 

$

17,069

 

 

 

 

 

 

 

 

 

In-process research and development

 

 

 

 

 

 

 

 

 

2,245

 

 

(2,245

)

(j)

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

57,087

 

 

$

(4,811

)

$

52,276

 

 

$

56,970

 

$

(6,898

)

$

50,072

 

 

 

 

 

 

 

 

 

(Loss) income from operations

$

(47,197

)

 

$

19,596

 

$

(27,601

)

 

$

(6,240

)

$

6,898

 

$

658

 

 

 

 

 

 

 

 

 

Non-operating income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

(3,090

)

 

 

557

 

(f)

 

(2,533

)

 

 

(1,013

)

 

 

 

(1,013

)

 

 

 

 

 

 

 

 

Total non-operating (expense) income

 

(81

)

 

 

557

 

 

476

 

 

 

3

 

 

 

 

3

 

 

 

 

 

 

 

 

 

Income tax (benefit) provision

 

(7,384

)

 

 

7,256

 

(g)

 

(128

)

 

 

72

 

 

 

 

72

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(39,894

)

 

$

12,897

 

(k)

$

(26,997

)

 

$

(6,309

)

$

6,898

 

(k)

$

589

 

 

 

 

 

 

 

 

 

Diluted net (loss) income per share

$

(0.90

)

 

 

$

(0.61

)

 

$

(0.17

)

 

$

0.01

 

(a) Cost of sales adjustments related to the inventory fair value step up and amortization of developed technology intangible assets from the Avedro, Inc. acquisition in the amount of $9.7 million and $5.5 million, respectively.
(b) Reversal of COVID-19 related excess and obsolete reserves relating to the associated fair-value step up of acquired Avedro inventory, totaling ($0.5) million.
(c) Expenses related to the Company’s patent infringement litigation and related matters, consisting of $1.7 million.
(d) Costs of $0.2 million associated with the Company’s implementation of its new enterprise systems and other technology optimizations.
(e) Expenses related to the Avedro, Inc. acquisition:
• Amortization expense of customer relationship intangible assets in the amount of $0.7 million in selling, general and administrative.
• Stock-based compensation expense related to replacement awards in the amount of $0.1 million in cost of sales, $1.9 million in selling, general and administrative and $0.3 million in research and development.
(f) Non-cash interest expense for the amortization of debt discount and associated issuance costs related to the convertible senior notes.
(g) Tax benefit related to the Company’s issuance of the convertible senior notes.
(h) Expenses related to the Company’s patent infringement litigation and related matters of $2.2 million.
(i) Costs of $2.5 million associated with the Company’s implementation of its new enterprise systems and other technology optimizations.
(j) In-process research and development charge related to the Company’s acquisition of DOSE Medical Corporation.
(k) Includes total tax effect for non-GAAP pre-tax adjustments. For non-GAAP adjustments associated with the U.S., the tax effect is $0 given the Company’s U.S. taxable loss positions in both 2020 and 2019.
GLAUKOS CORPORATION
GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
(Unaudited)
 
Year-to-Date Q2 2020 Year-to-Date Q2 2019
 
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Cost of sales

$

54,197

 

 

$

(38,224

)

(a)(b)(f)

$

15,973

 

 

$

14,981

 

 

 

 

$

14,981

 

 

 

 

 

 

 

 

 

 

Gross profit

$

32,697

 

 

$

38,224

 

$

70,921

 

 

$

97,645

 

 

 

 

$

97,645

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

$

88,662

 

 

$

(13,920

)

(c)(d)(e)(f)

$

74,742

 

 

$

72,581

 

 

$

(7,724

)

(h)(i)

$

64,857

 

 

 

 

 

 

 

 

 

 

Research and development

$

43,844

 

 

$

(2,308

)

(c)(f)

$

41,536

 

 

$

30,999

 

 

 

 

$

30,999

 

 

 

 

 

 

 

 

 

 

In-process research and development

 

 

 

 

 

 

 

 

 

2,245

 

 

 

(2,245

)

(j)

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

132,506

 

 

$

(16,228

)

$

116,278

 

 

$

105,825

 

 

$

(9,969

)

$

95,856

 

 

 

 

 

 

 

 

 

 

(Loss) income from operations

$

(99,809

)

 

$

54,452

 

$

(45,357

)

 

$

(8,180

)

 

$

9,969

 

$

1,789

 

 

 

 

 

 

 

 

 

 

Non-operating income (expense):

 

 

 

 

 

 

 

 

 

Interest expense

 

(3,971

)

 

 

557

 

 

(3,414

)

 

 

(1,013

)

 

 

 

 

(1,013

)

Total non-operating (expense) income

 

(1,977

)

 

 

557

 

(g)

 

(1,420

)

 

 

723

 

 

 

 

 

723

 

 

 

 

 

 

 

 

 

 

(Loss) income before taxes

 

(101,786

)

 

 

55,009

 

 

(46,777

)

 

 

(7,457

)

 

 

9,969

 

 

2,512

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) provision

 

(7,834

)

 

 

7,256

 

(k)

 

(578

)

 

 

194

 

 

 

 

 

194

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(93,952

)

 

$

47,753

 

(l)

$

(46,199

)

 

$

(7,651

)

 

$

9,969

 

(l)

$

2,318

 

 

 

 

 

 

 

 

 

 

Diluted net (loss) income per share

$

(2.13

)

 

 

$

(1.05

)

 

$

(0.21

)

 

 

$

0.06

 

(a)   Cost of sales adjustments related to the inventory fair value step up and amortization of developed technology intangible assets from the Avedro, Inc. acquisition in the amount of $19.3 million and $11.0 million, respectively.
(b)   Inventory write-off charges and COVID-19 related excess and obsolete reserves, a portion of which includes the associated fair-value step up of acquired Avedro inventory, totaling $7.4 million.
(c)   Restructuring expenses of $0.2 million in selling, general and administrative and $0.1 million in research and development.
(d)   Expenses related to the Company’s patent infringement litigation and related matters, consisting of $4.2 million.
(e)   Costs of $0.7 million associated with the Company’s implementation of its new enterprise systems and other technology optimizations.
(f)   Expenses related to the Avedro, Inc. acquisition:
  • Integration expenses of $0.8 million consisting primarily of legal fees, accounting fees and other costs in selling, general and administrative.
  • Restructuring expenses of $0.2 million in cost of sales, $0.5 million in selling, general and administrative and $0.1 million in research and development.
  • Amortization expense of customer relationship intangible assets in the amount of $1.4 million in selling, general and administrative.
  • Stock-based compensation expense related to replacement awards in the amount of $0.3 million in cost of sales, $6.1 million in selling, general and administrative and $2.1 million in research and development.
(g)   Non-cash interest expense for the amortization of debt discount and associated issuance costs related to the convertible senior notes.
(h)   Expenses related to the Company’s patent infringement litigation and related matters of $3.8 million.
(i)   Costs of $3.9 million associated with the Company’s implementation of its new enterprise systems and other technology optimizations.
(j)   In-process research and development charge related to the Company’s acquisition of DOSE Medical Corporation.
(k)   Tax benefit related to the Company’s issuance of the convertible senior notes.
(l)   Includes total tax effect for non-GAAP pre-tax adjustments. For non-GAAP adjustments associated with the U.S., the tax effect is $0 given the Company’s U.S. taxable loss positions in both 2020 and 2019.

Contacts

Chris Lewis

Director, Investor Relations, Corporate Strategy & Development

(949) 481-0510

[email protected]

Read full story here

error: Content is protected !!