Glaukos Corporation (NYSE: GKOS) — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the supplied financial data do not provide a separate fourth-quarter income statement.
Business context
Glaukos develops and sells ophthalmic medical technologies and pharmaceuticals for glaucoma and corneal disorders, while developing candidates for retinal diseases and other eye conditions. In 2023, about 75% of net sales came from the iStent family and related accessories, and about 25% from iLink therapies. U.S. and international sales represented 70% and 30%, respectively.
Financial results and liquidity
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Net sales | $314.7 million | $282.9 million | Up 11% |
| Gross profit / margin | $239.1 million / 76% | $213.9 million / 76% | Margin unchanged |
| Operating expenses | $367.8 million | $296.2 million | Up 24% |
| Operating loss | $128.7 million | $82.3 million | Loss widened |
| Net loss | $134.7 million | $99.2 million | Loss widened 36% |
| Basic and diluted loss per share | $2.78 | $2.09 | Loss per share increased |
| Cash used in operating activities | $57.8 million | $33.1 million | Use increased |
Net sales growth reflected U.S. glaucoma sales up about 5%, international glaucoma sales up about 23%, and corneal health sales up about 13%. The company reported higher U.S. Photrexa sales, including improved realized average prices and new account starts. Foreign exchange reduced FY2023 sales growth by approximately 145 basis points, primarily due to the Japanese yen.
SG&A increased 16% to $224.1 million and R&D increased 13% to $138.8 million, reflecting expanded commercial infrastructure, employee costs and clinical-development spending. FY2022 operating expenses included a $30 million litigation-settlement receipt recorded as a reduction of expenses; there was no comparable settlement benefit in FY2023.
At year-end, cash and cash equivalents were $93.5 million and short-term investments were $202.0 million; restricted cash was $5.9 million. Working capital was $321.4 million, down from $371.5 million. The company reported $287.5 million principal amount of 2.75% convertible notes due 2027, with a $282.8 million balance-sheet carrying amount. It also had finance lease liabilities of $70.5 million and operating lease liabilities of $30.4 million. Total reported liabilities were $478.6 million. Accumulated deficit was $599.1 million.
Material changes, outlook and commentary
- FDA approved iDose TR in December 2023 to reduce intraocular pressure in patients with open-angle glaucoma or ocular hypertension. Glaukos planned to begin commercialization in Q1 2024; commercial success will depend on adoption, supply, outcomes, pricing and reimbursement.
- Management said 2022–2023 Medicare physician-fee reductions disrupted ordering and contributed to lower U.S. iStent combo-cataract procedure volumes. The 2024 Medicare rule increased facility fees for relevant procedures, including standalone iStent infinite procedures, but management still expected reimbursement pressures to adversely affect 2024 volumes and U.S. combo-cataract glaucoma revenue, gross profit and net income.
- Management expects capital expenditures to be modestly lower in 2024 as manufacturing-facility expansion winds down. It stated that cash and investments, together with expected available operating cash, should fund operations and known obligations for at least the next 12 months and the foreseeable future; sustained profitability and positive operating cash flow remain uncertain.
- Supply challenges and inflation increased some component and raw-material costs; management expected some higher costs and supply challenges to continue into 2024. The company cited competition, reimbursement variability, foreign exchange and clinical/regulatory execution as additional pressures.
- Pipeline developments included completion of enrollment in the confirmatory Phase 3 iLink epi-on trial in Q2 2023 and initiation of a first-in-human retinal multi-kinase inhibitor trial in December 2023. The PreserFlo MicroShunt had received an FDA non-approvable determination; a U.S. approval pathway and timing remained uncertain.
- The company reported no material legal proceedings and no material cybersecurity incidents in the last three fiscal years. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting.
Key investor verification points
- Track iDose TR launch progress, physician uptake, manufacturing capacity, coverage and reimbursement, and any evidence of sustained demand.
- Verify how 2024 Medicare payment changes affect iStent procedure volumes, reimbursement, product mix and margins.
- Monitor operating-expense growth, cash burn and progress toward profitability; FY2023 operating cash use was $57.8 million despite sales growth.
- Review convertible-note conversion and cash-settlement risks, including potential effects on liquidity, working capital and shareholder dilution.
- Assess supply-chain resilience, clinical milestones and regulatory timelines for the epi-on program, retinal pipeline and PreserFlo MicroShunt.