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Glaukos Corporation Announces Third Quarter 2019 Financial Results

November 6, 2019

SAN CLEMENTE, Calif.--(BUSINESS WIRE)--Nov 6, 2019--

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 third quarter ended September 30, 2019. Key highlights include:

“We are very pleased with the company’s strong third quarter financial performance, along with the significant progress in advancing our transformative pipeline and expanding our future growth opportunities,” said Thomas Burns, Glaukos president and chief executive officer. “Our progress demonstrates continued successful execution on our core growth strategies. We remain focused on building upon our solid foundation to transform Glaukos into a global ophthalmic pharmaceutical and device leader capable of serving the vision care needs of physicians and their patients for years to come.”

Third Quarter 2019 Financial Results

Net sales rose 33% in the third quarter of 2019 to $58.5 million, compared to $43.9 million in the same period in 2018. The growth primarily reflected unit volume increases worldwide.

Gross margin for the third quarter of 2019 was approximately 87%, compared to approximately 86% in the same period in 2018.

Selling, general and administrative (SG&A) expenses for the third quarter of 2019 rose 41% to $44.4 million, compared to $31.6 million in the same period in 2018. Non-GAAP SG&A expenses for the third quarter of 2019 rose 17% to $36.2 million, compared to $31.0 million in the same period in 2018.

Research and development (R&D) expenses in the third quarter of 2019 rose 31% to $17.3 million, compared to $13.2 million in the same period in 2018. In addition, during the third quarter of 2019, we also incurred a $1.5 million in-process R&D charge associated with the licensing agreement with Intratus, Inc.

Loss from operations in the third quarter of 2019 was $12.4 million, compared to a loss of $6.9 million in the third quarter of 2018. Non-GAAP loss from operations in the third quarter of 2019 was $2.7 million, compared to a loss of $6.3 million in the third quarter of 2018.

Net loss in the third quarter of 2019 was $13.5 million, or $0.37 per diluted share, compared to a net loss of $6.6 million, or $0.19 per diluted share, in the third quarter of 2018. Non-GAAP net loss in the third quarter of 2019 was $3.8 million, or $0.10 per diluted share, compared to a net loss of $5.9 million, or $0.17 per diluted share, in the third quarter of 2018.

The company ended the third quarter of 2019 with $161.8 million in cash and cash equivalents, short-term investments and restricted cash.

2019 Revenue Guidance

The company raised its 2019 net sales guidance to $229 million to $232 million, compared to $226 million to $231 million previously. The company’s updated guidance does not include the impact of the pending acquisition of Avedro.

Webcast & Conference Call

The company will host a conference call and simultaneous webcast today at 1:30 p.m. PST (4:30 p.m. EST) 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 833-231-8262 (U.S.) or 647-689-4107 (international) and enter Conference ID 5560317. 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. 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 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 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 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; the ability of the parties to complete the proposed acquisition of Avedro on the anticipated terms and timing or at all; the ability of the parties to satisfy the conditions to the closing of the proposed acquisition; obtaining required regulatory and governmental approvals for the proposed acquisition; potential legal proceedings relating to the proposed acquisition and the outcome of any such legal proceedings; potential adverse reactions or changes to the business relationships of each party with their respective customers, suppliers and others resulting from the announcement or completion of the proposed acquisition; any adverse effects of the pending proposed acquisition on the market price of our common stock; any unexpected impacts from unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, costs and losses with respect to the proposed acquisition, including on the future prospects, business and management strategies for the combined company’s operations after the consummation of the proposed acquisition; inherent risks, costs and uncertainties associated with integrating the businesses successfully and risks of not achieving all or any of the anticipated benefits from the proposed acquisition or that such benefits may not be fully realized or take longer to realize than expected; potential disruptions from the proposed acquisition that may divert management attention from other important business objectives; and potential dilution of our stockholders’ ownership interest in our company in connection with the proposed acquisition. 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 Quarterly Report on Form 10-Q for the quarter ending June, 30, 2019, and will also be included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which we expect to file on or before November 8, 2019. 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.

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 associated with acquisitions and integration, costs associated with enterprise system upgrades, in-process R&D charges, 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 EndedNine Months Ended
September 30,September 30,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales

$

58,509

 

$

43,908

 

$

171,135

 

$

127,202

 

Cost of sales

 

7,703

 

 

6,011

 

 

22,684

 

 

17,957

 

Gross profit

 

50,806

 

 

37,897

 

 

148,451

 

 

109,245

 

Operating expenses:
Selling, general and administrative

 

44,443

 

 

31,632

 

 

117,024

 

 

87,425

 

Research and development

 

17,278

 

 

13,202

 

 

48,277

 

 

36,719

 

In-process research and development

 

1,500

 

 

-

 

 

3,745

 

 

-

 

Total operating expenses

 

63,221

 

 

44,834

 

 

169,046

 

 

124,144

 

Loss from operations

 

(12,415

)

 

(6,937

)

 

(20,595

)

 

(14,899

)

Non-operating income (expense):
Interest income

 

780

 

 

583

 

 

2,368

 

 

1,568

 

Interest expense

 

(1,028

)

 

-

 

 

(2,041

)

 

-

 

Other expense, net

 

(656

)

 

(230

)

 

(508

)

 

(1,346

)

Total non-operating (expense) income

 

(904

)

 

353

 

 

(181

)

 

222

 

Loss before taxes

 

(13,319

)

 

(6,584

)

 

(20,776

)

 

(14,677

)

Provision for income taxes

 

187

 

 

37

 

 

381

 

 

53

 

Net loss

$

(13,506

)

$

(6,621

)

$

(21,157

)

$

(14,730

)

 
Basic and diluted net loss per share

$

(0.37

)

$

(0.19

)

$

(0.58

)

$

(0.42

)

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

 

36,831

 

 

35,541

 

 

36,507

 

 

35,075

 

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

 

2019

 

 

2018

 

(unaudited)
Assets
Current assets:
Cash and cash equivalents

$

39,534

 

$

29,821

 

Short-term investments

 

113,385

 

 

110,667

 

Accounts receivable, net

 

24,345

 

 

18,673

 

Inventory, net

 

12,801

 

 

13,282

 

Prepaid expenses and other current assets

 

19,223

 

 

4,124

 

Total current assets

 

209,288

 

 

176,567

 

Restricted cash

 

8,881

 

 

8,775

 

Property and equipment, net

 

20,038

 

 

19,153

 

Operating lease right-of-use asset

 

12,146

 

 

-

 

Finance lease right-of-use asset

 

53,343

 

 

-

 

Income tax receivable

 

213

 

 

213

 

Deposits and other assets

 

3,527

 

 

2,262

 

Total assets

$

307,436

 

$

206,970

 

 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable

$

3,501

 

$

6,286

 

Accrued liabilities

 

29,602

 

 

23,964

 

Deferred rent

 

-

 

 

115

 

Total current liabilities

 

33,103

 

 

30,365

 

Operating lease liability

 

11,406

 

 

-

 

Finance lease liability

 

68,851

 

 

-

 

Other liabilities

 

3,960

 

 

2,745

 

Total liabilities

 

117,320

 

 

33,110

 

 
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; 36,945
and 36,135 shares issued and 36,917 and 36,107 shares outstanding
as of September 30, 2019 and December 31, 2018, respectively

 

37

 

 

36

 

Additional paid-in capital

 

414,665

 

 

378,352

 

Accumulated other comprehensive income

 

1,837

 

 

738

 

Accumulated deficit

 

(226,291

)

 

(205,134

)

Less treasury stock (28 shares as of September 30, 2019 and
December 31, 2018)

 

(132

)

 

(132

)

Total stockholders' equity

 

190,116

 

 

173,860

 

Total liabilities and stockholders' equity

$

307,436

 

$

206,970

 

GLAUKOS CORPORATION
GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
(Unaudited)
 
 
Q3 2019Q3 2018
 
GAAPAdjustmentsNon-GAAPGAAPAdjustmentsNon-GAAP
Operating expenses:
Selling, general and administrative

$

44,443

 

$

(8,233

)

(a)(b)(c)

$

36,210

 

$

31,632

 

$

(674

)

(f)

$

30,958

 

In-process research and development

 

1,500

 

 

(1,500

)

(d)

 

-

 

 

-

 

 

-

 

 

-

 

 
Total operating expenses

$

63,221

 

$

(9,733

)

$

53,488

 

$

44,834

 

$

(674

)

$

44,160

 

 
Loss from operations

$

(12,415

)

$

9,733

 

$

(2,682

)

$

(6,937

)

$

674

 

$

(6,263

)

 
Net loss

$

(13,506

)

$

9,733

 

(e)

$

(3,773

)

$

(6,621

)

$

674

 

(e)

$

(5,947

)

 
Diluted net loss per share

$

(0.37

)

 

$

(0.10

)

$

(0.19

)

 

$

(0.17

)

(a)Expenses related to the Company's patent infringement litigation and related matters, consisting of $2.5 million.
(b)Costs of $3.3 million associated with the Company's implementation of its new enterprise systems and other technology optimizations.
(c)Transaction expenses of $2.4 million related to the Company's proposed acquisition of Avedro, Inc., consisting primarily of financial advisory fees, legal fees, accounting fees, and other costs.
(d)Upfront payment associated with the execution of the licensing arrangement with Intratus, Inc.

(e)

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 2019 and 2018.
(f)Expenses related to the Company's patent infringement litigation and related matters.

  GLAUKOS CORPORATION

GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
(Unaudited)
 
 
Year-to-Date Q3 2019Year-to-Date Q3 2018
 
GAAPAdjustmentsNon-GAAPGAAPAdjustmentsNon-GAAP
Operating expenses:
Selling, general and administrative

$

117,024

 

$

(15,957

)

(a)(b)(c)

$

101,067

 

$

87,425

 

$

(2,601

)

(f)

$

84,824

 

In-process research and development

 

3,745

 

 

(3,745

)

(d)

 

-

 

 

-

 

 

-

 

 

-

 

 
Total operating expenses

$

169,046

 

$

(19,702

)

$

149,344

 

$

124,144

 

$

(2,601

)

$

121,543

 

 
Loss from operations

$

(20,595

)

$

19,702

 

$

(893

)

$

(14,899

)

$

2,601

 

$

(12,298

)

 
Net loss

$

(21,157

)

$

19,702

 

(e)

$

(1,455

)

$

(14,730

)

$

2,601

 

(e)

$

(12,129

)

 
Diluted net loss per share

$

(0.58

)

$

(0.04

)

$

(0.42

)

$

(0.35

)

 
(a)Expenses related to the Company's patent infringement litigation and related matters, consisting of $6.3 million.
(b)Costs of $7.3 million associated with the Company's implementation of its new enterprise systems and other technology optimizations.
(c)Transaction expenses of $2.4 million related to the Company's proposed acquisition of Avedro, Inc., consisting primarily of financial advisory fees, legal fees, accounting fees, and other costs.
(d)Consists of $2.2 million related to the purchase of certain DOSE assets and $1.5 million for the upfront payment associated with the execution of the licensing arrangement with Intratus, Inc.

(e)

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 2019 and 2018.
(f)Expenses related to the Company's patent infringement litigation and related matters.

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191106005930/en/

CONTACT: Chris Lewis

Director, Investor Relations, Corporate Strategy & Development

(949) 481-0510

clewis@glaukos.com

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: MEDICAL DEVICES OTHER HEALTH HEALTH PHARMACEUTICAL OPTICAL

SOURCE: Glaukos Corporation

Copyright Business Wire 2019.

PUB: 11/06/2019 04:10 PM/DISC: 11/06/2019 04:11 PM

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