Glaukos - Earnings Call - Q2 2025

Executive Summary

• Record Q2 2025 revenue of $124.1M, up 30% YoY and 16% QoQ, with non-GAAP gross margin at ~83%; management raised FY25 net sales guidance to $480–$486M from $475–$485M, reflecting accelerating iDose TR adoption.
• Revenue beat Wall Street consensus by ~$8.6M and non-GAAP EPS loss narrowed to ($0.24) vs. consensus ($0.258), a modest beat; 14 estimates underpin both revenue and EPS consensus values (S&P Global)*.
• U.S. Glaucoma revenue surged 45% YoY to $72.3M, with iDose TR contributing ~$31M; 80% of iDose volumes came from MAC regions with established professional fees (Noridian, Novitas, First Coast), while NGS is progressing and Palmetto/WPS/CGS lag.
• Corneal Health revenue was $20.6M (+4% YoY) but management flagged a material Q4 headwind as patients defer Photrexa to await potential Epioxa approval (PDUFA Oct 20, 2025), setting up a transition dynamic.
• CMS proposed 2026 rules would modestly increase facility fees but reduce physician fees for several Category 1 ophthalmology CPT codes; Glaukos sees this reinforcing standalone interventional glaucoma procedures (iDose TR, iStent Infinite) while immunizing Category 3 codes from the proposed physician fee cuts.

What Went Well and What Went Wrong

What Went Well

• U.S. Glaucoma momentum: “We delivered record second quarter net sales of $72.3 million on strong year-over-year growth of 45% driven by growing contributions from iDose TR, which generated sales of approximately $31 million in the second quarter.”
• Reimbursement footprint expanding: “We saw over 80% of our iDose volumes come from [Noridian, Novitas, First Coast] areas in Q2… and that’s a growing percentage of the overall mix.”
• Pipeline and regulatory progress: Completed PAI for Epioxa and EU MDR clearance for iStent Infinite, enabling a European launch roadmap and strengthening global IG initiatives.

What Went Wrong

• Non-iDose U.S. Glaucoma headwinds: LCD restrictions on dual MIGS in combo cataract drove declines; management expects mid-single-digit decline in non‑iDose revenues in 2H and full year 2025.
• Corneal Health transition risk: Q4 disruption anticipated as patients defer Photrexa pending potential Epioxa approval, implying cadence risk in 2H.
• SG&A step-up and one-time comp: GAAP SG&A rose to $83.4M (+26% YoY), including ~$4M one-time stock comp hit; full-year OpEx now guided to ~$460M with mid-teens growth.

Transcript

Operator (participant)

Welcome to Glaukos Corporation's Second Quarter 2025 Financial Results Conference Call. Copies of the company's press release and quarterly summary document, both issued after the market closed today, are available at www.glaukos.com. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. This call is being recorded and an archived replay will be available online in the Investor Relations section at www.glaukos.com. I will now turn the call over to Chris Lewis, Vice President of Investor Relations and Corporate Affairs.

Chris Lewis (VP, Investor Relations and Corporate Affairs)

Thank you and good afternoon. Joining me today are Glaukos Corporation's Chairman and CEO Thomas Burns, President and COO Joseph Gilliam, and CFO Alex Thurman. Similar to prior quarters, the company has posted a document on its investor relations website under the Financials and Filings Quarterly Results section. Titled Quarterly Summary, this document is designed to provide the investment community with a summarized and easily accessible reference document that details the key facts associated with the quarter, the state of the company's business, objectives and strategies, and any forward statements or guidance we may make. This document is designed to be read by investors before the regularly scheduled quarterly conference call. As such, for this call we will make brief prepared remarks and transition into a question and answer session.

To ensure ample time and opportunity to address everyone's questions, we request that you limit yourself to one question and one follow up. If you still have additional questions, you may get back into the queue. Please note that all statements other than statements of historical facts made on this call that address activities, events or developments we expect, believe or anticipate will or may occur in the future are forward looking statements. These include statements about our plans, objectives, strategies and prospects regarding, among other things, our sales, products, pipeline, technologies and clinical trials, U.S. and international commercialization, market development efforts, product approvals, the efficacy of our current and future products, competitive market position, regulatory strategies and reimbursement for our products, financial condition and results of operations, as well as the expected impact of general macroeconomic conditions, including foreign currency fluctuations, on our business and operations.

These statements 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. Therefore, they may cause our actual results to differ materially from those expressed or implied by forward looking statements. Please review today's press release and our recent SEC filings for more information about these risk factors. You'll find these documents in the Investor Relations section of our website at www.glaukos.com. Finally, please note that during today's call we will also discuss certain non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into Glaukos Corporation's ongoing results of operations, particularly when comparing underlying results from period to period.

Please refer to the tables in our earnings press release available in the Investor Relations section of our website for reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I will turn the call over to Glaukos Corporation's Chairman and CEO Thomas Burns.

Thomas Burns (Chairman and CEO)

Okay, thanks Chris. Good afternoon and thank you all for joining us today. Glaukos reported record second quarter consolidated net sales of $124.1 million, up 30% on a reported basis or 29% on a constant currency basis versus the year ago quarter. As a result of our strong performance, we are raising our full year 2025 net sales guidance range to $480 million-$486 million compared to $475 million-$485 million previously. Our second quarter record results reflect a sustained growth acceleration in our business driven by growing iDose TR adoption and utilization along with our broader interventional glaucoma, or IG, initiatives globally. While we are in the early stages of these IG efforts, our focus remains on driving new standalone intervention therapies designed to slow disease progression and reduce drug burden for the benefit of physicians and patients.

We continue to be encouraged with the increasing levels of clinical interest for this paradigm-changing evolution. Within our U.S. glaucoma franchise. We delivered record second quarter net sales of $72.3 million on strong year-over-year growth of 45% driven by growing contributions from iDose TR, which generated sales of approximately $31 million in the second quarter. iDose TR, a first-of-its-kind intracameral procedural pharmaceutical designed to continuously deliver glaucoma drug therapy for up to three years, continues to build commercial momentum supported by positive clinical outcomes and surgeon feedback that reaffirms our view that with the launch of iDose TR we are pioneering a brand new therapeutic category that has the potential to reshape glaucoma management as we know it today.

Operationally, our teams continue to make great progress in the execution of our detailed launch plans for iDose TR including, first, growing the universe of trained surgeons and accounts; second, expanding utilization of the installed active surgeon base; third, broadening and streamlining market access among MACs, commercial, and Medicare Advantage payers; fourth, expanding the robust body of clinical evidence; and fifth, accelerating marketing investments to support increased patient awareness and education. Shifting to our U.S. stent business, as anticipated, the five MAC LCDs implemented in the fourth quarter of 2024 continued to cause some transient turbulence in the market during the second quarter as surgeons navigate restrictions when using two MIGS surgical devices in the same procedures. We expect this MACs market headwind will continue over the course of 2025 as providers continue to navigate the impacts associated with these LCDs until it anniversaries later this year.

As a reminder, our second quarter U.S. glaucoma results also reflect the expiration of royalty payments associated with the Hydrus microstent, which concluded in late April. Earlier this month, CMS issued its proposed rules for 2026, which as drafted, largely maintain the 2025 APC assignments and modestly increase facility fee rates associated with our procedures across both the hospital outpatient and ASC settings. In contrast, CMS has proposed reductions in physician fee reimbursement for several Category 1 CPT codes across ophthalmology, including for cataract and surgical MIGS procedures specifically, along with several other specialties. These stem primarily from a major revision in how CMS allocates indirect practice expenses within its RVU methodology, particularly impacting services performed in the facility outpatient setting. We intend to support our customers and societies as they educate CMS on the proper assumptions associated with this proposed methodology shift.

Beyond that, we believe these proposed changes further support a more diversified practice mix that includes interventional glaucoma treatment and underscores the value of our standalone therapies such as iDose TR and iStent Infinite, which as procedures covered by Category 3 codes, are currently unaffected by this proposed physician fee rule. Moving on, our international glaucoma franchise also delivered record net sales of $31.3 million on year-over-year growth of 20% on a reported basis and 15% on a constant currency basis. This strong growth was once again broad-based as we continue to scale our international infrastructure and execute our plans to drive iStent forward as standard of care in each region and major market in the world. Last month we were pleased to announce EU MDR clearance for iStent Infinite along with several of our other leading trabecular micro-bypass MIGS technologies.

Of note, this clearance provides a broad label for iStent Infinite indicated for patients with all stages of open-angle glaucoma in both combo cataract and standalone procedures. These important milestones, which mark our company's long-awaited first approvals under the new EU regulatory framework, will not only help us maintain and grow our presence in Europe, but also advance and accelerate our broader IG initiatives globally. We plan to commence commercial launch activities for iStent Infinite in our key European markets at the upcoming ESCRS Annual Meeting in September. As previously discussed, we continue to expect the trialing of new competitive products in some of our major international markets may become an increasing headwind as we progress through 2025. Finally, our Corneal Health franchise delivered net sales of $20.6 million on a year-on-year growth of 4%, including Photrexa and M6 sales of $17.9 million.

As discussed previously, our second quarter results reflect the continued impact of Photrexa realized revenues as a result of our entry as a company into the Medicaid Drug Rebate Program or MDRP. Shifting gears to our corneal health pipeline and FDA's ongoing NDA review for Epioxa, our next-generation, non-invasive corneal cross-linking therapy for the treatment of keratoconus, a rarely diagnosed sight-threatening disease. During the second quarter, we completed several important review-related milestones, including a successful pre-approval inspection or PAI at our Burlington, Massachusetts facility, along with a productive post mid-cycle review meeting with the agency as we continue to progress towards the established PDUFA date of October 20, 2025. Alongside this regulatory review, our commercial and market access teams continue to make solid progress in the preparation and planning of the Epioxa commercial launch targeted for next year.

As a reminder, this potential approval would provide keratoconus patients in the ophthalmic community with the first FDA-approved, surgery-free topical drug therapy that's catalyzed by pulsed oxygen and light that does not require the removal of the corneal epithelium, the outermost layer of the front of the eye. An Epioxa approval would also provide us with the opportunity to launch this pharmaceutical therapy supported by the right long-term pillars to optimize patient access. A persistent and at times frustrating challenge for us historically with Photrexa because we believe Epioxa, which is designed to preserve the corneal epithelium, streamline the procedure, improve patient comfort, and shorten recovery time, represents a potentially breakthrough treatment advantage and advancement for keratoconus patients. We anticipate some potential transient disruption with our U.S.

Corneal Health franchise as the market transitions from Photrexa to Epioxa following targeted approval, which is reflected in our latest full year guidance outlook. Beyond Epioxa, we continue to advance several other important clinical programs across our five novel therapeutic platforms. Within our iStent Surgical Glaucoma platform, we are advancing patient enrollment in a PMA pivotal trial for iStent Infinite in mild to moderate glaucoma patients, as well as a 510(k) pivotal trial for the PRESERFLO MicroShunt. Within our iDose platform, we're advancing a phase IIb/III clinical program for iDose TREX, our next generation iDose therapy, with patient enrollment already underway, and now expect an FDA decision regarding readministration for iDose TR in early 2026. Within our iLink platform, in addition to the ongoing Epioxa NDA review, we are also advancing phase II trials for our third generation iLink therapy.

Within our iLution platform, we remain on track to file a U.S. FDA IND and commence a clinical trial for iLution Demodex Blepharitis later this year. Finally, within our retinal platform, we are advancing a first-in-human clinical development program for GLK-401, our intravitreal multikinase inhibitor retinal program in wet AMD patients, where we now also have an open U.S. FDA IND. As you can see, we have a lot to be excited about when it comes to significant potential value that we believe our pipeline programs may create. At the same time, as we consistently discussed, we continue to prioritize the cadence of our investments as we strive to strike the right balance of risk-based spending while maintaining our strong capital position both now and in the future.

This disciplined approach has enabled us to stay active on the business development front with a focus on transactions that complement and enhance our existing organic growth initiatives. During the second quarter, we put this strategy to work with the small acquisition of Mobius Therapeutics, whose lead compound Mitosol is the only FDA approved ophthalmic formulation of Mitomycin C, or MMC, which is often utilized as an adjunct in late-stage glaucoma filtration procedures. This addition helps to solidify our supply chain as it is being utilized alongside the PRESERFLO MicroShunt in our active 510(k) study. It will also support our broader late-stage glaucoma tertiary care efforts over time and further add to our deepening relationship within the glaucoma specialist community. We also continue to invest operationally to support our long-term growth plans with the purchase of an additional building at our leased Aliso Viejo headquarters campus during the second quarter.

Excluding these two one-time investments, our underlying cash and equivalents grew by more than $4 million in the second quarter. In conclusion, I'm very pleased with another record quarter and sustained strong momentum in our business as we continue to successfully advance our mission to truly transform vision by pioneering novel dropless platforms that can meaningfully advance the standard of care and improve outcomes for patients suffering from sight-threatening chronic eye diseases. Our foundation is strong, and we are ideally positioned to continue transforming vision for the benefit of patients worldwide. With that, I'll open the call for questions. Operator

Operator (participant)

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again, we kindly ask that questions are limited to one on one. Follow up for today's call, we will pause for just a moment to compile the Q&A roster. Your first question comes from Thomas Stephan with Stifel. Please go ahead.

Thomas Stephan (VP of Healthcare Equity Research)

Great. Hey guys, thanks for taking the questions. Nice quarter. One sort of near term, just on 2025 sales guidance, you beat street in 2Q on revs by, I think, $8.9 million. On the guide, you only raised by $3 million at the midpoint. Tom, you made some comments on OUS glaucoma and corneal health within the guide. Tom or Joe, can you talk. About the components of this year's revenue guide and then maybe why more of. The upside wasn't flushed through for the full year?

Joseph Gilliam (President and COO)

Yeah, Tom, it's Joe, and Tom wants to ask him at the end. He can obviously you did the math pretty quickly there. The fact is we're pleased to be able to be in a position to raise guidance off the back of what was an exceptional second quarter as you noted. That was really driven by outperformance across the board, but largely by iDose in particular. I think when you parse back some of the commentary from Tom and I'll elaborate a bit more, you'll find that really it was a full beat and raise in the context of iDose, which is at the core of the growth story as we sit here today. Several data points as you think about updating your models for the second half of the year.

First, on the international glaucoma side, obviously we continue to be off a strong start this year and had some currency benefit in the second quarter and we're now expecting that you'll have sort of low double digit growth for the remainder of the second half on a year-over-year basis, largely unchanged there in terms of our expectations of our growing scale and competitive products launching in key markets that present headwinds as we move forward relative to the strong first half results. On the cornea side, Tom, I think, elaborated on this, but I'll repeat it. When we go into the second half here, we enter a period with, I'll call it, less visibility or predictability as we navigate the transition from Photrexa to Epioxa, assuming the latter is approved as expected in October.

Our current expectations are for flat to low single digit growth, if you will, in Q3 followed by a material disruption or headwind in Q4 as patients forego Photrexa in favor of Epioxa for all the reasons that Tom articulated. That leaves you on the U.S. glaucoma side where we continue to expect the same dynamics around the LCD headwinds and the Hydrus royalty expiration and then the generation of probably a mid single digit decline for, I'll call the non-iDose revenues in the second half. When you put all that together, it's going to imply continued sequential iDose expansion in Q3 and Q4 and an overall expansion of our expectations for the full year on the iDose front.

Thomas Stephan (VP of Healthcare Equity Research)

That's great, appreciate that. Then pivoting a bit more kind. Of big picture just on interventional glaucoma. You know, approaching 18 months into the iDose launch. I just wanted to ask. About the state of the union with interventional glaucoma. What are the learnings, the puts and. Takes around those broader interventional glaucoma efforts? Joe or Tom, where does the. Bullishness, your bullishness stand kind of in Terms of the long term opportunity with IG? Thanks.

Joseph Gilliam (President and COO)

I can start off here. I'm sure Tom will have some views as well. Obviously, if you think about this as being part of the kind of the birthright of us as a company over the years. I'll start, Tom, by acknowledging some of the foundational work that you recently did on this paradigm shift. I'm glad you asked the question. I think it was a good state of the state snapshot, but also a bit of indicator of how far we've come over these last 18 months-24 months in terms of building the standalone market opportunity. Hopefully, you all have visibility and awareness of just how pronounced the shift in momentum towards interventional approach into glaucoma care has changed since we began our efforts in support of it a year and a half ago.

The underlying movement, if you will, largely led by Glaukos in partnership with physicians to be proactive on behalf of patients now that tools like iDose TR and iStent Infinite really enable a risk benefit equation that makes sense, is rapidly gaining traction, and it's worth reminding investors what this means for, I'll call it, the next decade in ophthalmology. As the 12 million-13 million diagnosed and treated glaucoma eyes in the U.S. also increasingly seek an interventional approach to care. If you compare that to cataract surgery, which is the mainstay of our industry today, that does about 5 million procedures annually, it's hard not to see how bright the future is for Glaukos and our industry overall as we improve the standard of care for patients.

I have to give credit to our marketing team, our sales team, and the numerous other folks here at Glaukos that are driving this rapid change from both the top down and the ground up. Every day has gotten us here.

Thomas Stephan (VP of Healthcare Equity Research)

That's great. Thank you.

Operator (participant)

Your next question comes from Ryan Zimmerman with BTIG. Please go ahead.

Ryan Zimmerman (Managing Director and Medical Technology Analyst)

Thanks for taking the questions. Congrats on the quarter and appreciate you giving us the iDose number and removing the guesswork on that one. Maybe just to start off with iDose for a second, you've made progress on certain MACs and others are still not fully there. I guess the best way to put it. Can you compare and contrast the geographies in which Medicare Administrative Contractors are fully covering iDose without any disruption or any slowness, and how is the utilization amongst that physician base compared to, say, a territory or a state that's in a Medicare Administrative Contractor that may not be fully there and your timelines and assumptions for when those ramp Joe.

Joseph Gilliam (President and COO)

Yeah, happy to touch on that, Ryan. As you comment, we did disclose the $31 million approximate sales of iDose in the second quarter, which was a significant step in the right direction. The performance really was driven by a mix and a continued mix of both new starts and increasing utilization within those accounts who've been at it for a bit now. To kind of dive in, I think in the part of some of your question, while we saw growth nationwide in pretty much every geography, the acceleration continued to be faster in those MAC regions where the professional fee has been established for a bit. That is really driven again by widening surgeon adoption over the course of 2025. That began to translate into procedures given the typical scheduling backlogs you see in ophthalmology.

I know you know well, and to put that into context, Novitas, Noridian, First Coast, which are the MACs who've had a professional fee schedule in place for a little bit, represent a little over 50% of Medicare lives, those regions. We saw over 80% of our iDose volumes come from those areas in Q2, and that's a growing percentage of the overall mix. I think that's a trend that goes well for our business as these other MACs finalize their iDose and professional fee schedules here in the hopefully relatively near future. The second part of your question was kind of, you know, where do we go from here, is the way I would summarize it.

I would just say that all the MACs now appear to largely be paying the J-code properly, which is the first step in the journey, if you will, and continued progress that we've seen there. As it relates to professional fee beyond Noridian, Novitas, and First Coast, we believe that NGS has made considerable progress. We're seeing increasing momentum. That makes us hopeful that in the relatively near term we'll see a professional fee get established in what is the third largest MAC region in the United States. We continue to make slow and I'll call it methodical progress with Palmetto and WPS. We've really accelerated our advocacy and education efforts, both at the account level, but also with the MACs themselves. We started to see the earliest signs of positive proceed payment flow.

But there is still work to do in both of those important MACs. CGs, I would say, remains behind the others by a fairly considerable margin at this stage. We are engaging directly with them and have been for some time. Eventually, as the smallest MAC of all, we do expect them obviously to come around alongside the other MACs.

Ryan Zimmerman (Managing Director and Medical Technology Analyst)

Very helpful, Joe. Just sticking on the topic of professional fees for a moment and turning to the legacy MIGS business. We all saw the proposals. I remember many years ago, doctors were making, I think, close to $1,000 to implant a MIGS. We're now pushing around $100, maybe sub-$100. We'll see kind of where the proposals land. I guess my question is more of a bigger picture question on that topic, which is, as the pro fees have calmed down, how do you think about legacy surgical glaucoma and the broader appeal to, say, non-glaucoma ophthalmologists, the comprehensive ophthalmologist, who maybe was your marginal customer, who was doing MIGS? As that comes down, does that get offloaded to the glaucoma specialist? I'm just curious how you're thinking about maybe some of those economic incentives.

Joseph Gilliam (President and COO)

Yeah, I think, Ryan. There's a couple things to unpack in your statement. The first one is, to a large extent, professional fees are about relativity in the context of the economics for that surgeon's time, whether that be in the context of cataract surgery, MIGS procedures, standalone procedures, or the like. As you heard Tom say, and we know from the proposed rule, what you've seen across many therapeutic categories, not just ophthalmology but many others, and certainly across the board in ophthalmology, is a wholesale shift in the way CMS is calculating the professional fee economics and the RVUs that drive them.

I think there's an education process that has to happen led by the societies and the various groups that have a voice with CMS to help make sure that lands in the right spot, but where we land on it, I think was articulated by Tom in the prepared remarks. The reality of what we're seeing unfold only emboldens the move towards standalone glaucoma therapy as a pathway for the average practice to continue to remain financially viable as they move forward here and face that. To put that historical statement in context, there was a point where cataract surgery proceeds were over $2,000 a procedure. Today, obviously in the proposed rule, they're in the $400s. Obviously, doctors continue to do cataract surgery as the ubiquitous standard of care for that disease indication.

I think what you're going to see is more and more of those broader ophthalmologists leaning in to what we've been talking about, which is interventional glaucoma paradigm shift and starting to really treat these patients proactively as a part of both doing the right thing for the patient and the right thing for the practice.

Thomas Burns (Chairman and CEO)

I agree as well. Ryan, this is Tom. You look at the recurring changes and reductions in fees that are happening as we've now seen over the last several years in cataract surgery, and we believe that's going to continue going forward. I think not only do we have the immunization here under the current CMS provisions of category 3 codes of really high paying standalone payments for iDose and iStent Infinite, but I think as we go forward, these comprehensive ophthalmologists who right now are spending most of their time recruiting cataract patients for one and done procedures—this is catch and release—are going to start waking up to the value of looking at glaucoma as a long-term treatment pattern and what we're calling the forever patient.

With the forever patient, now with a statutory time of 20+ years from the time of diagnosis to life termination, there will be multiple opportunities for these surgeons to re-enter and to reimplant with procedural pharmaceuticals and with stents. I think that will start to really resonate with these comprehensive ophthalmologists not only as a more advanced standard of care for patients to stop the progression of glaucoma, but as an offset to the chewing that's happening on the professional fee side for their cataract surgery procedures.

Ryan Zimmerman (Managing Director and Medical Technology Analyst)

Yeah, thank you for the complete answer there. Thank you.

Thomas Burns (Chairman and CEO)

Welcome Sir.

Operator (participant)

Your next question comes from Rohin with JPMorgan. Please go ahead.

Hi, this is actually Rohin on for Alan, and thanks for taking the question. I just wanted to ask about the ramifications of the proposed reimbursement. To start off, just a higher facility fee offsetting the lower physician fees. How do you think about that and the impact for that next year? Do you view it as more of a rising tide that lifts all? MIGS boats or you just want to get a sense for how you're thinking about it?

Joseph Gilliam (President and COO)

Yeah, I think you're talking about the proposed rule around the facility payments, and obviously we were pleased to see those step up largely in line with the pace of inflation. I think in general that's a positive across the board for those folks who own and operate facilities and the manufacturers that provide tools and technologies and therapeutics into those facilities. I'm not sure I would call it out as a particular driver. As you think about the setup for 2026, it's more of a neutral but slightly positive event in the context of Glaukos and I think the other participants in the MIGS field.

Thanks. Just a quick follow up as well on SG&A. There was a fairly big step up in the quarter. Just want to get a sense for what's driving that relative to expectations, and how are you thinking about SG&A growth for 2026? Is that 10% level still a good way to think about it, or should we expect something a bit higher?

Alex Thurman (CFO)

Hey Rohin, this is Alex. Thanks for the question, and it is a great question. You're right, there was a little bit of a step up in both SG&A and total OpEx year-over-year, and during the quarter we want to point out that within that number, I'm going to speak to the total OpEx as an aggregate. Within the total OpEx number, there's about a $4 million one-time stock comp expense hit that occurred based on the triggering of certain performance awards that happened during the quarter. If you exclude that and you look at that on an adjusted basis, the OpEx would have grown around 16%.

As we guided in the past, we've always kind of said our OpEx this year would grow in the mid-teens. That's in line with what we would have expected excluding that stock comp expense. As you think about it on a go-forward basis, again speaking as a total OpEx, we would expect that third quarter to be roughly flat to our reported second quarter number, and the fourth quarter may be a sequential step up from there. When you put all that together, you're looking at something for the full year in the $460 million range, which is more the top end of the range that we were thinking about previously. That again translates to about mid-teens growth year-over-year.

Thank you.

Operator (participant)

Your next question comes from Simran with Wells Fargo. Please go ahead.

Hi, this is Simran on for Larry. Thanks for taking the questions here. Just one on guidance, any finer point on the cadence of sales in the back half? As I think about the color that you've provided around iDose and the different reimbursement updates with regards to the MACs, should we be thinking about sort of an incremental step up in Q3 and something that's a little bit more Q4 weighted and just sort of what would that exit rate imply for iDose beyond this year?

Joseph Gilliam (President and COO)

Yeah, hi Simran, it's Joe. I've probably given sufficient color in the context of the second half in totality. Maybe the best way to answer the question around, I'll call it the cadence from Q3-Q4, is to dial in a bit on what you typically see in Q3. As you know, in ophthalmology, certainly in our business, Q3 tends to be a seasonally down quarter just given summer holidays on a global basis. If I put a finer point on that in the context of our various franchises, the corneal health business tends to be kind of flat up a touch. I think with lower device sales and some potential Epioxa obviously related noise as anticipation grows for that product approval, the way to probably think about that is sequentially being a bit flat to what we saw in Q2 out of the Cornea Business.

International glaucoma usually takes a couple million dollar step down in Q3 relative to Q2. The U.S. glaucoma business, the non-iDose related portion, typically also takes a step down of a couple million dollars from Q2-Q3. We would expect obviously some iDose offset there to put you back into kind of positive territory Q3 versus Q2 on the U.S. glaucoma. You put all that together, I think where your model will land is sequentially down a bit relative to Q2. As often is the case in ophthalmology, Q4 becomes the important, more important of the two as we exit the year and a lot of procedures get done.

Okay, great. That's very helpful. Just for my follow up, we do continue to hear from physicians and our surveys that a high percentage of iDose cases are done in combo cataract. Can you share a national percentage with us, and how is that trending versus your expectations?

Yeah, I think there can be some noise in your sampling there, obviously, and it's not something that we track closely, nor are we able to. As you know, when a facility orders iDose at the end of that, there's no direct relationship to knowing whether or not they've done it in combination with cataract surgery or not. Having said that, we believe that the largest utilization continues to be in standalone procedures. As reimbursement gets solidified, surgeons naturally start to look at it in both settings, meeting the patient where they're at. If they've got elevated pressure and they're looking to control that, whether that patient has comorbidity with cataract or not, they're increasingly turning to iDose.

We would expect certainly over the intermediate period a little higher percentage being done in combination with cataract surgery than, say, at the beginning or certainly as we think about it over the next three, five, and ten year period. I wouldn't say that it's the dominant portion of what we're seeing today.

Operator (participant)

Great, thank you. Your next question comes from David Saxon with Needham. Please go ahead.

David Saxon (Equity Research)

Great. Thanks for taking my questions. Congrats on the quarter. A couple for me. One on iDose and then I'll have. One on corneal health. For iDose, specifically for the reimbursement, do you think we'll be at a place exiting the year where maybe six or all seven of the MACs are paying out the J-code? An established professional fee? Is there anything that needs to? Be done outside of just getting cases submitted for the four that are lagging to kind of catch up.

Joseph Gilliam (President and COO)

Yeah, David. Just, I think first of all on the iDose J-code itself, we're already largely seeing all of the MACs increasingly paying those as they should. As it relates to professional fee, which I think is the heart of your question, it is in large part a volume gain because what the MACs do is educate themselves on the procedure, the cost and resource utilization associated with that, and as they get more data points they're able then to arrive at the appropriate crosswalk and pricing of that category three code, and that's when they'll publish it. I think we, you know, as I noted earlier in the call, we've made an awful lot of progress with virtually all the MACs, probably with the lone exception being CGS. As I think about going forward, I certainly hope that that would be the case.

I can only say that we'll be doing everything possible from an advocacy and education and driving those required volumes to get the MACs to a place where they feel comfortable pricing it in a manner similar to what we've seen obviously already out of Noridian, Novitas, and First Coast.

David Saxon (Equity Research)

Okay, great, thanks for that. On Corneal hill. After Epioxa is approved, how are you thinking about rolling out the Epioxa cross-linking machine? My understanding is that it's going to be a different machine. Is that a trade in?it a new purchase? Over what period of time? Would you expect installed base to convert? Over to the new machine?

Joseph Gilliam (President and COO)

Yeah, it's a good question, David. I'm not going to get too deep into the particulars, obviously certainly in advance of an approval in hand. I think when we get to that point we'll give a lot more context. You raise one of many pertinent points around what will be the rollout and transition period from Photrexa as the standard of care today, what we expect with Epioxa. As you heard Tom mentioned in the prepared remarks, we do expect an impact from those that transition over the course of certainly the fourth quarter and into early next year, part of which is driven by what you're describing around getting the new system installed and out there.

Really the biggest driver of this is going to be simply the fact that most patients who are educated on the relative differences of the non-invasive procedure alternative that exists with Epioxa are going to want to defer to the extent they can to get access to what is a superior procedure from a patient perspective. We do expect there to be a bit of that, I'll call it warehousing of patients post approval until we're really fully up and running, both from a site of care perspective with the machines, as you're describing, as well as a patient access perspective from a reimbursement standpoint.

David Saxon (Equity Research)

Okay, great. Thanks so much.

Operator (participant)

Your next question comes from the line of Joanne Wuensch with Citigroup.

Joanne Wuensch (Managing Director)

Please go ahead. Good evening and thank you. Thank you for taking the question. I'm catching up here a little bit with others reporting, so forgive me, but did you comment on the full year guidance for iDose based on what you are seeing in the market at this stage? For my second question, as we start to think about the Epioxa approval, how do you start to think about when that revenue may begin to ramp? To your point, if patients are putting the procedure off until it is available, is there a wait list that's starting or is that too early? Thank you so much.

Joseph Gilliam (President and COO)

Yeah, hi Joanne. First on the iDose guide and a bit of a repeat and you'll be able to see it. I think the remarks, they become available. Really the punchline on iDose is as you weave your way through the second half across the various franchises, there's an implied, obviously, you know, it was the predominant part of the beat in the second quarter. Really on the heels of that, we've effectively raised our guidance for the full year around iDose and we continue to see that growing momentum that you'd hope for around the utilization of that, in particular in those regions where the professional fee has been established in Novitas and Noridian and First Coast as it relates to the Epioxa approval.

I think from a big picture standpoint, there's a series of things that have to take place to where you're really running with any new drug, certainly in a rare disease category like keratoconus. As we make our way through 2026, we expect to methodically unlock some of those. An important moment along that journey is the establishment of a J-code, which we would expect in mid-year. Even through the course of the year you're educating, in this case commercial payers, you're updating policies, you're doing all the blocking and tackling to get access for patients to a therapy that clearly they're going to want over the prior standard of care in the form of Photrexa. The last thing I think you referenced, no, there wouldn't be any formal wait list at this point, you don't have an approved product.

Those conversations aren't really happening, certainly not on behalf of Glaukos or our organization in any way, shape or form. It's possible that some surgeons, just simply because of the public nature of the trial or their involvement in it, would be having some conversations with patients, but I'd say that's probably on the margin at this point. It is something we expect to be an important dynamic that will play out post approval. As you make your way through into, call it, November and December in the fourth quarter, you can expect that an increasing percentage of those patients will be having exactly that conversation with their physician. We expect a significant portion of who can try to defer and get access to Epioxa just simply given the pain and the recovery time associated with Photrexa versus Epioxa.

Operator (participant)

Thank you. Your next question comes from Adam Maeder with Piper Sandler. Please go ahead.

Adam Maeder (Research Analyst)

Good afternoon. Thank you for taking the questions, and congrats on the quarter. Two for me both on iDose and I'll ask them up front. First, on the reimplantation decision from FDA, if I heard in the prepared remarks correctly, it's early 2026, before it was, you know, potentially before year end. Did we have a little bit of a wiggle there? If so, you know, why the change in timing? Secondly, for iDose Trio and the in-office opportunity, can you just put a finer point on timelines there and kind of what needs to be done to unlock the office opportunity for iDose? Thanks for taking the questions.

Thomas Burns (Chairman and CEO)

Yeah, Adam, this is Tom. I'll be happy to take both those questions. First of all, on the FDA's position with regards to high dose reimplantation, the wiggle, as you call it, there was the FDA recently classified our petition as an NDA supplement. With that, it gave us a PDUFA date which followed the statutory guidelines that they've set, which is now January 28, 2026, which gives us certainty now for understanding what the position will be. While we believe we've made a compelling case for reimplantation, as I've said in the past, I just want to alert the investment community that we are not at all counting on a positive outcome. It would be a very formidable upside if we were able to have a positive outcome on the high dose reimplantation discussions.

Secondly, with regards to iDose Trio, I think first it's important to note that we've already demonstrated that in our patient subset of a phase III clinical trial we stratified and we did a number of patients in office using the current iDose applicator and iDose device in an office setting. Those data we are now stratifying and we're pulling together for submission for a peer-reviewed publication as we speak, and we think they would replicate the safety and efficacy of iDose implantations that are done in the ASC. We are currently in the process of initiating discussions with MACs, as I've talked about before, with the intention of creating a non-facility payment code which will allow for the reimbursement of iDose implantation in an office setting. As I've stated previously, this will likely be a several months long process.

With regards to iDose Trio itself, we've gone through several enhancements of the improved iDose applicator. We continue to optimize the final engineering design and as I've said before, we're designing this new approach with the existing iDose device. The applicator will target an approximately 1mm incision and by doing so it should allow us to perform a closed chamber procedure which can maintain chamber pressure and minimize dehiscence of aqueous humor. That's aqueous humor that would kind of percolate out during the procedure. We have a final design which is now targeted to enter a U.S. clinical trial by year end. While the design itself and the clinical trial is relatively short, the FDA has asked us to perform some additional testing over the period of one year. We will now be targeting the approval of the high dose iDose Trio by year end 2027.

Let me just say this new product may aid in the transition for surgeons to in-office surgery, particularly as we establish non-facility payment codes at each of the individual MACs. It is the first of what I anticipate will be many development efforts that we will be making to optimize in-office implantation of iDose. I think the development of this product as well as our subsequent products comes at an enviable time as we think about the recurring reduction of cataract surgical fees, the future capacity constraints of ASCs, and the accelerating demographic patient demands of IG procedures that are going to continually drive surgeons to perform in-office implantations. Back to Tom's initial question. Where are we going? We have incredible standalone opportunity in front of us. We are driving and creating a new marketplace just like we've done previously creating the global MIGS marketplace.

We intend to do so as we go forward in the future. It will be led, spearheaded by procedural pharmaceuticals and by our stent combinations. I would say as well as you think about where this could go, I do believe that people will look for multiple mechanisms with single implantations. We will see surgeons, as they already are in the real world, start to put in iDose with the iStent Infinite or even a competitive product to be able to reduce target pressures where they can arrest the progression of glaucoma. I think we have an incredible opportunity in front of us. Implantation over the next five to ten years will be an accelerant to get the surgeons and patients to where I think they deserve to go.

Adam Maeder (Research Analyst)

It's a great color. Thanks, Tom.

Operator (participant)

Your next question comes from Richard Newitter with Truist Securities. Please go ahead.

Richard Newitter (Managing Director)

Thank you for taking the question. Just the first one. I was wondering if you could characterize. The utilization trends or really any kind of behavior you're noticing in situations where the professional fee is established by MACs and without. If you could specifically talk to everything from doc training, if you're noticing more docs getting trained or accelerating docs training in those situations or regions, too. Whether or not you're seeing combo cataract. Use potentially differ in prophy-on or prophy-established situations. Could you also characterize the utilization differences between the national average?The regions where you have a professional fee. Thank you.

Joseph Gilliam (President and COO)

Yeah, Richard. Some of this will be a bit of a rehash from earlier in the call, but I'm happy to do it. As you think about what's going on, I think the most important overall statement, and it's evidence of giving many of the answers to the questions you asked, is the continued acceleration in Novitas, Noridian, and First Coast that is exceeding that of the overall country. When you think about the performance that we just had in the second quarter and the fact that 50% of the Medicare lives are represented in those three MACs where you have an established professional fee, we saw over 80% of our iDose volumes come from those areas in Q2, and that's a percentage that's actually been increasing in recent quarters. The momentum there is driven by virtually everything that you just asked.

We see a faster pace of doctor training and onboarding. We see overall increased utilization at an increasing number of accounts where they move past trying and trialing and they start going into the full adoption mode, at least within the Medicare fee-for-service arena. We also see a widening of how they utilize it. In the early days, to minimize both clinical distraction as well as reimbursement distraction, we really mandate that they do these in standalone procedures. As they get their sea legs on both of those fronts, you see them start to expand into not just standalone procedures, but also utilizing it in combination with cataract surgery, really based upon the need for treating the glaucoma, irrespective of whether that patient has a cataract or not.

I would tell you that in virtually every KPI or metric, you might look at those regions that are contained within Novitas, Noridian, or First Coast, you're seeing outperformance relative to the other areas of the country.

Richard Newitter (Managing Director)

That's really helpful. Just a quick follow up. Thanks for the sequential growth. 2Q-3Q and then 2Q- 4Q. I just want to clarify, did you say that U.S. glaucoma would be up quarter-over-quarter, 2Q-3Q, where iDose is obviously up sequentially and core. Non-iDose is down and that's. Out to positive or just what's the directional trend on U.S. glaucoma quarter-over-quarter?

Joseph Gilliam (President and COO)

Yeah, I can confirm that. Obviously, procedure volumes in the third quarter are down, right? I mean, physicians are on vacation. There's a lot less activity in the third quarter than in the second. That has generally always been the case, at least certainly over recent years. What we've seen in prior years is that non-iDose business, if you will, is down a couple million dollars, which we would expect to get iDose offset. I think that should put us back into the positive category on a sequential basis for the U.S. Glaucoma franchise.

Richard Newitter (Managing Director)

Thank you.

Operator (participant)

Your next question comes from Michael Sarcone with Jefferies. Please go ahead.

Michael Sarcone (Equity Research Analyst)

Good afternoon and thanks for taking the questions. Just had a follow-up on the U.S. iStent business. Looks like it might have declined about 10% in the second quarter. Joe, I think in your walkthrough. For 2H you mentioned maybe mid single digit declines. I don't know if I'm splitting hairs here, but what trends would kind of occur where that performance would improve somewhat off of a kind of high single digit, low double digit decline in Q2.

Joseph Gilliam (President and COO)

Yeah, it's a good question, Michael. I'd say there's two things going on there. The first one is when you land at the 10%, there's probably a little bit of false precision around the division of what was non-iDose versus iDose even in the comparable period last year, the second quarter of 2024. I'll just reiterate what we said which is, you know, I think the combined stent plus expiration of the Hydrus royalty impact was a high single digit year-over-year impact. Now you raised a good point around the Q2 trend. We had anticipated that Q2 was going to represent the peak of the headwind if you will.

Even when we set guidance last quarter we made that assumption when we talked about the full year kind of being in that mid single digit headwinds area. The reason for that is there was a little bit of it was a tougher comp if you will in the second quarter given some of the dynamics and ordering patterns that happened in Q2 of last year in the non-iDose business that ease as we go forward here and we're seeing some of those trends play out already as we make our way here through July. I think we're confident that we've seen the peak of that headwind and as we think about the remainder of the year it should go back down to something that's in that mid single digits both for Q3 and Q4 as a headline.

Michael Sarcone (Equity Research Analyst)

Got it. That's really helpful Joe. And then maybe a quick follow up. I think in some of the prepared remarks. Remarks at the opening of the call you had mentioned some of the.Investments made in 2Q you might have.Generated about $4 million of cash from operations. I just wanted to dig a little deeper there. On an underlying basis, how are you thinking about cash flow generation in the near and midterm?

Alex Thurman (CFO)

Hey Mike, it's Alex. I'll take that one. Just to give you a little more flavor on the cash for the quarter and what Tom was saying in his prepared remarks, if you look at the change in cash between the end of the last quarter and the end of this quarter, that change was actually a decline of about $25 million. As Tom mentioned in his remarks, there were two transactions that occurred in the quarter. The first was the purchase of a building adjacent to our headquarters and the second was the acquisition of Mobius Therapeutics. The sum of those is about $30 million. When you take that and take that out of the -$25 million, you end up it's actually $29 million. You end up around a +4, 4.5 of cash generation in the quarter.

That's kind of the details around that as we think about going forward again. We continue to have the near term goal to manage our business such that we march towards cash flow break even or maybe small amounts of cash flow generation. Our goal continues to strike the right balance between our revenues and cash generation against the investments needed in both our new product launches and our rich pipeline in, you know, that you heard about as well in Tom's prepared remarks.

Joseph Gilliam (President and COO)

I think it's also worth adding that with iDose growth clearly comes. There's we have long-dated terms as you expect with any new product launch, and as we make our way through and you see this, there's a lag effect there to the cash flow benefit, the earliest of which you're starting to see obviously in the Q2 period that Alex was just talking about.

Michael Sarcone (Equity Research Analyst)

Really helpful, thank you.

Operator (participant)

Your next question comes from Mason Carrico with Stephens. Please go ahead.

Mason Carrico (Equity Research Analyst)

Hey, thanks for fitting me in here. I'll ask my two up front if that's easier here. When it comes to commercial payers, what? Are your expectations around how iDose is implemented into those coverage policies? I mean, is there an opportunity for it to be incorporated first line, should we be thinking about it as a second or third line potentially? As a second question, could you give us some insight into where iDose margins stand today? Does that product become accretive to overall corporate gross margins? Thanks.

Joseph Gilliam (President and COO)

Yeah, Mason, I'll start off and then Alex can answer the latter for the second question there. The good news is on the commercial payer policy we actually have a pretty high number of policies that we can point to in support of. In fact, both on the commercial policy standpoint as well as Medicare Advantage, over 50% of lives have a positive policy in place today and the vast majority of the remainder are silent.

Every day that goes by we're adjudicating claims within those environments and get confidence that patients can have access with those policies or those plans. The reality of the existing policy framework is the majority have iDose as either a second or third line procedure and it's entirely consistent with Durysta that obviously has been approved for a couple of years now. The policies themselves will differ, often requiring failure either on a single medication or two medications or a single medication in some form of an intervention prior to turning to iDose. That's okay for us out of the gate as we're launching the product, but you can imagine over time we'll continue to work on evidence and education of these payers to drive the iDose procedure closer and closer to first line therapy, where we believe it ultimately should belong over the next decade plus.

Alex Thurman (CFO)

Mason, on the margin, it's a great question and glad. You asked it because we were really pleased to see the margins come in at 83% in the quarter. That represented really modest accretion both on a year over year and a quarter by quarter basis. It also continues to be in. This 82%-84% range that we've been guiding to all year. We've said for some time now that with iDose, as you mentioned, that is a high margin product. That was success in the commercialization of iDose, and we'd expect to see accretion in the gross margin over time. We hope that we're starting to see it now and that we'll continue to see modest accretion over the remaining quarters here.

Mason Carrico (Equity Research Analyst)

Got it. Thank you.

Operator (participant)

Your next question comes from Anthony Petrone with Mizuho. Please go ahead.

Anthony Petrone (Managing Director Equity Research)

Thanks. I'll stick to two on iDose here. One, when you think about the cadence that we're seeing now, how much is from early adopters here that have been with iDose now maybe for a few quarters, them increasing utilization versus new physician adds, and then maybe just an update on managed care coverage for iDose. It sounds like based on some channel checks, you're starting to see a little bit of movement there. No official formulary coverage, but there are some claims being processed. Anything you can share on the managed care front for iDose would be helpful. Thanks.

Joseph Gilliam (President and COO)

Yeah. Anthony, first, there's always a lag effect, as I mentioned earlier, around physician awareness, adoption, and then ultimately the procedure volumes associated with that. These folks, as you know, have backlogs in terms of procedures and when they get scheduled. What we're seeing is a mix of expanding, I'll call it new physicians and the early dabbling, if you will, before they fully adopt, combined with increasing utilization of those early adopters and really tying into the second part of your question. What we're starting to see in its earliest phases is for those earliest adopters who are now really going closer and closer to full scale, they're starting to expand into that broader patient population of commercially covered lives as well as Medicare Advantage lives. There's obviously a process with that. It's different than dealing with Medicare, as you know.

The way we really continue to handle this is methodical crawl, then maybe walk and ultimately hopefully jog and run as we make our way through the coming quarters and years on an account by account basis. You really have to make sure that even when you've got proper policies in place that the account, the practice, are doing benefits verification, contracting, prior authorizations, claim processing, and all the things associated with proper managed care lives, that they're doing it in the right way. You want to ensure that success. We are moving intentionally, in a very methodical manner to make sure that they have a positive outcome, payer by payer and situation by situation, as they continue to grow over time we obviously expect this to be a significant portion of our business, especially the commercially covered lives, but we want to make sure that we set them up for success out of the gate here.

Anthony Petrone (Managing Director Equity Research)

Thank you.

Operator (participant)

Your final question comes from Danielle Antalffy with UBS. Please go ahead.

Danielle Antalffy (Senior Analyst)

Hey, good afternoon, guys. Thanks so much for taking the question. Congrats on a strong quarter here. Just a question on where you're seeing physicians adopt iDose. Could you maybe talk a little bit about how they're balancing iDose versus iStent and sort of what the decision pathway is to go with iDose versus iStent, and maybe just because it could serve as a snapshot of five years from now how these two different product lines are coexisting. Thanks so much.

Joseph Gilliam (President and COO)

Yeah, thanks, Danielle. Obviously it's still early days, and you have to sort of focus in more on those physicians who are adopting and are at the phase that Anthony's prior question or earlier doctors who are now moving into a part of their everyday practice paradigm in managing patients with glaucoma. I think what you're starting to see for those folks who are in that is that iDose becomes their foundational therapy. That's where they go first and foremost. That shouldn't be a surprise given how wide open that label is and the ability to treat patients up and down the disease spectrum. They then turn increasingly to the iStent or iStent Infinite, whether that be standalone or in combination at times with iDose to manage those patients who are progressing. They may have failed on a few more therapies along the way.

They want to make sure that they really take every chance to arrest the progression of that disease and hopefully avoid the progression towards a more invasive procedure like a tube or trab or other alternatives.

Operator (participant)

That concludes our question and answer session. I will now turn the call back over to the company for closing remarks.

Thomas Burns (Chairman and CEO)

Okay, thank you all for your time and attention today. We thank you for your continued interest and support of Glaukos. Goodbye.

Operator (participant)

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.