10-K
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGECOMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to
Commission File No. 001-37463
GLAUKOS CORPORATION
(Exact name of registrant as specified in its charter)
One Glaukos WayAliso Viejo, California 92656
(Address of principal executive office) (Zip Code)
(949) 367-9600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock GKOS New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐No☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. (See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2025, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of common stock held by non-affiliates of the registrant, based on the closing sales price for the registrant’s common stock as reported on The New York Stock Exchange, was $5,913 million.
The number of shares of the Registrant’s common stock outstanding as of February 18, 2026 (latest practicable date) was 58,078,812 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the 2026 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the close of the registrant's fiscal year ended December 31, 2025.
Table of Contents
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business. 4
Item 1A. Risk Factors. 19
Item 1B. Unresolved Staff Comments. 36
Item 1C. Cybersecurity. 36
Item 2. Properties. 38
Item 3. Legal Proceedings. 39
Item 4. Mine Safety Disclosures. 39
PART II
Item 6. [Reserved]. 41
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 55
Item 8. Financial Statements and Supplementary Data. 56
Item 9A. Controls and Procedures. 99
Item 9B. Other Information. 103
PART III
Item 10. Directors, Executive Officers and Corporate Governance. 104
Item 11. Executive Compensation. 104
Item 14. Principal Accountant Fees and Services. 104
PART IV
Item 15. Exhibits and Financial Statement Schedules. 105
We use Glaukos, our logo, iStent, iStent inject W, iStent infinite, iPrism, iDose TR, iPRIME, MIGS, Avedro, Photrexa, iLink, KXL, Epioxa, iLution, Retina XR, PRESERFLO Microshunt, Mitosol and other marks as trademarks. This report contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.
References throughout this document to the “Company,” “we,” “us,” “our,” or “Glaukos” refer to Glaukos Corporation and its consolidated subsidiaries.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Annual Report on Form 10-K contains forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). All statements other than statements of historical or current facts in this report or referred to or incorporated by reference into this report are forward-looking statements. In some cases, you can identify forward‐looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward‐looking statements contain these words. Forward-looking statements in this Annual Report on Form 10-K include statements regarding: future operations; expected operating results and financial performance; the Company’s strategy for growth; product development activities; regulatory approvals, including timing and likelihood of success; facility expansion and development; reimbursement rates and trends; market position and expenditures, and may be included under Item 1 - “Business,” Item 1A - “Risk Factors,” Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K. These forward-looking statements are based on management’s beliefs and assumptions based on the information currently available to management. Although we believe that we have a reasonable basis for each forward‐looking statement contained in this Annual Report on Form 10-K, we caution you that these forward-looking statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward‐looking statements.
You are urged to carefully review the disclosures we make concerning the risks we face and other factors that may affect the outcome of our forward-looking statements and our business and operating results, including the risks set forth below under “Risk Factors Summary” and further described in the “Risk Factors” section of this Annual Report on Form 10-K, which includes a discussion of important factors that may cause actual results to differ materially from those expressed or implied by any forward-looking statements. As a result of these factors, we cannot assure you that the forward‐looking statements in this Annual Report on Form 10-K will prove to be accurate, and actual results may differ materially from those expressed or implied by the forward‐looking statements. In light of the significant uncertainties in these forward‐looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans or that any of our expectations will occur in any specified time frame, or at all. You are therefore cautioned not to place undue reliance on the forward-looking statements included in this Annual Report on Form 10-K, which speak only as of the date of this document. We undertake no obligation to publicly update any forward‐looking statements, whether as a result of new information, future events or otherwise, except as required by law.
This Annual Report on Form 10-K contains market data and industry forecasts that were obtained from industry publications. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. Although we believe that the industry publications on which the market and industry statements are based are reliable and we are not aware of any misstatements regarding any market data or industry forecasts presented herein, we have not independently verified any of the third-party information.
WEBSITE REFERENCES
In this Annual Report on Form 10-K, we make references to our website at www.glaukos.com. References to our website through this Form 10-K are provided for convenience only and the content on our website does not constitute a part of, and shall not be deemed incorporated by reference into, this Annual Report on Form 10-K.
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Risk Factors Summary
Investing in our securities involves a high degree of risk. The following is a summary of the principal factors that make an investment in our securities speculative or risky, all of which are further described below in the section titled “Risk Factors” in Part I, Item 1A of this report. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing our business. In addition to the following summary, you should consider the information set forth in the “Risk Factors” section and the other information contained in this report before investing in our securities.
Risks Related to Our Business
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Failure to achieve commercial success of iDose TR or Epioxa could materially impact our business.
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Downturns or volatility in general economic conditions and public health crises could harm our business.
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Supply and/or manufacturing disruptions impacting our principal revenue-producing products could reduce our gross margins and negatively impact our operating results.
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We may not reach sustained profitability.
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We may fail to generate sufficient sales of our commercialized products or to develop and commercialize additional products.
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We are subject to a variety of risks associated with our international operations.
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We may not meet our customers’ expectations for the quality or delivery of our products, which could harm our reputation and sales.
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If ophthalmic surgeons do not use or if they misuse our products, our business could be harmed.
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We may fail to manage our anticipated growth effectively and may not be able to meet customer demand.
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We may be unable to retain or recruit qualified personnel for growth.
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We have and may continue to enter into acquisitions, collaborations, in‐licensing agreements, joint ventures, alliances or partnerships with third parties that could fail.
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Cybersecurity incidents, service interruptions, or data loss could materially disrupt our operations and adversely affect our business.
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Implementation of artificial intelligence and machine learning technologies may result in legal and regulatory risks, reputational harm, or other adverse consequences to our business.
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Failure to comply with data privacy and security laws could have a material adverse effect on our business.
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Our net operating loss tax carryforwards may not be available, or may be subject to certain limitations, to offset future taxable income.
Risks Related to Financing Transactions
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The capped call transactions may affect the value of our common stock, par value $0.001 per share (Common Stock) and subject us to counterparty risk.
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Risks Related to Our Regulatory Environment
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Healthcare legislative reform measures and changes in U.S. and international trade policies may have a material adverse effect on our business and results of operations.
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Compliance with applicable regulations can be costly and failure to comply with such regulations could harm our business, financial condition and operating results.
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Legislative or regulatory reform of the healthcare system could hinder or prevent our products’ commercial success.
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Inadequate or inconsistent reimbursement for our products may adversely impact our business.
Risks Related to Our Intellectual Property
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Failure to protect our intellectual property could substantially impair our ability to compete.
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Intellectual property claims or litigation could be costly, time-consuming and unsuccessful and could interfere with our ability to successfully commercialize our products.
Risks Related to Our Common Stock
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Provisions in our Certificate of Incorporation and Bylaws limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts.
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Our Certificate of Incorporation designates the sole and exclusive forum for certain types of actions and proceedings, which could limit our stockholders’ ability to obtain a favorable judicial forum.
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PART I
ITEM 1. BUSINESS
Overview
Glaukos is an ophthalmic pharmaceutical and medical technology company focused on developing novel, dropless therapies and commercializing associated products for the treatment of glaucoma, corneal disorders, and retinal disease. We first developed Micro-Invasive Glaucoma Surgery (MIGS) as an alternative to the traditional glaucoma treatment paradigm, launching our first MIGS device, the iStent, commercially in 2012. In 2024, we commenced commercialization activities for iDose® TR, a first-of-its-kind, long-duration, intracameral procedural pharmaceutical implant designed to continuously deliver glaucoma drug therapy inside the eye for extended periods of time. We also offer commercially proprietary bio-activated pharmaceutical therapies for the treatment of corneal disorders. Beyond our approved products, we continue to develop and advance a robust pipeline of novel, dropless platform technologies designed to meaningfully advance the standard of care and improve outcomes for patients suffering from chronic eye diseases.
Ophthalmic diseases and disorders are a national and global health concern and, as the population ages, the number of individuals with vision impairment and blindness is increasing. Moreover, improving access to cost-effective tools is increasing the diagnosis of sight-threatening ocular diseases globally and driving demand for innovative products, technologies, and therapies that improve clinical outcomes, demonstrate favorable safety profiles and provide ease of use and reliability. In response to the significant unmet needs that exist within ophthalmology we have designed commercial and development-stage solutions to provide ophthalmologists and other eye care professionals with various treatment options.
Our commercial solutions and development-stage product candidates include:
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procedural pharmaceuticals based on an intracameral drug delivery technology designed to reduce intraocular pressure (IOP) by delivering therapeutic levels of glaucoma medication from inside the eye over an extended period of time;
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MIGS products that primarily involve the insertion of a micro-scale device designed to reduce IOP by restoring the natural aqueous humor outflow pathways for patients suffering from glaucoma;
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bio-activated pharmaceuticals that are intended to strengthen, stabilize, and reshape the cornea for patients impacted by corneal ectatic disorders such as keratoconus;
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transdermal pharmaceuticals that are applied to the eyelid and designed to treat demodex blepharitis, myopia and other ocular surface diseases and disorders; and
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proprietary micro-invasive, bio-erodible posterior sustained release drug delivery implants that are designed to elute pharmaceuticals over time to improve the vision of patients impacted by retinal diseases such as age-related macular degeneration (AMD), diabetic macular edema (DME), and retinal vein occlusion (RVO).
Products and Pipeline
We operate in one operating segment and our primary business activity is the development and commercialization of therapies across several end markets within ophthalmology. In an effort to provide greater visibility into our business, the following discussion is presented based on our five principal novel platforms that address four therapeutic areas within ophthalmology: glaucoma, corneal disorders, anterior segment and posterior segment.
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iStent Micro-Scale Surgical Devices
Glaucoma is a group of eye diseases characterized by progressive, irreversible and largely asymptomatic vision loss in which elevated levels of IOP are often associated with optic nerve damage that can cause blindness. While some glaucoma patients do not experience an increase in IOP, it is widely considered a major risk factor in glaucoma’s progression, and reduction in IOP is the only clinically proven treatment for the disease. Elevated IOP occurs when aqueous humor is not circulating normally or properly draining from the front part of the eye. We have three primary commercialized micro-scale surgical device products designed to treat glaucoma: the iStent, the iStent inject W, and the iStent infinite, collectively referred to as the “iStent family of products.”
The iStent, and the iStent inject W are micro-bypass stents designed to treat mild-to-moderate open angle glaucoma through the restoration of the natural physiologic outflow pathways for aqueous humor. These stents are inserted through the small corneal incision made during cataract surgery and implanted in the trabecular meshwork of the eye. Our original iStent, a single stent device, obtained U.S. FDA clearance in 2012 and was the first commercially available MIGS treatment solution. The iStent inject W device includes two stents pre‐loaded in an auto‐injection system designed to allow the surgeon to inject stents through a single corneal entry and was approved by the FDA in 2018. The iStent and iStent inject W procedures are currently reimbursed in the U.S. by Medicare and all major national private payers. Some or all of the iStent family of products are commercially available in numerous countries, including certain European Union members, the United Kingdom, Japan, Australia, Canada and Brazil, even though reimbursement may not always be available for all such procedures.
In August 2022, we received FDA 510(k) clearance for the iStent infinite indicated for use in the treatment of patients with glaucoma uncontrolled by prior medical and surgical therapy. The iStent infinite product includes three stents preloaded into an auto-injection system that allows the surgeon to inject stents across a span of up to approximately six clock hours around Schlemm’s canal, the eye’s primary drainage channel. iStent infinite is our first FDA-cleared micro-bypass stent that can be used in either a standalone procedure or in conjunction with cataract surgery for glaucoma patients uncontrolled by prior medical and surgical therapy. Similar to its predecessors, iStent infinite procedures are reimbursed in the U.S. by Medicare and all major private payers. In June 2025, we received European Union (EU) Medical Device Regulation (MDR) certification for iStent infinite, marking our company’s first approval under the new EU regulatory framework. We subsequently commenced initial commercial launch activities for iStent infinite in several of our key European markets in 2025.
We have also licensed from Santen Pharmaceutical Co., Ltd. (Santen) the PRESERFLO MicroShunt. The MicroShunt is an ab-externo device being developed for treatment of glaucoma where IOP is uncontrolled with maximum tolerated medical therapy or where progression of the disease warrants surgery. We assumed clinical development responsibilities and commenced a Phase 3 clinical trial for the PRESERFLO MicroShunt in 2025, which we believe would be the basis to support potential future FDA approval. We have commercialized the PRESERFLO MicroShunt in various countries in which regulatory approval has been obtained. These include, but are not limited to, Canada, Australia, Mexico and Brazil.
Additionally, in May 2025 we acquired all of the outstanding equity interests in Mobius Therapeutics, LLC (Mobius), and began selling its lead product, Mitosol. Mitosol is the only FDA-approved ophthalmic formulation of mitomycin-C, which is often utilized as an adjunct in late-stage glaucoma filtration procedures, and is not expected to be a material source of revenue.
iDose Sustained-Release Pharmaceuticals
In December 2023, we received FDA approval for iDose TR, indicated for the reduction of IOP in patients with open-angle glaucoma or ocular hypertension. iDose TR is a first-of-its-kind, intracameral procedural pharmaceutical therapy designed to continuously deliver therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time. iDose TR is intended to improve the standard of care by addressing the ubiquitous patient non-compliance issues and chronic side effects associated with topical glaucoma medications.
iDose TR was initially launched in a controlled manner during the first quarter of 2024. Over the course of 2025, we continued to advance our U.S. commercialization plans for iDose TR.
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iDose TR is reimbursed by Medicare through established reimbursement pathways that include product, facility, and physician payment components. Medicare reimbursement for the iDose TR product is available under a permanent Healthcare Common Procedure Coding System (HCPCS) J-code, while facility fee reimbursement is provided under applicable temporary Current Procedural Terminology (CPT) codes and associated Ambulatory Payment Classification (APC). Physician fee reimbursement for procedures related to iDose TR is determined by the applicable multi-state, regional contractors, or Medicare Administrative Contractors (MACs), that are responsible for administering Medicare claims, consistent with Medicare reimbursement processes for procedures described by Category III CPT codes. Throughout 2025, we have been continuously working with the MACs to streamline and obtain consistent reimbursement payments for iDose TR related to the permanent J-code, the facility fee, and the physician fee. Lastly, iDose TR has broad coverage amongst the major national private commercial payers as well as their associated Medicare Advantage plans.
iLink Bio-Activated Pharmaceuticals
The cornea, the eye’s outermost layer, is a clear, dome-shaped surface that functions best as a lens when the cornea is strong and shaped properly. The cornea is responsible for the majority of the eye’s total focusing power and corneal disorders, including ectasia, refractive vision errors and dry eye, among others, can cause vision impairment. Corneal ectatic disorders are comprised of a class of diseases characterized by an ectatic, or misshaped, cornea. Corneal ectasia is typically caused by a weakening of the cornea, which can be due to a number of factors, including genetic causes, adverse side effects from ophthalmic refractive procedures such as LASIK, or excessive eye rubbing. We are currently targeting certain corneal disorders with our bio-activated pharmaceuticals including keratoconus, a rare disease, and corneal ectasia following refractive surgery.
Keratoconus is mostly a hereditary, degenerative ectatic disease that is often first seen in older children or young adults in which the typically round, dome-shaped cornea progressively thins and weakens, causing a cone-like corneal bulge due to normal internal pressure of the eye.
Corneal ectasia following refractive surgery is a serious complication that involves the cornea becoming weakened following a refractive procedure, such as LASIK, with symptoms similar to naturally occurring keratoconus.
Refractive vision errors, or the inability of the cornea to properly focus light, are prevalent in the U.S. and abroad and include disorders such as presbyopia and myopia. Presbyopia is a natural part of aging due to the hardening of the eye’s crystalline lens over time, resulting in a loss of lens elasticity or the ability of the lens to change shape in order to focus incoming light on the retina. Myopia, or nearsightedness, is a vision condition in which close objects are seen clearly, but objects farther away appear blurred, and is usually caused by an elongation of the eyeball or a cornea having too much curvature. Presbyopia affects nearly everyone over the age of 40 while myopia first occurs in school-age children and typically progresses until about age 20.
Our pharmaceutical iLink platform uses a suite of novel single-use drug formulations that are bio-activated by our proprietary systems to address these corneal diseases. The iLink therapies, bioactivated upon the delivery of ultraviolet A (UVA) light to the cornea, induce a biochemical reaction called corneal collagen cross-linking (CXL). CXL strengthens, stabilizes and reshapes the cornea to treat corneal ectatic disorders.
Our KXL System, which delivers UVA light to a large portion of the cornea, in conjunction with our Photrexa therapy, was approved by the FDA in 2016 for use in the U.S. following removal of the epithelium (often referred to as “epi-off”), a procedure familiar to ophthalmologists. We received FDA approval of our New Drug Application (NDA) for the iLink system using Epioxa therapy for the treatment of keratoconus without the removal of the epithelium (often referred to as “iLink epi-on”) in October 2025. We are preparing to commence commercial launch activities in the first half of 2026.
We are also advancing clinical trials for a third generation iLink therapeutic system and are investigating whether our bio-activated pharmaceutical products may also offer a means of improving the vision of patients with
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presbyopia, myopia or other corneal diseases. Internationally, our iLink pharmaceutical therapies can also be administered with the KXL System to address corneal weakening caused by refractive surgery such as LASIK.
iLution Transdermal Pharmaceuticals
We are developing our iLution platform of cream-based drug formulations that are applied to the outer surface of the eyelid for dropless transdermal delivery of pharmaceutically active compounds for the treatment of certain anterior segment eye disorders.
In September 2021, we entered into a licensing agreement with Attillaps Holdings, Inc. (Attillaps) to research, develop, manufacture and commercialize Attillaps’ proprietary library of investigational pharmaceutical compounds that target the eradication of Demodex mites, which are the root cause of Demodex blepharitis and often associated with meibomian gland dysfunction and related ophthalmic diseases. We commenced a Phase 2 clinical trial evaluating iLution for the treatment of Demodex blepharitis in the fourth quarter of 2025.
Retinal XR Bio-Erodable IVT Pharmaceuticals
Retinal diseases vary widely but universally affect the retina, a thin layer of tissue inside the back wall of the eye containing light-sensitive cells that convert light into neural signals. Most retinal diseases cause visual impairment, including blurred or distorted vision and vision loss. Our research and development (R&D) efforts in our Retinal XR platform are focused on treating AMD, DME, RVO, and other posterior segment retinal diseases with a longer duration-of-effect than current standard of care products.
AMD is a progressive disease that occurs when the macula, the central portion of the retina, is impaired, which can result in severe vision problems. DME is highly prevalent among individuals with type 2 diabetes and is associated with diabetic retinopathy (DR), the impairment of small blood vessels in the retina caused by increased glucose levels. Advanced DR can lead to fluid leaking into the macula, which causes DME and severe vision impairment. RVO occurs when the flow of blood from the retina is blocked, often due to a blood clot blocking the retinal vein, which can result in severe vision problems.
We are developing sustained release (SR) pharmaceutical retinal platforms leveraging our expanded pharmaceutical and sustained drug delivery R&D capabilities, including triamcinolone acetonide SR, multi-kinase inhibitor SR and anti-VEGF SR, as well as the proprietary technology licensed from Ripple Therapeutics Corporation. In 2023, we commenced a first-in-human clinical trial for our retinal intravitreal multi-kinase inhibitor designed to treat wet AMD patients.
Research & Development
We devote significant resources to our R&D efforts, which are focused on developing new products and enhancing the effectiveness, ease of use, safety, and reliability of our commercialized products. Our R&D objectives are:
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to advance glaucoma patient care through continuous improvement of our iDose and iStent platform technologies;
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to further enhance treatment options for corneal disorders such as keratoconus, while expanding iLink and CXL indications to include treatment for certain refractive and other rare corneal conditions;
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to develop dropless, transdermal pharmaceutical therapies for demodex blepharitis, myopia, and other ocular surface disorders and diseases; and
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to leverage our expertise in sustained release pharmaceutical retinal platforms to identify and develop viable treatment options for retinal diseases such as AMD, DME and RVO.
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A considerable portion of our R&D investment includes clinical trials and the collection of evidence that provide data for use in regulatory submissions and required post-market approval studies involving applications of our products. We expect our R&D and clinical expenditures to increase as we continue to devote significant resources to clinical trials and regulatory approvals of our pipeline products. We currently conduct R&D activities primarily in the U.S. but continue to expand our clinical capabilities to sites internationally.
Our current R&D pipeline includes the following programs:
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iStent infinite PMA pivotal Phase 3 clinical trial for treatment of mild-to-moderate glaucoma;
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U.S. IDE for the PRESERFLO MicroShunt;
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Second-generation extended release iDose TREX Phase 2b/3 clinical program;
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iDose TRIO Phase 3 clinical program;
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Next generations of the iDose platform (pre-clinical);
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iLink third-generation Phase 2 clinical program;
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iVeena Phase 1 clinical program;
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Keratoconus screening tool (pre-submission);
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Phase 2 clinical trial for iLution Blepharitis;
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iLution Myopia program (pre-clinical);
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IVT Multi-Kinase Inhibitor (GLK-401) Phase 2 clinical trial for AMD, DME and RVO; and
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IVT NCE Conjugate (GLK-411) for DME (pre-clinical).
Sales and Marketing
Our global sales efforts and promotional activities are currently aimed at ophthalmic surgeons and other eye care professionals. Our primary customers include ambulatory surgery centers (ASC), hospitals and physician private practices. In the U.S., we sell the majority of our products through a direct sales organization. Internationally, we sell our products primarily through direct sales subsidiaries but also through independent distribution partners in certain countries in which we do not have a direct commercial presence or only maintain a modest commercial presence. In 2025, sales to U.S. and international customers accounted for 74% and 26% of our net sales, respectively. No single customer or distributor accounted for more than 10% of our total net sales in 2025. For the year ended December 31, 2025, our iStent family of products, iDose TR, and related glaucoma accessories accounted for approximately 83% of our net sales, while our iLink therapies and associated products accounted for approximately 17% of our net sales.
Competition
The medical technology and pharmaceutical industries are highly competitive. We compete with many companies, including divisions of companies much larger than us that may have greater resources and name recognition, and smaller companies that compete against specific products or in certain geographies. Furthermore, new product development, discoveries, and technological changes characterize the areas in which we compete. Our present or future products could be rendered obsolete as a result of development advances made by one or more of our present or future competitors or by other surgical or pharmaceutical therapy innovations. We must continue to develop and commercialize new products, technologies and therapies to remain competitive in the ophthalmology industry. We believe that we compete primarily on the basis of clinical superiority supported by extensive data and innovative features that enhance patient benefit, product performance, and safety.
The ophthalmic segment of the medical technology and pharmaceutical industries is dynamic and subject to significant change due to cost-of-care considerations, reimbursement levels, regulatory reform, industry and customer consolidation and evolving patient needs. The ability to provide products, technologies and therapies that demonstrate value, are reimbursed through government or third-party payers, improve clinical outcomes,
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demonstrate favorable safety profiles, and provide ease of use and reliability is becoming increasingly important for companies within ophthalmology.
In glaucoma, our MIGS offerings primarily compete against Alcon, Sight Sciences, AbbVie, Iantrek, and New World Medical. Our procedural pharmaceutical product competes with AbbVie Inc. However, there are a considerable number of large and small companies providing other surgical glaucoma technologies, laser-based therapies, and pharmaceuticals that currently provide competition or with whom we may compete should our broad clinical development pipeline be approved and commercialized. In corneal disorders, we currently have the only FDA approved bio-activated pharmaceutical therapy for the treatment of keratoconus; however, we are aware of companies such as Epion Therapeutics that are developing competitive corneal cross-linking products, and there are certain pharmacies that compound pharmaceuticals that may be used by certain physicians in place of our Photrexa or Epioxa products, and globally we compete against numerous providers of corneal crosslinking therapies such as PeschkeTrade GmBH. Our anterior segment pipeline, if approved, would vastly expand our competition to numerous large companies such as AbbVie Inc., Alcon, Inc. and Johnson & Johnson, as well as some small companies that provide medical technology and pharmaceutical therapies for several areas including dry eye and refractive conditions. Our posterior segment pipeline, if approved, may face substantial competition from large pharmaceutical companies such as AbbVie Inc., Novartis AG, Genentech/Roche, Regeneron Pharmaceuticals, Inc. and Bayer AG, and there are also a considerable number of large and small companies with development efforts in the field.
Facilities, Manufacturing and Distribution
Our corporate headquarters, including certain administrative, laboratory, R&D and warehouse space, are located at a campus in Aliso Viejo, California (Aliso Facility) consisting of three leased buildings totaling 160,000 square feet of space, as well as certain real property consisting of land, a building of approximately 40,000 square feet and certain assumed leases, adjacent to the Aliso Facility. Our manufacturing operations for the iStent family of products and iDose TR are located in an approximately 120,000 square foot campus in San Clemente, California which is comprised of two main buildings, two suites and a warehouse. Our pharmaceutical therapies for keratoconus are primarily manufactured and supplied by third parties in the U.S. and Germany, and the manufacturing operations for the systems that bio-activate these therapies are located in approximately 60,000 square feet of space located in Burlington, Massachusetts. We recently reached agreement with the city of Huntsville, Alabama to build a brand-new 200,000 square foot R&D and manufacturing facility with construction anticipated to begin in 2026. Our international subsidiaries lease facilities in Australia, Brazil, Canada, Germany, Japan and the United Kingdom.
In the U.S., we distribute our iStent family of products directly from our campus in San Clemente, California, or from a third-party distribution center located in Memphis, Tennessee. Our iDose TR and Photrexa products are distributed using third-party logistics providers. Our KXL Systems are distributed from our facility in Burlington, Massachusetts.
Internationally, we distribute our products using our distribution center in Germany as well as certain third-party logistics providers in the United Kingdom, Japan, Australia, Canada and Brazil.
Intellectual Property
The strength of our competitive position depends substantially upon our ability to obtain and enforce intellectual property rights protecting our technology both domestically and internationally. We rely on a combination of intellectual property rights, including patents, trademarks, service marks, copyrights, trade secrets and other similar intellectual property, as well as customary contractual protections and security measures used to protect our proprietary, trade secret information.
In the aggregate, our intellectual property assets are of material importance to our business. We are significantly dependent on our patent and other intellectual property rights and the failure to protect such rights could negatively impact our ability to sell current or future products or prohibit us from enforcing our patents or
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other intellectual property rights against others. For additional information see the section titled Risks Related to Our Intellectual Property within Item 1A. “Risk Factors” of this Annual Report on Form 10-K.
As of December 31, 2025, we owned or exclusively licensed in certain fields of use over 500 issued patents, pending U.S. patent applications, issued foreign patents and pending foreign patent applications. We have obtained licenses from various parties, including Ripple Therapeutics Corporation, Attillaps, Iveena Delivery Systems, Inc. and Stuart Therapeutics, Inc. for patents, patent applications or other technology that we are currently or may in the future use in our R&D efforts. We may, from time to time, choose to acquire or license additional patents and patent applications, or we may choose to abandon, sell, or license certain Company patents and patent applications, depending on our needs. The issued patents that protect our commercial products and current product pipeline expire between 2026 and 2043.
Government Regulation U.S. Regulation & Reimbursement
Our products and operations are subject to extensive and rigorous regulation by federal, state, and local authorities, as well as foreign regulatory authorities. These governmental agencies regulate, among other things, the research, development, testing, manufacturing, approval, labeling, storage, recordkeeping, advertising, promotion and marketing, distribution, post approval monitoring and reporting, and import and export of medical devices and drugs (including drug/device combination products) in their respective jurisdictions to assure the safety and effectiveness of medical devices and drug products for their intended use. In general, there has been a trend of increased regulation of medical device and drug products which has resulted in, and will likely continue to result in, increased prices to bring new products to market.
U.S. Regulation & Reimbursement
The FDA has broad regulatory authority over medical devices and drugs in the U.S. The FDA regulates, among other things, product safety, efficacy, manufacturing, advertising, labeling and safety reporting.
Medical Device Requirements
Each medical device commercially distributed in the United States requires one of the following: (i) exemption from or clearance under a 510(k) premarket notification; (ii) approval under a PMA application; or (iii) approval of a de-novo classification petition.
The FDA classifies medical devices into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturing and regulatory control needed to ensure its safety and effectiveness. Class III devices, which include our iStent family of products that produce the majority of our revenue, are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices and devices deemed not substantially equivalent to a predicate device that the FDA has already cleared for marketing. Class III devices require FDA approval of the more demanding PMA application before marketing of the device can proceed. While the iStent, iStent inject W and the PRESERFLO MicroShunt are categorized as Class III devices and thus have been or would be generally subject to the more rigorous PMA approval pathway, the FDA determined that an appropriate predicate device existed for the iStent infinite and that 510(k) premarket notification was sufficient for clearance.
PMA Approval Pathway
In a PMA application process, the manufacturer must demonstrate that the device is safe and effective for its intended use, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials. If the FDA accepts the application for review, it has 180 days under the Federal Food, Drug, and Cosmetic Act (FDCA) to complete its review of a PMA, although in practice, the FDA’s review can take up to several years. The FDA will generally conduct a pre-approval inspection of the applicant’s or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the FDA’s Quality System Regulation (QSR). Even after a PMA approval, the FDA may require post-approval conditions to ensure the
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safety and effectiveness of the device, including additional clinical studies or post-market surveillance. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the PMA approval. Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which may affect the safety or effectiveness of the device, require submission of a PMA supplement.
Clinical Trials of Medical Devices
Clinical trials are almost always required to support a PMA for a Class III device. All clinical investigations must be conducted in accordance with the FDA’s investigational device exemption (IDE) regulations. If the device presents a “significant risk” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA showing with appropriate data that it is safe to test the device in humans and that the testing protocol is scientifically sound.
Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board (IRB) for each clinical site. During a study, the sponsor and any clinical investigators are required to comply with the applicable FDA requirements. After a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.
Post-Market Regulation
After a device is approved for marketing, numerous and pervasive regulatory requirements continue to apply. These include:
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establishment registration and device listing with the FDA;
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QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process;
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labelling, advertising and promotion regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling;
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FDA approval of product modifications of approved devices that affect safety or effectiveness or that would constitute a major change in intended use of an approved device;
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medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;
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correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and
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post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in, among other things:
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warning letters, fines, injunctions, consent decrees, civil penalties and criminal prosecution;
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recalls, withdrawals, or administrative detention or seizure of products;
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operating restrictions or partial or total suspension of production;
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refusing or delaying requests for approvals of new products or modified products;
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withdrawing 510(k) clearances or PMA approvals that have already been granted;
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refusal to permit the export or import of our products.
Drug Requirements
The development and commercialization of drug products is subject to extensive regulation by governmental authorities in the U.S. Before marketing in the U.S., a drug must undergo rigorous preclinical and clinical studies and an extensive regulatory approval process implemented by the FDA under the FDCA. Several of our products, including our recently-approved iDoseTR and Epioxa drug-led combination products as well as a number of potential future products in our pipeline, are subject to this regulatory approval process.
Before commencing clinical studies in humans in the U.S., we must submit to the FDA an investigational new drug (IND) application that includes, among other things, the general investigational plan and protocols for specific human studies and the results of preclinical studies. Once clinical studies have begun under the IND, they are usually conducted in three phases and under FDA oversight. These phases generally include the following:
Phase 1. Introduction into patients or healthy human volunteers to test for safety, dose tolerance and pharmacokinetics.
Phase 2. Introduction into a limited patient population to assess the efficacy of the drug in specific, targeted indications, assess dosage tolerance and optimal dosage, and identify possible adverse effects and safety risks.
Phase 3. Expansion to further demonstrate clinical efficacy, optimal dosage and safety within an expanded patient population.
The results of drug development, preclinical studies and clinical studies must be submitted to the FDA as part of an NDA. The NDA also must contain extensive manufacturing information. The Prescription Drug User Fee Act (PDUFA) establishes timeframes for FDA review of NDAs and the 2007 Food and Drug Administration Amendments Act gave the FDA authority to require implementation of a formal Risk Evaluation and Management Strategy to ensure that the benefits of a drug outweigh its risks. At the end of the review period, the FDA communicates either approval of the NDA or a complete response listing the application’s deficiencies.
As part of the NDA approval, the FDA may require post‐marketing studies, sometimes referred to as Phase 4 studies, to monitor the safety and effectiveness of approved drugs, which may limit further marketing of the drug based on the results of these post‐marketing studies.
If regulatory approval for a drug is obtained, the marketing of the drug will be limited to those diseases and conditions approved by the FDA and for which the drug was shown to be effective, as demonstrated through clinical studies and specified in the drug’s labeling. Even if this regulatory approval is obtained, a marketed drug, its manufacturer and its manufacturing facilities are subject to continual review and periodic inspections by the FDA. The FDA ensures the quality of approved drugs by carefully monitoring manufacturers’ compliance with its current Good Manufacturing Practice (cGMP) regulations, which contain minimum requirements for the methods, facilities, and controls used in manufacturing, processing, and packaging of a drug. The FDA may withdraw drug approval if compliance with post‐marketing regulatory standards is not maintained or if safety or quality issues are identified after the drug reaches the marketplace.
The FDA has determined that products previously regulated as drugs, which are comprised of a drug constituent part and a device part, may become subject to regulation as drug-led drug-device combination products. A drug-led drug-device combination product classification, such as iDose TR received, is based on the determination of the primary mode of action of the combination product. As a result, this change impacted the NDA submission
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for iDose TR, and may affect some of our pipeline products, such as future iDose platform drug-eluting implants. These products that are considered to be drug-led drug-device combination products will require review and coordination by both the FDA’s drug and device centers prior to approval, which may delay approval. In the U.S., a combination product with a drug primary mode of action generally would be reviewed and approved pursuant to the drug approval processes under the FDCA. In reviewing the approval application for such a product, however, FDA reviewers in the drug center will consult with their counterparts in the device center to ensure that the device component of the combination product meet applicable requirements regarding safety, effectiveness, durability and performance. Under FDA regulations, combination products are subject to cGMP requirements applicable to both drugs and devices, including the Quality System (QS) regulations applicable to medical devices.
We are also subject to various laws and regulations regarding laboratory practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances in connection with our research. In each of these areas the FDA and other regulatory authorities have broad regulatory compliance and enforcement powers, including the power to withdraw approvals.
Health Care Regulatory Laws
Additional laws and regulations also govern our business operations and products in the U.S., including among others:
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the federal health care Anti-Kickback Statute which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order, arrangement for, or recommendation of, items or services for which payment may be made, in whole or in part, under federal health care programs, and which has been interpreted broadly by courts and enforcement authorities, which impact our interactions with healthcare professionals;
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the federal civil False Claims Act which prohibits, among other things, knowingly presenting or causing the presentation of a false or fraudulent claim for payment of government funds, or knowingly making, using, or causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government. False Claims Act liability is significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties per false claim or statement for violations (adjusted annually for inflation) and actions may be brought by the federal government or by private individuals through "qui tam" actions;
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federal and state laws and regulations that govern the collection, dissemination, security, use, disclosure, deletion and confidentiality of patient‐identifiable health and other proprietary and personally-identifiable information, in particular, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their implementing regulations, as well as proposed or enacted state-level laws and regulations that create data privacy and security rights for state residents and obligations for certain entities, such as the California Consumer Privacy Act, the California Privacy Rights Act, the Virginia Consumer Data Protection Act and the Colorado Privacy Act, and similar laws enacted or proposed in other states. HIPAA and related federal statutes created federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program;
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the Physician Payments Sunshine Act, which requires applicable manufacturers like us to report annually to the CMS information related to payments and other “transfers of value” made to certain healthcare providers, including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives, and teaching hospitals, and ownership and investment interests held by such healthcare providers and their immediate family members; and
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federal and state government price reporting laws that require us to calculate and report certain drug pricing metrics to government programs, such as the average sales price of our Photrexa and iDose TR products, where such reported prices may be used in the calculation of reimbursement and/or discounts
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on our marketed pharmaceutical products, and prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs, including federal laws that require any company that participates in the Medicaid Drug Rebate Program (MDRP) also to participate in the Public Health Service's 340B drug pricing program (340B program) in order for federal funds to be available for the manufacturer's drugs under Medicaid and Medicare Part B. The 340B program requires participating manufacturers to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for the manufacturer's covered drugs. Recently, compliance with the 340B program has been subject to increased regulatory scrutiny, enforcement activity, and litigation.
Certain states also mandate implementation of corporate compliance programs, require adherence to the medical device or pharmaceutical industry’s voluntary compliance guidelines, impose restrictions on manufacturer marketing practices, require registration or licensing of manufacturers and their sales representatives, and/or require tracking and reporting of gifts, compensation, and other remuneration to healthcare professionals and entities. State enforcement authorities may impose additional or more restrictive requirements than federal law.
Violations of the health care regulatory laws described above; may subject us to administrative, civil, and criminal penalties, including imprisonment of individuals, the imposition of significant fines, monetary penalties, and damages, exclusion from participation in (or reimbursement for our products from) federal health care programs like Medicare or Medicaid, imposition of compliance obligations or monitoring, curtailment or restructuring of our operations, the invalidation of contracts, and damage to our reputation.
Medical Device Reimbursement - Medicare
Ambulatory surgery centers, hospitals and physician private practices that purchase our medical device products typically bill various third‐party payers, such as government programs, private insurance plans and managed care programs, to cover all or a portion of the costs and fees associated with the therapeutics or procedures in which our productsare used and bill patients for any applicable deductibles or co‐payments. In the U.S., there are distinct billing codes that are used by healthcare providers to report the provision of medical procedures and the use of supplies for specific patients to payers. There are different categories of Current Procedural Terminology (CPT ®) codes (Category I, II and III) based on the procedure or supply.
In the U.S., physicians are typically paid separately from the facility for surgical procedures involving our products. Physician fee payment rates for products covered by Category III CPT codes are set by the multi-state, regional contractors, or MACs, of which there are currently seven, that are responsible for administering Medicare claims. MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.
On January 1, 2025, CMS’ final rules on 2025 Medicare physician fee and facility fee payment rates (2025 Final Rule) became effective. The 2025 Final Rule did not materially modify the 2024 Medicare physician fee and facility fee payment rates with respect to physician fee and facility fee payment rates for procedures using our iStent family of products.
We estimate that approximately 80% of procedures utilizing our iStent family of products in the U.S. are performed in the ambulatory surgery center setting and the remaining estimated 20% of procedures are performed in the hospital.
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Drug Reimbursement – Medicare
On April 2, 2024, CMS assigned a unique, permanent HCPCS J-code for iDose TR indicated for the reduction of intraocular pressure in patients with open-angle glaucoma or ocular hypertension. The J-code for iDose TR, J7355, became effective July 1, 2024. J-codes are used by U.S. government and commercial payers, and providers, including surgeons, to streamline the billing and reimbursement process for procedural pharmaceuticals administered by a healthcare professional, such as iDose TR, along with other certain treatments. In addition to the J-code, effective April 1, 2024, CMS assigned the CPT codes to be used to report the procedural component of iDose TR, 0660T and 0661T, to APC 5492 (Level 2 Intraocular Procedures), effective April 1, 2024. The professional fees associated with an iDose TR procedure are being set by each individual MAC separately.
Our Photrexa pharmaceutical therapy indicated for the treatment of progressive keratoconus continues to be reported by providers and paid by payers under the permanent HCPCS (J-code) J2787. The associated CXL continues to be reported and paid under the Category III CPT code 0402T, for the professional fees associated with CXL procedure.
As a condition of having our iDose TR and Photrexa products covered under certain federal healthcare programs such as Medicare and Medicaid, we are required to participate in the MDRP with respect to all of our pharmaceutical products. Participation in the MDRP requires us to calculate and report certain pricing metrics to the government, comply with certain pricing limitations and pay a rebate to each state Medicaid program for our covered products based on utilization of our products by Medicaid beneficiaries. Any manufacturer that participates in the MDRP must also participate in the 340B program. The 340B program, which is administered by the Health Resources and Services Administration, requires participating manufacturer to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs. The 340B program ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the MDRP. To the extent applicable, these and other similar legislation or regulations will reduce the prices we can charge, and impact the rebate amount we must pay on sales of our products subject to those laws or regulations, particularly on sales to our customers if they qualify as covered entities eligible to receive the discounted 340B program ceiling price. Any changes to the limitations, calculations, or scope of these programs could negatively impact the results of our operations. Our participation in the MDRP affects our profitability through the need to increase our overall Medicaid rebate liability and the obligation to charge reduced prices to covered entities.
Reimbursement – Commercial Insurance Plans
In the U.S., no uniform policy of coverage and reimbursement exists among third‐party commercial payers; coverage and reimbursement can differ significantly from payer to payer. In addition, payers continually review new products for possible coverage and existing products for changes in coverage and can, without notice, deny coverage. Furthermore, providers tend to have unique contracts with each of the payers, thus adding another layer of complexity to the commercial reimbursement landscape.
International Regulation & Reimbursement
Regulation
In addition to regulations in the U.S., we are subject to a variety of regulations in other jurisdictions governing clinical trials, commercial sales and distribution of our products and reporting of payments to physicians. Whether or not we obtain FDA approval for a product, we must obtain authorization before commencing clinical trials or obtain marketing authorization or approval of a product under the comparable regulatory authorities of countries internationally. The approval process varies from country to country and the time may be longer or shorter than that required for approval in the U.S. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. In addition, certain countries have adopted transparency legislation that requires us to report contracts with or payments made to physicians in those countries and many have enacted anti-kickback laws and regulations, which generally prohibit the offer, receipt, or payment of remuneration in exchange for or to induce the use of our products.
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Similar to the trend within the U.S., certain major international markets are also moving toward more stringent regulatory frameworks for medical device and drug products. For example, in May 2017, the EU adopted a new regulatory scheme for medical devices under the Medical Device Regulation (MDR). The MDR became effective in May 2021 and the European Commission approved an extension of the transition period through 2028 for qualifying products. The MDR brings significant new requirements for many medical devices, including enhanced requirements for clinical evidence and documentation, increased focus on device identification and traceability, new definitions and registration of economic operators throughout the distribution chain, and additional post-market surveillance and vigilance, which could result in substantial additional expense. Additionally, the bio-activated therapy used with our crosslinking device to treat keratoconus in international markets, which is currently classified as a medical device in the EU and certain other countries, could be reclassified as a drug product, which would impose an entirely new regulatory framework on us and our contract manufacturers for this product, and compliance may prove costly and difficult or may not be achievable at all.
The EU has also adopted increasingly stringent data protection and privacy rules that have and will continue to have a substantial impact on the use of patient data across the healthcare industry. The EU General Data Protection Regulation (GDPR) became effective in May 2018 and applies across the EU. The United Kingdom has adopted the UK Data Protection Act 2018, a substantially equivalent version of the GDPR. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors. See the section titled Risks Related to Our Business within Item 1A. “Risk Factors” of this Annual Report on Form 10-K for more information related to the GDPR.
Reimbursement
Internationally, reimbursement levels vary significantly by country and by region within some countries. Reimbursement is obtained from a variety of sources, including government-sponsored plans, private health insurance plans, and combinations of both. Some countries require additional clinical data, or may impose additional obligations, such as payment of rebates, before granting or expanding coverage and reimbursement for our products. In general, obtaining broad‐based reimbursement and adequate payment for new technologies is more difficult in these markets than in the U.S. Many countries require new medical technologies to not only be safe and effective, but also to be able to demonstrate clinical benefits that outweigh the costs when compared to the standard of care. As in the U.S., reimbursement decisions can change, resulting in the elimination or reduction of reimbursement payments, which could adversely affect our financial results and our ability to invest in and grow our business.
Other Regulations
Our operations and many of the products we manufacture or sell are subject to extensive regulation by numerous other governmental agencies, both within the U.S. and internationally. In the U.S., apart from the agencies discussed above, our facilities, operations, employees, products (their manufacture, sale, import and export) and services are regulated by the Environmental Protection Agency, the Occupational Health & Safety Administration, the Department of Labor, Customs and Border Protection, the Department of Commerce, the Department of Treasury, the Department of Justice and others. State agencies also regulate our facilities, operations, employees, products and services within their respective states. Government agencies internationally also regulate public health, product registration, manufacturing, environmental conditions, labor, exports, imports, bribery and corruption and other aspects of our global operations.
These regulatory agencies and any current or future legislation could impact our business operations, reimbursement for our products, and the healthcare environment generally, which could adversely affect our ability to operate our business and our financial results. We cannot estimate the expenses we may incur to comply with potential new laws or changes to existing laws, or the other potential effects these laws may have on our business.
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Additionally, the U.S. government has recently made statements and taken certain actions that have created significant uncertainty about the future relationship between the U.S. and various other countries with respect to trade policies, treaties, government regulations and tariffs, which may lead to the imposition of tariffs and export control restrictions affecting certain products manufactured in certain other countries. On February 20, 2026, the U.S. Supreme Court struck down the international tariffs imposed by President Trump in 2025. President Trump has subsequently expressed his intent to reinstate the tariffs through other means which have not yet been disclosed. We are evaluating the impact of these developments, however we believe our exposure to such potential tariffs and export restrictions is limited as we do not source a significant amount of our raw materials and product components from countries other than the U.S. Nevertheless, unfavorable government policies on international trade, such as export controls, or tariffs, may increase the cost of manufacturing our commercialized products or developing our pipeline products, affect the demand for our products (if and once approved), or restrict our access to raw materials and components used in the manufacture of our current products and the development of our future products, each of which could negatively impact our financial condition and results of operations.
Human Capital Management
Glaukos is committed to developing a comprehensive, cohesive and positive employee experience. We consider talent attraction, development, engagement and retention a key driver of our business success. As of December 31, 2025, we had 1,094 full-time employees. Our Board of Directors, through the Compensation, Nominating and Governance Committee, retains direct oversight of our human capital management process, including executive succession planning, talent development, employee retention, material aspects of employee compensation as well as inclusive recruitment, retention and compensation efforts. We report on human capital matters at each regularly scheduled Board of Directors meeting and periodically throughout the year. The most significant human capital measures or objectives that we focus on in managing our business and our related human capital initiatives include the following:
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Health, Safety, and Wellness: We are dedicated to the safety and well-being of our employees. We continue to provide our employees with exceptional medical and dental benefits. In the U.S. we provide vision benefits for our employees and their dependents at no cost to them. In 2025 and 2024, we offered a wellness credit to all U.S. employees that provides reimbursement for certain health-related expenses such as gym memberships, to incent a healthy lifestyle, as well as a mental health toolkit that was developed to promote the various resources, programs and tools available to help support our U.S. employees and their families. We provide healthy snacks at all of our headquarters’ locations, and at certain sites we have implemented “Wellness Wednesdays” to provide shoulder massage services to our employees to enhance their well-being. We also established a cross-departmental Safety Committee to communicate safety information to their respective teams, act as their department’s liaison to bring up safety concerns or questions, and work to improve safety within the organization. Glaukos conducts periodic risk assessments and institutes controls intended to eliminate hazards and minimize risks. In 2024, we also implemented a voluntary disability insurance program for our California state employees.
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Philanthropy and Volunteerism: We created the Glaukos Charitable Foundation to assist the company in its philanthropic endeavors. In 2025, Glaukos donated approximately $5.3 million worth of its products to assist individuals in need. We regularly hold local volunteer events and fundraising campaigns, including approximately 60 in 2025, to encourage our employees to give back to our communities, a commitment that we further support by offering employees paid time off for charitable volunteering. One of our more impactful volunteer events involved Glaukos employees adopting over 320 disadvantaged families globally to help provide a more special holiday experience. We also have implemented an automated charitable giving platform that allows employees to donate to the Glaukos Charitable Foundation, or any other 501(c)(3) charitable organization, through payroll deductions.
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Training and Development: Employees receive regular development feedback through quarterly management check-ins during which they are encouraged to cultivate new skills and opportunities. We coach our leaders to facilitate effective conversations, and we measure the effectiveness of these conversations by surveying our employees. All people leaders are invited to participate in two formal leadership development programs. In addition, Glaukos offers a variety of open enrollment leadership classes. Furthermore, all new employees are required to participate in training seminars to introduce them to Glaukos’ products, pipeline and position within ophthalmology. We value knowledge and
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continuous improvement and conduct informational and training sessions to further expose our employees to different departments, projects and business priorities. Our company-wide learning management system contains thousands of learning activities and expanded leadership and technical training and is available to employees worldwide.
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Compensation and Benefits: To attract, retain and recognize talent, we aim to ensure merit-based, equitable compensation practices and strive to provide competitive compensation and benefit packages to our workforce. Employees at all levels are eligible for discretionary cash bonuses. To align employees with the organization’s performance, all U.S. employees are eligible to receive new hire and annual awards of restricted stock units. In furtherance of our commitment to internal pay equity and pay transparency, Glaukos conducts a global annual pay equity analysis to evaluate compensation distribution, which analysis is also conducted in connection with new hires and promotions. In recent years we expanded our global benefits programs, including broadening our employee assistance program globally. In the U.S., we added elderly and childcare and fertility treatment assistance. In 2024, we also introduced a student loan repayment program available to all full-time U.S. employees, pursuant to which the Company will make a monthly payment directly to an employee’s eligible student loan, up to a lifetime maximum. In the fourth quarter of 2024, we introduced a California Voluntary Disability Insurance (VDI) program for California based employees to provide a tax efficient method of funding approved medical leaves of absence when needed. In 2025, we enhanced our student loan reimbursement program monthly benefit amount and increased our 401(k) match to support employee financial wellness. We also implemented a global rewards and recognition platform with several tiers of recognition to allow employees to recognize each other and to provide managers another mechanism to recognize employee achievements that are above and beyond those planned in their goals.
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Employee Retention: Employee retention is crucial for the success of our organization. By retaining our employees, we can experience savings on hiring and training costs, preserve institutional knowledge and strengthen our culture. In order to keep our turnover rates low, we focus on maintaining a positive work environment where employees want to stay, offer competitive compensation and benefits, encourage career development and recognize and reward employees for their achievements and accomplishments. In 2025 and 2024, our overall employee voluntary turnover rate was 7.7% and 6.9%, respectively.
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For additional information on human capital matters, please see our most recent Sustainability Report, which is available on our website at www.glaukos.com. The information found on, or otherwise accessible through, our website is not incorporated by reference into, nor does it form a part of, this report or any other document that we file with the Securities and Exchange Commission (SEC).
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available on our web site at www.glaukos.com, free of charge, as soon as reasonably practicable after the electronic filing of these reports with, or furnishing of these reports to, the SEC. In addition, the SEC maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.
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Item 1A. Risk Factors
The risks and uncertainties discussed below are not the only ones facing our business but do represent those risks that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business. Please read the cautionary notice regarding forward-looking statements preceding Part I, Item 1 in this Annual Report.
Risks Related to Our Business
The commercial success of our iDose TR and Epioxa products is dependent upon multiple factors, the failure of any one of which could materially impact the prospects of these products and our business.
Our iDose TR travoprost intracameral implant was approved for sale in the U.S. by the FDA in December 2023 and we began commercializing the product in a controlled manner in February 2024. In October 2025, the FDA approved Epioxa, an innovation in keratoconus care, offering an incision-free alternative to traditional corneal cross-linking procedure, which the Company plans to begin commercializing in early 2026. The ultimate commercial success of these products will depend upon a number of factors, including physician training on and adoption of their use, establishment of consistent reimbursement, the availability and maintenance of commercial payor coverage, satisfactory patient outcomes, particularly as we continue our commercial launch, product pricing, duration of efficacy, our ability to manufacture product in volumes sufficient to meet customer demand, marketing in compliance with label restrictions. Our failure to successfully commercialize the iDose TR or Epioxa based upon these or other factors could materially adversely impact our net sales, our business, our stock price or our financial condition.
Unfavorable global and regional conditions have adversely affected, and could in the future materially and adversely affect, our business, results of operations, financial condition, liquidity, and cash flows.
Geopolitical conflicts, natural disasters and public health crises, and changes in U.S. trade policies that have occurred in recent years have led to or exacerbated certain unfavorable global and regional macroeconomic conditions, including inflation, volatility in the financial and credit markets, higher interest rates and capital costs, labor shortages, increased energy costs, tariffs, and currency fluctuations. These unfavorable global and regional conditions have had, and could continue to have, an adverse effect on the global economy, the regional economies that we serve and our business, results of operations, financial condition, liquidity and ability to access our existing cash, cash equivalents and investments. Continuation or worsening of these unfavorable global and regional conditions, or similar new events or crises, could have a material adverse effect on our operations, including through foreign exchange rate headwinds, higher operating expenses, key component shortages, and lower operating margins, and cause us to need to seek additional capital, which may not be available to us on favorable terms or at all.
Additionally, U.S. government shutdowns, including the shutdown that occurred in the fourth quarter of 2025, have impacted and could in the future impact certain regulatory agencies relevant to us, such as the U.S. FDA. Significant changes to operations at or the funding of such regulatory agencies could cause decreases in staff or changes in policy and enforcement priorities. Hospitals, ambulatory surgery centers and other health care providers may not purchase our products if reductions in agency staffing results in inadequate reimbursement from third-party payers for procedures using our products. If a government shutdown continues for a prolonged period of time, or if a widespread freeze on federal funding occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions or negatively affect sales of our products.
In recent years, unfavorable economic conditions have also adversely impacted several financial institutions, including some financial institutions with whom we have banking relationships, and certain banks have failed and gone into receivership. If banks and other financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash and cash equivalents to the extent those funds are not insured or otherwise protected by the FDIC.
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Public health crises have adversely affected, and could in the future adversely affect, our business, results of operations, financial condition, liquidity, and cash flows.
We have experienced, and may in the future experience, financial and operational impacts as a result of public health crises, which may be material, including:
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Impacts or delays to our product development efforts, including due to slowdown of new patient enrollment in clinical trials, such as we experienced in our 2020 and 2021 iDose clinical trial, or regulatory clearances and approvals;
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Costs associated with protecting the health of our employees and adhering to any guidance or orders of various governmental authorities, such as masking, testing, and social distancing requirements;
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Risks associated with remote work, including increased cybersecurity risk;
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Widespread staffing shortages and turnover, including in ambulatory surgery centers, and mandatory and voluntary quarantining, which may impact elective procedures;
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Outbreaks of disease in our facilities, which could require us to temporarily shut down manufacturing operations or cause a disruption to, or shortage in, our workforce;
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Delays in shipments of our products, which could harm our customer relations and adversely impact our competitive positioning and sales, including as a result of longer lead times, delays, higher prices and unfulfilled deliveries of our supply chain and development partners, each of which we continued to experience in 2025 and some of which we anticipate will continue into the near future;
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Restrictions on our personnel’s ability to access customers and clinical sites for training and support; and
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Volatility in credit or financial markets.
If the supply and/or manufacture of our principal revenue-producing products, the iStent family of products, our Photrexa therapies, or the iDose TR, or our recently-approved Epioxa therapies, is materially disrupted, it may adversely affect our ability to manufacture products and could reduce our gross margins and negatively impact our operating results.
Our sole manufacturing location for our iStent and iDose products is an approximately 120,000 square foot campus located in San Clemente, California, where we manufacture, inspect, package, release and ship nearly all of our implanted deviceproducts. We conduct substantially all of our research and development (R&D) activities, customer and technical support, and management and administrative functions at our corporate headquarters in Aliso Viejo, California (Aliso Facility). If either of our San Clemente or Aliso Facility suffers a significant disruption, including due to any natural disaster such as an earthquake, fire or flood, or if we lose insurance coverage for or are unable to renew insurance on these facilities, as some California residents have experienced, this could materially impact our ability to operate.
Additionally, we rely on a limited number of third-party suppliers, in some cases sole suppliers, to supply components for the iStent, the iStent inject models, the iStent infinite, the iDose TR, and our other pipeline products. If any one or more of our suppliers cease to provide us with sufficient quantities of components or drugs in a timely manner or on terms acceptable to us, we would have to seek alternative sources of supply. Because of factors such as the proprietary nature of our products, our domestic and international quality control standards and regulatory requirements including the FDA’s Quality System Regulation, the European Union’s Medical Device Regulation, and Current Good Manufacturing Practices (cGMP) regulations, we may be unable to obtain components or quickly engage replacement suppliers, who may not have access to previous suppliers’ proprietary processes, if our component suppliers are found to be in violation of such standards, which could delay or impact our business, including regulatory approval timelines. If our manufacturing facilities or those of any of our component suppliers or contract facilities are found to be in violation of applicable laws and regulations or fail to adequately remediate any issues discovered during an audit, the FDA or other regulatory bodies could take enforcement action. Despite our efforts to maintain an adequate supply of inventory, the loss of these suppliers, or their inability to provide us
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with an adequate supply of components or products, could cause delay in the manufacture of our products, thereby impairing our ability to meet the demand of our customers and causing significant harm to our business. Any disruption of this nature or increased expense could harm our commercialization efforts and adversely affect our operating results.
Our corneal health Photrexa therapies, and our Epioxa pharmaceutical therapies, which were approved by the FDA in October 2025, are produced by a small number of contract manufacturing organizations. The systems that bio-activate our Photrexa and Epioxa therapies are primarily manufactured in Burlington, Massachusetts. Any material disruption to the manufacture of these corneal health products could also adversely affect our operating results and clinical efforts.
We have incurred significant losses since inception and our operating results can be unpredictable and may fluctuate significantly from quarter to quarter, requiring substantial capital and operating expenditures for our business to operate and grow. These factors could adversely affect our business, financial condition, results of operations and the trading price of our common stock, and limit our ability to reach sustained profitability.
Since the Company’s inception in 1998, we have incurred significant operating losses. Although we have been profitable for certain periods in our operating history, there can be no assurance that we will be profitable or generate cash from operations in the future. As of December 31, 2025, we had an accumulated deficit of approximately $933.1 million, principally comprised of costs incurred in our clinical trials, R&D programs, our selling, general and administrative expenses, and from amortization expense related to our acquired developed technology intangible assets included in cost of sales. We have funded our operations to date from the sale of equity securities, including our June 2015 initial public offering, the issuance of notes payable, cash exercises of stock options and warrants to purchase equity securities, cash generated from commercial operations and the issuance of the Company’s 2.75% convertible notes due 2027 (Convertible Notes), which were fully exchanged, converted or redeemed in 2024. Our operations to date have been, and our future growth and success will be, impacted by our ability to expand our business, including the success of our marketing and sales efforts, our timely satisfaction of regulatory requirements, and our overall ability to maintain a competitive position. To implement our global business strategies we have made, and expect to continue to make, significant investments in R&D activities, clinical studies, expanding our manufacturing capabilities, growing our sales and marketing organization, engaging in market access activities, enforcing and defending our intellectual property rights, acquiring companies or in-license products and intellectual property, building our general and administrative infrastructure, and obtaining regulatory clearance or approval to commercialize our pipeline product globally and expand our existing products into international markets or products We expect our expenses will continue to increase as we pursue these objectives. While we believe we have sufficient cash to fund our operations for at least the next 12 months from the date our consolidated financial statements for the year ended December 31, 2025 are made publicly available, our ability to reach sustained profitability and generate positive cash flow in the future is highly uncertain.
Additionally, our net sales have in the past and may in the future experience volatility due to a number of factors, many of which are beyond our control, including, among other things, fluctuating demand, pricing pressures applicable to our products, changes in foreign currency exchange rates, Medicare payment rates established by U.S. Centers for Medicare & Medicaid Services (CMS) or Medicare Administrative Contractors (MACs) or changes in such rates or coverage, commercialization of our new products, the marketing of competitive products, transition-related sales disruptions when introducing new products, results of clinical research and trials, regulatory approval requirements and timings, legislative changes affecting our products, variances in the sales terms, an increase in demand for our patient assistance and/or free drug programs, supply chain and inventory management, shortage or increased cost of raw materials, seasonality in the timing or volume of customer orders, the length of our sales cycle, and reductions in revenue associated with our participation in Medicaid Drug Rebate Program (MDRP), which varies and may be unpredictable. For example, certain local coverage determinations (LCDs) finalized by five of the seven MACs in November 2024 that confirm non-coverage for surgical MIGS procedures in combination with other surgical MIGS procedures disrupted traditional customer ordering patterns and may have adversely impacted U.S. Glaucoma sales in 2024, 2025 and into the future. As a result, you should not rely solely on our results in any past period as an indication of future results and you should anticipate that fluctuations in our quarterly and annual
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operating results may continue and could generate volatility in the price of our common stock. Comparisons of our past financial results should not be relied upon as an indication of our future performance.
Our success depends on our ability to continue to generate sales of our commercialized products and develop and commercialize additional products, which we may not be able to accomplish.
Our primary sales-generating commercial products have been the iStent, the iStent inject and its successor, the iStent injectW, as well as our Photrexa therapies. While we expect to continue to derive a significant portion of our net sales from the iStent, the iStent inject models, the iStent infinite and the Photrexa therapies, as well as our iDose TR product, which was approved by the FDA in December 2023 and which we began commercializing in a controlled manner in February 2024 and our Epioxa therapies, which were approved by the FDA in October 2025 and which we plan to begin commercializing in a controlled manner in early 2026, it is important that we continue to build a more complete product offering. Developing additional products is expensive and time-consuming. Our research programs may fail to yield product candidates for clinical development despite showing initial promise. If we are unable to successfully commercialize additional products, our business prospects would be materially affected. Even if we are successful in developing our additional pipeline products, the success of our new product offerings is inherently uncertain and our products, or the expansion of labeling of our products, may not receive regulatory approval, may receive approval that requires restrictive labeling, may not be profitable, or may be subject to transition-related sales disruptions when we introduce new products that are intended to replace or supersede our existing commercial products. Any current or new products could also quickly be rendered obsolete by changing customer preferences, third party payer reimbursement levels, or the introduction of competing products that (i) embody superior technologies, features, safety, quality or efficacy, (ii) reflect a broader label indication, or (iii) are available at lower prices. Our competitors include large publicly traded companies or divisions thereof and have more resources, greater name recognition, longer operating histories, more established relationships with healthcare professionals, customers and third-party payers, broader products lines, more established sales and marketing programs and distribution networks, and greater experience in obtaining regulatory clearance or approval. Additionally, the period of orphan drug exclusivity with respect to our Photrexa pharmaceutical therapy expired in 2023, which has enabled third parties to develop potentially-competitive products.
As our growth strategy turns increasingly global, we are, and will continue to be, subject to a variety of risks associated with our international operations, which could adversely impact our results of operations and financial condition.
Our existing foreign operations, as well as our planned international growth, expose us to additional uncertainty and risks beyond regulatory authorization and reimbursement levels. We sell our products through direct sales organizations and a network of third-party distribution partners in other markets. These international operations expose us and our subsidiaries and third-party distributors to a variety of risks including, without limitation, the following:
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different, and in some cases more exacting and lengthy, regulatory approval processes, regulations and laws, pricing and reimbursement systems, and rebate requirements applicable to us, our suppliers and distributors;
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reduced or varied protection for intellectual property rights or difficulties enforcing our intellectual property rights and defending against third-party threats and intellectual property enforcement actions against us, our distributors, or any of our third-party suppliers;
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pricing pressure or longer sales and payment cycles;
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different competitive dynamics, including smaller market sizes, which we may not be able to fully appreciate before entering certain foreign markets;
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a shortage of qualified sales personnel and distributors;
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the challenges of managing foreign operations;
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relative disadvantages compared to competitors with more recognizable names, longer operating histories and better established distribution networks and customer relationships;
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political and economic instability, international terrorism and anti-U.S. sentiment, or the imposition of U.S. or international sanctions that could restrict or prohibit continued business;
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changes or increases in duties and tariffs, reciprocal and retaliatory tariffs, license obligations, import and export laws and other non-tariff barriers to trade;
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scrutiny of foreign tax authorities that could result in significant fines, penalties and additional taxes;
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different cultural norms which may impact how business is conducted;
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laws and business practices favoring local companies;
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difficulties in maintaining consistency and compliance with our internal guidelines;
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difficulties in enforcing agreements and collecting receivables through foreign legal systems;
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risks of money laundering, bribery and corruption practices, off-label promotion or breach of sanction regulations by our personnel or distributors, which may be difficult for us to discover or prevent;
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failures by our third-party partners to properly assist us with local guidance on operations, financial and other reporting, accounting, tax, payroll, legal and regulatory matters; and
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costly and complex export requirements and restrictions, particularly relating to technology.
If we experience any of these risks, our sales in non-U.S. jurisdictions may be harmed, our results of operations would suffer, and our reputation and business prospects would be negatively impacted. Additionally, we are exposed to changes in foreign currencies relative to the U.S. dollar, which are references to the differences between the foreign-exchanges rates we use to convert the financial results of our international operations from local currencies into U.S. dollars for financial reporting purposes. This impact of foreign-exchange rate changes is calculated based on the difference between the current period’s currency exchange rates and that of the comparable prior period. Further, significant foreign exchange rate fluctuations resulting in a decline in the respective local currency may decrease our revenues and earnings from our foreign operations. As a result of our global operations, our revenue, gross margins, operating expense and operating income in some international markets have been and may continue to be affected by foreign currency fluctuations.
If the quality or delivery of our products does not meet our customers’ expectations, our reputation could suffer and ultimately our sales and operating earnings could be negatively impacted.
As a manufacturer, we have addressed and must continue to address quality issues associated with our products, including in our engineering, design, manufacturing and delivery processes, as well as issues with third-party pharmaceuticals or components included in our products. Because our products are highly complex, the occurrence of performance issues may increase as we continue to introduce new products and rapidly scale up manufacturing to meet increased demand. Although we have established internal procedures to minimize risks that may arise from product quality issues, there can be no assurance that we will be able to eliminate or mitigate occurrences of these issues and associated liabilities. In addition, identifying the root cause of performance or quality issues, particularly those affecting third-party components or other elements, may be difficult, which increases the time needed to address quality issues as they arise and increases the risk that similar problems could recur. Finding solutions to quality issues can be expensive and we may incur significant costs, lost revenue or reputational damage in connection with, for example, shipment holds, product recalls and warranty or other service obligations. Quality issues can also impair our relationships with new or existing customers or result in product liability suits against us, which may be expensive to defend and could impact the reimbursement coverage of our products, our product liability insurance rates and/or our cash reserves in the event our existing insurance coverage is insufficient. The occurrence of any of the foregoing could harm our reputation as a producer of high-quality products and could adversely affect our business, financial condition or results of operations.
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Ophthalmic surgeons may not use our products if they do not believe they are safe, efficient, effective and preferable alternatives to other treatment solutions in the market or may use our products without being adequately trained, which could result in inferior clinical outcomes.
We believe that ophthalmic surgeons and other healthcare providers will not use our products unless they conclude that our products provide a safe, efficient, effective and preferable alternative to currently available treatment options. Publications of clinical results by us, our competitors and other third parties may impact whether, and the degree to which, our products are used by physicians and the procedures and treatments those physicians choose to administer to their patients. If ophthalmic surgeons determine that any of our products are not sufficiently effective, efficient or safe, whether based on longer-term patient studies or clinical experience or unsatisfactory patient outcomes or patient injury, our sales would be harmed. Surgeons may base such determination on patient outcomes that are the result of other unqualified surgeons performing procedures for which they haven’t been trained. It is also possible that as our products become more widely used, latent defects could be identified, creating negative publicity and liability problems for us and adversely affecting demand for our products. If an increasing number of ophthalmic surgeons do not continue to adopt the use of our products, our operating and financial results will be negatively impacted.
If we fail to manage our anticipated growth effectively, we may not be able to meet customer demand for our products and our business could suffer.
Since the commercial launch of the iStent in 2012, we have seen significant period-to-period growth in our business, both organically and through transactions, and we must continue to grow in order to meet our business and financial objectives. However, continued growth creates numerous challenges, including, among others, new and increased responsibilities for our management team; increased competition; increased and, with respect to new products such as the iDose TR, uncertain product demand which could strain our manufacturing capacity or create product shortages; the management of an increasing number of customer, supplier and other relationships; increased pressure on our operating, financial and reporting systems; entry into new international territories with unfamiliar regulations and business approaches; and the need to hire, train and manage additional qualified personnel. If we fail to manage any of these challenges effectively, our business may be harmed.
If we are unable to retain or recruit qualified personnel for growth, our business results could suffer.
We have benefited substantially from the leadership and performance of our senior management and other key employees. For example, our chief executive officer, as well as other key members of our senior management, has experience successfully developing novel technologies and scaling early-stage medical device and pharmaceutical companies to achieve profitability. We also rely on our qualified sales representatives and on consultants and advisors in our research, operations, clinical and commercial efforts to grow our business, develop and commercialize new products and implement our business strategies. Our success will depend on our ability to retain our current management and key employees, consultants and advisors, and to attract and retain qualified personnel in the future, including by providing competitive compensation and benefit programs, flexible work arrangements, career advancement prospects and sufficient opportunities to develop leadership, managerial and other valuable skills. The loss of services of these personnel, which could occur without notice and without cause, could prevent or delay our growth plans and the implementation of our strategic objectives, or divert management’s attention to seeking qualified replacements. Our U.S. employees, including our senior management, are not subject to non-competition agreements. Accordingly, the adverse effect of losing key personnel could be compounded by our inability to prevent them from competing with us.
We have and may continue to enter into acquisitions, collaborations, in-licensing agreements, joint ventures, alliances or partnerships with third parties that could fail or result in litigation.
We have and may continue to enter into acquisitions, collaborations, in-licensing agreements, joint ventures and partnerships in order to retain our competitive position within the marketplace, develop new products or expand into new markets. Examples include our acquisitions of Mobius Therapeutics, LLC, DOSE Medical, and Avedro, as well as our licensing of Santen’s PRESERFLO® Microshunt® (Preserflo MicroShunt), and the Attillaps, iVeena, Ripple and Stuart pharmaceutical compounds. However, we cannot assure you that we will be able to successfully
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complete any future acquisition we may pursue, or that we will be able to successfully integrate any acquired business, product or technology in a cost-effective and non-disruptive manner. Our future successes will depend, in part, on our ability to manage an expanded business, which may pose substantial challenges for our management, such as increased costs and complexity. There can be no assurances that we will be successful in managing such expanded business or that we will realize the expected economies of scale, synergies and other benefits currently anticipated from recent or future acquisitions or strategic transactions. Additionally, these collaborations, joint ventures, and partnerships may fail to result in any commercialized product, including due to delays in or failures to obtain regulatory approvals, such as the failure to receive approval of the PreserFlo MicroShunt in the U.S., and could require us to invest a substantial amount of resources only to ultimately change regulatory strategies or to fail. In addition, these arrangements may be terminated before we are able to realize net sales to sufficiently cover the costs associated therewith, or result in disputes between the parties that ultimately results in litigation, which could materially impact our business. We cannot assure you that any such transaction would result in the benefits expected from the transaction, including revenue growth, increased profitability or an enhancement in our business prospects. Further, pursuing acquisitions, collaborations, in-licensing agreements, joint ventures, alliances or partnerships with third parties, whether or not completed, is costly and time-consuming and could distract Company management from the operation of the business, which could negatively impact our operating results.
Failure to protect our information systems against cybersecurity threats, cybersecurity incidents, service interruptions, or data loss could materially disrupt our operations and adversely affect our business, operating results, or the effectiveness of our internal controls over financial reporting.
The efficient operation of our global business depends on our information systems, including telecommunications, the internet, network communications, email and various computer hardware and software applications. We rely on our information systems to effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, quality systems, customer service and technical support functions. Our information systems are vulnerable to damage, interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, data loss and security breaches or other cybersecurity incidents, some of which we have experienced and continue to monitor and expect may experience in the future. Cybersecurity incidents, which might be related to industrial, state-sponsored, and/or economic espionage, or financial cyber extortion or fraud, can include ransomware, computer denial-of-service attacks, worms, covertly introducing malware and spyware, and other malicious software programs introduced to our computers, networks and products (or to an electronic system operated by a third party for our benefit), including intrusions that are designed to evade detection for an extended period of time or impersonate authorized users, phishing attacks, social engineering attacks, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities or weaknesses, as well as intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage. Additionally, cybersecurity threats and the techniques used in cyberattacks change, develop and evolve rapidly, including from emerging technologies, such as advanced forms of artificial intelligence (AI) and quantum computing. Further, use of AI by our employees, third-party service providers, strategic partners or other contractors or consultants, whether authorized or unauthorized, increases the risk that our intellectual property and other proprietary information will be unintentionally disclosed. While none of the cybersecurity incidents or service interruptions that we have experienced to date have had a material adverse impact on our business, financial condition or operations, the preventative measures we have implemented to date may not be sufficient to prevent, mitigate or offset a future incident that may materially and adversely impact us and the cybersecurity insurance we have obtained may or may not cover such an incident. In addition, some of our software systems are cloud-based data management applications, hosted by third-party service providers whose security and information technology systems are subject to similar risks. The failure to protect either our or our service providers’ information technology infrastructure could disrupt our entire operation, resulting in decreased sales, increased overhead costs, product shortages, or loss or misuse of intellectual property or data, including proprietary, confidential, sensitive or personal information, all of which could have a material adverse effect on our reputation, business, financial condition and operating results or result in investigations, claims and administrative penalties by regulators.
Our enterprise resource planning (ERP) system is integral to our ability to accurately and efficiently maintain our books and records, record transactions, and prepare our financial statements. Any disruptions or
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difficulties that may occur in connection with our ERP system (whether in connection with the regular operation, periodic enhancements or upgrades of such systems, or due to cybersecurity incidents) could adversely affect our ability to provide services, fulfill contractual obligations, file reports with the SEC in a timely manner, operate our business or otherwise affect our controls environment. If our independent registered public accounting firm determines that we have a material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the New York Stock Exchange, the SEC, or other regulatory authorities. Any of these events could have an adverse effect on our operating results and financial condition.
We have incorporated and continue to further incorporate artificial intelligence into our internal operations. Implementation of artificial intelligence and machine learning technologies may result in legal and regulatory risks, reputational harm, or other adverse consequences to our business.
We have and are continuing to incorporate artificial intelligence (AI), including machine learning and independent algorithms, in certain of our business processes, including for research and development purposes. As with many innovations, AI presents risks and challenges that could undermine or slow its adoption, and therefore harm our business to the extent we increase our reliance on AI in the future. Moreover, our competitors may introduce AI technologies and features into their operations that result in greater efficiencies or other competitive advantages over us. Additionally, AI algorithms may be flawed or datasets may be insufficient or contain biased information resulting in perceived or actual negative outcomes. If the output that AI algorithms assist in producing are or are alleged to be inaccurate, deficient, or biased, our business, financial condition, and results of operations may be adversely affected. The use of AI could pose security and other risks to our confidential or proprietary information, including personal, customer or patient information, or could expose us to legal liability and reputational harm in the event AI output includes third party proprietary information. Issues relating to the use of new and evolving technologies such as AI that we integrate into our operations may cause us to experience brand or reputational harm, competitive harm, legal liability, new or enhanced governmental or regulatory scrutiny, and to incur additional costs to resolve such issues.
Several laws have been enacted at the U.S. state level that regulate the development and deployment of AI platforms and systems. Federal agencies in the U.S. are applying existing laws to address AI-related risks. An Executive Order issued in December 2025 seeks to establish uniform federal standards and challenge state laws that regulate AI. As with data privacy laws, these state laws and possible federal regulation could have significant effects on us and require us to change our AI practices and incur substantial costs and expenses in order to comply. Additionally, many countries and regions, including the EU, have proposed or passed new and evolving regulations related to the use of AI and machine learning technologies. The regulations may impose onerous obligations and may require us to unexpectedly rework or reevaluate improvements to be compliant. In particular, the EU Artificial Intelligence Act, which was adopted on June 13, 2024, may affect our use of AI technologies, may require additional compliance measures and changes to our operations and processes, and expose us to increased risk of regulatory enforcement and litigation. Furthermore, some of the AI features involve the processing of personal data and may be subject to laws, policies, legal obligations, and codes of conduct related to privacy and data protection, and could subject us to competitive harm, regulatory enforcement, increased cyber risks, reputational harm, and legal liability.
Failure to comply with data privacy and security laws could have a material adverse effect on our business.
We are subject to state, federal and foreign laws relating to data privacy and security in the conduct of our business, including state breach notification laws, the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, the European Union’s General Data Protection Regulation (GDPR), the U.K. Data Protection Act and the U.K. GDPR, the California Consumer Privacy Act, and the California Privacy Rights Act, among others. These laws affect how we collect and use data of our employees, consultants, customers and other parties, including patients treated with our products. They may further restrict our transfer and use of such data, and may allow individuals to make requests or exercise rights that could limit use of data and require the expenditure of significant resources and time and effort to
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address. In addition, as a result of the release and availability of AI technologies, including generative AI platforms, we have seen a global trend toward more comprehensive and refined regulation of AI that may impact our business, such as the EU AI Act, that are designed to ensure the ethical use, security, and privacy of AI and create standards for transparency, accountability, and fairness. These laws, as well as similar laws being enacted by other states and countries, impose substantial requirements that involve the expenditure of significant resources and the investment of significant time and effort to comply. We also rely on third parties to host or otherwise process some of this data. In some instances, these third parties have experienced failures to protect data privacy. Our failure or the failure of these third parties to comply with these laws or prevent security breaches of such data could result in significant liability, fines and penalties under applicable data privacy laws, cause disruption to our business, harm our reputation and have a material adverse effect on our business.
We cannot be certain that our net operating loss tax carryforwards will be available to offset future taxable income.
At December 31, 2025, we had approximately $546.9 million, $455.1 million and $5.8 million of net operating loss (NOL) carryforwards for federal, state and foreign purposes, respectively. Portions of federal NOL carryforwards incurred prior to 2018 will expire annually, if unused, while $346.9 million will not expire but can only be used to offset 80 percent of federal taxable income. Additionally, portions of state and foreign NOL carryforwards will expire annually, if unused.
At December 31, 2025, we had federal and state R&D credit carryforwards of approximately $56.3 million and $33.0 million, respectively. Portions of federal and $5.9 million of state R&D credits will expire annually, if unused, while $27.1 million of state R&D credits carry forward indefinitely. Additionally, at December 31, 2025, we had California economic development credit carryforwards of $3.0 million. These economic development credits can only be used to offset California taxable income and begin to expire in 2028, if unused.
We continue to provide a valuation allowance against a portion of these tax attributes because we believe that uncertainty exists with respect to their future realization. Utilization of these tax attributes may be subject to annual limitations under Internal Revenue Code Sections 382 and 383 if we experience an ownership change. To the extent available, we intend to use these NOL and credit carryforwards to offset future taxable income and/or income tax liabilities associated with our operations. There can be no assurance that we will generate sufficient taxable income in the carry forward period to utilize the remaining tax attributes before they expire.
Risks Related to Financing Transactions
The capped call transactions may affect the value of our common stock, and subject us to counterparty risk.
In connection with the issuance of the Company's 2.75% convertible notes due 2027 (Convertible Notes), which were fully exchanged, converted or redeemed in 2024, we entered into capped call transactions with certain option counterparties. The capped call transactions initially covered, subject to customary adjustments, the number of shares of common stock initially underlying the Convertible Notes. The capped call transactions were expected generally to reduce the potential dilution of our common stock upon any conversion of the Convertible Notes or at our election (subject to certain conditions), offset any cash payments we would be required to make in excess of the aggregate principal amount of converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap. We have been advised that the option counterparties or their respective affiliates have established initial hedges of the capped call transaction, and may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the Convertible Notes. In December 2024, we unwound a portion of capped call transactions corresponding to fifty percent of the number of shares of the Company’s common stock initially underlying the Convertible Notes. However, the remaining capped call transaction may still modify their hedge positions and such hedge modification activity could impact the market price of our common stock.
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The option counterparties to the capped call transactions are financial institutions, and we are subject to the risk that any or all of them might default under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the capped call transactions with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price of our common stock, subject to the cap and in the volatility of our common stock. We can provide no assurances as to the financial stability or viability of the option counterparties.
Risks Related to Our Regulatory Environment
Healthcare legislative reform measures and changes in U.S. and international trade policies may have a material adverse effect on our business and results of operations.
The current administration has enacted or proposed legislative, administrative and executive actions and regulatory changes that could affect our ability to profitably sell our commercialized products or products for which we obtain marketing approval. For example, changes in government budget and funding levels for the FDA and other government agencies could negatively impact the ability of the FDA to review and approve new products due to staffing and other resource limitations, the inability to hire or retain key personnel, as well as the imposition of statutory, regulatory and policy changes. Such changes could prevent or delay marketing approval of our current or future pipeline products, restrict or regulate post-approval activities and affect our ability to profitably sell any product for which we obtain marketing approval, each of which may negatively impact our business. Further, there have been, and may continue to be, legislative and regulatory proposals at the U.S. federal and state levels and in foreign jurisdictions directed at broadening the availability and containing or lowering the cost of healthcare including plans announced by the current administration to reform the U.S. pharmaceutical pricing system significantly through rulemaking and executive orders. In addition, existing legislation aimed at patient affordability in the United States such as the Patient Protection and Affordable Care Act may be repealed or replaced. The continuing efforts of the government, insurance companies and third-party payers to contain or reduce costs of healthcare may adversely affect our ability to set prices for our products that would allow us to achieve or sustain profitability. In addition, governments may impose price controls on any of our products, which may adversely affect our future profitability. These risks may also impact the development decisions we make with respect to our pipeline products.
Additionally, the U.S. government recently announced changes to its trade policies, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements. The current tariff environment is dynamic and uncertain, as the U.S. government has imposed, modified and paused tariffs multiple times since the beginning of 2025, and on February 20, 2026, the U.S. Supreme Court struck down the international tariffs imposed by President Trump in 2025, and President Trump subsequently expressed his intent to reinstate the tariffs through other means which have not yet been disclosed. Changes to tariffs and other trade restrictions can be announced at any time with little or no notice. We cannot predict with certainty the future trade policy of the U.S. or other countries or the impact of the recent developments discussed above, however, we believe our exposure to the current tariff environment is limited as we primarily source products and product components from the U.S. Nevertheless, such tariffs, or uncertainty regarding tariff policy, may cause (i) increases in manufacturing costs, (ii) disruptions or delays to our supply chain, (iii) limitations on our ability to sell our products domestically or abroad, and (iv) reductions in sales volumes and gross margins for our products, any of which could negatively affect our business, results of operations and financial condition.
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Our business, products and processes are subject to extensive regulation both in the U.S. and abroad and it can be costly to comply with these regulations. Any failure to adhere to applicable regulations could harm our business, financial condition and operating results.
Our medical devices, drugs, drug/device combination products and other products are subject to extensive government regulation in the U.S. by the FDA, state regulatory authorities and foreign regulatory authorities in the countries in which we conduct business. These regulations relate to, among other things, approval or clearance of our products for sale, R&D, labeling, advertising, promotion, pricing and discounts, recordkeeping, reporting, import and export, post-approval studies and the sale and distribution of our products. See Item 1, Business, “Government Regulation - U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” in this Annual Report on Form 10-K for additional information. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, or state or foreign regulatory authorities, which may include, among other things, warning letters, fines, injunctions, recalls, refusals to grant or delays in granting requests, civil fines and penalties, operating restrictions, withdrawal of approvals and even criminal prosecution.
The process of obtaining clearances or approvals to market our products can be expensive and lengthy, and we cannot guarantee that our current products will receive clearance or approval for additional indications or that our future products will receive clearance or approval on a timely basis, or without restrictions, if at all. Additionally, our pipeline products that are determined to be drug-device combination products, such as our iDose TR product, require review and coordination by each of FDA’s drug and device centers prior to approval, which may delay approval of our future products. In some instances, we or our partners have pursued, and may in the future pursue, a regulatory clearance or approval that proves unsuccessful, such as the FDA’s failure to approve the PreserFlo Microshunt in the U.S. and our determination to conduct a second pivotal confirmatory study of our Epioxa pharmaceutical therapy based on recommendations from the FDA in pre-NDA submission meetings. When this occurs, the time and financial resources required to obtain FDA or other regulatory approval may substantially increase or new competitive products could reach the market faster than our product candidate, which could materially adversely impact our competitive position and prospects.
Before we can obtain regulatory approval for any product candidate, we may have to undertake complex, time-consuming and expensive clinical testing in humans to demonstrate safety and efficacy, the outcomes of which are inherently uncertain and may never result in approved products or commercial sales. We have experienced in the past, and could experience in the future, delays in the commencement or completion of clinical trials or testing that could significantly affect our product development costs, including delays in enrollment for rare disease clinical trials. We do not know whether planned clinical trials will begin on time, need to be redesigned, enroll an adequate number of patients in a timely manner or be completed on schedule, if at all, or be deemed insufficient by the FDA, which may require additional lengthy, time-consuming and expensive trials, which would further delay approval. We may suffer significant setbacks in clinical trials, even after earlier trials showed promising results, and failure can occur at any time during the clinical trial process. We, the clinical trial investigators, the independent review board overseeing the trial, the FDA, or another regulatory authority may suspend, delay or terminate clinical trials at any time due to a number of factors, including failure to conduct the trial in accordance with applicable regulatory requirements or trial protocols, failure to demonstrate a benefit from using the product, lack of sufficient funding, medical device product malfunctions, adverse events, or to avoid exposing trial participants to unacceptable health risks. Any delay or failure in clinical trials would delay or prevent our ability to obtain necessary regulatory approvals, which would have a material adverse effect on our business, financial condition and prospects.
If our facilities, or those of our third-party manufacturers or suppliers, fail to meet the FDA’s Quality System Regulation or cGMP regulations, as applicable, or other standards required by the FDA, we could experience a delay in obtaining the necessary regulatory clearances or approvals to commercialize our pipeline products, which could have a material adverse effect on our business and financial condition and results.
We have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations and we may also be required to seek additional regulatory approvals to modify our approved products or their manufacturing processes or indications, which may entail significant time and expense. We and our suppliers are subject to extensive post-marketing regulatory requirements and failure to comply with applicable requirements in a timely manner could subject us to enforcement actions, including recall or product approval withdrawals.
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Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA. Other post-market requirements on our products include reporting of adverse events and device malfunctions, product tracing, reporting of corrections and removals (recalls), labeling requirements, and promotional restrictions. See Item 1, Business, “Government Regulation - U.S. Regulation & Reimbursement - Post-Market Regulation” in this Annual Report on Form 10-K for additional information. Additionally, any recall or product withdrawal, whether required by the FDA, another regulatory authority or initiated by us, could harm our reputation with customers, cause us to incur significant expense and negatively affect our sales.
In addition, our promotional materials, sales techniques, pricing programs and training methods must comply with FDA and other applicable laws and regulations, including increased scrutiny on direct to consumer advertising of pharmaceutical products. The FDA or other regulatory authorities may limit the indications for use of our products, thereby restricting our ability to promote the drug or device. Physicians may use our products, particularly newly-approved products, off-label or in combination with other products that are not indicated or appropriate, as the FDA does not restrict or regulate a physician's choice of treatment within the practice of medicine. However, if the FDA determines that our promotional materials, sales techniques, pricing programs or training constitutes promotion of an off-label use or encourages over-utilization of our products or use of our products in combinations that are not indicated or appropriate, it could request that we modify our materials, techniques, programs or training or subject us to enforcement actions.
We are subject to healthcare fraud and abuse, anti-kickback, false claims and transparency laws and regulations, among others, which are enforced by federal, state and international governments with respect to our marketing, training, customer arrangements, discount, rebate and pricing programs, product bundling, financial arrangements with physicians, patient assistance programs, reimbursement support services, and other practices. See Item 1, Business, “Government Regulation - U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in this Annual Report on Form 10-K for additional information about the laws and regulations which apply to us. The U.S. Department of Justice has increased its scrutiny of interactions between manufacturers and healthcare providers, as well as various patient, product and reimbursement support programs and speaker bureaus, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Although we try to structure our arrangements within available safe harbors whenever possible, we may nevertheless become subject to government scrutiny or investigation. Violations may result in civil monetary penalties, criminal penalties, and exclusion from participation in government healthcare programs, including Medicare and Medicaid, all of which would have an adverse effect on our business.
We are also subject to compliance with various anti-bribery laws and regulations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar anti-bribery laws in other jurisdictions, which generally prohibit companies and their agents from making bribes or other improper payments to officials for the purpose of obtaining or retaining business. We are also subject to limitations on trade with persons in sanctioned countries. Our sales in international markets increase the inherent risks of encountering such issues. While our employees, distributors and agents are required to comply with these laws and regulations, no assurance can be given that our training efforts and internal policies and procedures will prevent violations of these laws. Any actual or alleged violations of these laws and regulations could subject us to government investigations, criminal sanctions, severe fines and penalties that could have a material adverse impact on our reputation, financial condition, results of operations and cash flows.
The scope and enforcement of each of the laws applicable to our business and products is uncertain and subject to rapid change in the current environment of healthcare reform. Responding to a government investigation is time and resource intensive, and may cause harm to our business and reputation even if we are able to successfully defend against it. Additionally, resolution of any such investigation may require agreement to onerous corporate integrity agreements or other compliance or reporting requirements, which may negatively affect our business.
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Legislative or regulatory reform of the healthcare system could hinder or prevent our products’ commercial success.
In the U.S. and in certain states and foreign jurisdictions, there have been a number of legislative and regulatory proposals and adoptions to change the healthcare systems in ways that could impact our ability to sell our products profitably, if at all. In addition, new regulations and interpretations of existing healthcare statutes and regulations are frequently adopted and we may not be able to comply with the changed laws, they could increase the cost of manufacturing, marketing or selling our products, lower the prices we can charge for our products, or make approvals of pipeline products more difficult or prevent us from selling at all. We expect there will continue to be a number of legislative and regulatory changes to the U.S. health care system that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof and may impose additional costs or lengthen review times of planned or future products. It is also difficult to predict whether and how the policies and priorities of a new administration could materially impact the regulation governing our products. A new U.S. administration may propose policy changes that create additional uncertainty for our business, such as changes to the level of scrutiny to enforce the 340B drug pricing program (340B program) non-compliance, new price restrictions on products we sell to Medicaid, Medicare or other government purchasers, or other regulatory changes impacting reimbursement or competitive dynamics in the markets in which we operate. The extent to which such policy changes impact the healthcare regulatory environment remains uncertain and could materially impact our business and operations.
Additionally, in its June 2024 decision in Loper Bright Enterprises v. Raimondo (“Loper decision”), the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper decision could result in additional legal challenges to regulations and guidance issued by federal agencies applicable to our operations, including those issued by the FDA and CMS. Further, the Loper decision may result in increased regulatory uncertainty, inconsistent judicial interpretations and other impacts to the agency rulemaking process. We cannot predict which additional measures may be adopted or the impact of current and additional measures on the marketing, pricing and demand for our products, which could have a material adverse effect on our business, financial condition and results of operations.
We are also subject to the EU’s Medical Devices Regulation (MDR) and the United Kingdom’s Medical Device Regulation (UKMDR), each of which could result in substantial additional costs of compliance. In addition, our products could be reclassified in international markets, which would impose an entirely new regulatory framework on us and our contract manufacturers and compliance may prove costly and difficult or may not be achievable at all. Our failure, or the failure of our contract manufacturers, to obtain CE marks for all of our products under MDR or the UKMDR on a timely basis, or to comply with MDR, UKMDR or applicable European Medicines Agency regulations regarding drug products, could restrict our ability to sell our products in the EU or other parts of the world, which would have a material adverse effect on our business and financial results.
From time to time, we increase the prices of our products, as we have previously done with our Photrexa therapies, or set pricing for new products. Drug pricing by pharmaceutical manufacturers is subject to federal and state reporting requirements and is currently, and is expected to continue to be, under close scrutiny, including with respect to manufacturers that increase the price of products after acquiring those products from other companies. In some cases, such scrutiny has resulted in congressional inquiries and federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturers’ patient support programs, and reform government program reimbursement methodologies for products. Although our pricing is in part based upon third party studies of the projected economic value of our products to the healthcare system, it may still become subject to such scrutiny.
As a condition of having our iDose TR product covered under certain federal healthcare programs such as Medicare and Medicaid, we are required to participate in the MDRP with respect to all of our pharmaceutical products, including Epioxa, which requires us to calculate and report certain pricing metrics to the government, comply with certain pricing limitations and pay a rebate to each state Medicaid program for our covered products based on utilization of our products by Medicaid beneficiaries. Any company that participates in the MDRP also must participate in the 340B program. The 340B program, which is administered by the Health Resources and
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Services Administration, requires participating companies to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs. The 340B program ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the MDRP.
Additionally, the U.S. Inflation Reduction Act of 2022, which is designed to, among other things, have a direct impact on drug prices and reduce drug spending by the federal government, requires drug manufacturers to pay rebates to Medicare if they increase prices faster than inflation for certain drugs used by Medicare beneficiaries. The expansion of inflation-based rebates may complicate our pricing strategies. See Item 1, Business, “Government Regulation - U.S. Regulation & Reimbursement” in this Annual Report on Form 10-K for more information on the MDRP. To the extent applicable, these and other similar legislation or regulations will reduce the prices we can charge, and impact the rebate amount we must pay, on sales of our products subject to that act, particularly on sales to our customers if they qualify as covered entities eligible to receive the discounted 340B ceiling price. Compliance with these laws and programs may reduce our net sales, and could require significant resources, which would reduce our profitability. Further, we cannot predict how our participation in, or how future CMS guidance or rules governing, MDRP will affect our profitability (including the potential for increases in our overall Medicaid rebate liability and the obligation to charge reduced prices to covered entities). Any changes to the limitations, calculations, or scope of these programs could negatively impact the results of our operations. Additionally, pricing and rebate calculations are complex and often subject to interpretation by the manufacturer, governmental agencies and courts. A manufacturer that becomes aware that its Medicaid reporting for a prior was incorrect or has changed as a result of a recalculation of pricing data is obligated to resubmit corrected data up to three years after the data was originally due. Restatements and recalculations may result in an overage or shortfall in our rebate liability for prior periods, and may affect our 340B ceiling price and therefore liability under the 340B program.
If we cannot sell our products profitably, whether due to our own inability to comply with, or the inability of other economic operators in our supply chain to qualify under, any legislative reform or pricing programs, our business would be harmed. In addition, any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products.
Inadequate or inconsistent reimbursement for our products may adversely impact our business.
Our ability to successfully commercialize and achieve market acceptance of our products and compete against other therapies designed to address the same disease states depends in significant part on adequate financial coverage and reimbursement from third party payers, including governmental payers (such as the Medicare and Medicaid programs in the U.S.), managed care organizations and private health insurers. See Item 1, Business, “Government Regulation - U.S. Regulation & Reimbursement” and “International Regulation & Reimbursement” contained in this Annual Report on Form 10-K for additional information. payers continually review the clinical evidence for new therapies and can change their coverage policies without notice or deny payment if the product was not used in accordance with the payer’s coverage policy. Therefore, coverage for our products can differ significantly from payer to payer. As a result, the coverage determination process is often time-consuming and costly and requires us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that coverage will be obtained or will be maintained once it is obtained.
In addition to uncertainties surrounding coverage policies, there are uncertainties regarding appropriate reimbursement for the procedures associated with certain of our products like iStent infinite and iDose TR, as well as sporadic volatility in reimbursement levels of existing products, including our Photrexa therapy and the procedures associated with our existing products, such as our iStent family of products. For example, in 2022 the CMS’ payment rates significantly lowered the Medicare physician fee payment rates and slightly lowered the Medicare facility fee payment rates related to the implantation of trabecular bypass stents, such as our iStent family of products, in conjunction with cataract surgery, furnished in the ambulatory surgery center setting, which we believe disrupted traditional customer ordering patterns and resulted in certain of our customers’ utilization of competitive products, causing reduced glaucoma sales volumes in the U.S. in 2022 and 2023. Additionally, the facility fee payment rates for the standalone procedure that hospitals and ambulatory surgery centers will use with Glaukos’ iStent infinite product were lower than anticipated for 2022 and were not significantly modified by CMS for 2023
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facility fee payment rates, which had an adverse impact on procedural iStent family product volumes and our revenues and net income.