GLAUKOS Corp (GKOS)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the United States (U.S.) Securities and Exchange Commission (SEC) on February 23, 2026 (Annual Report). The discussion and analysis below contains forward-looking statements within the meaning of federal securities laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. See “Note Regarding Forward-Looking Statements” preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.

Overview

We are an ophthalmic pharmaceutical and medical technology company focused on developing novel dropless platform 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 commercially in 2012. Since that time, we have launched additional MIGS products. In 2024, we commenced commercialization activities for iDose TR, a sustained-release pharmaceutical product used in the treatment of glaucoma. We also recently commenced our controlled commercial launch of Epioxa, a proprietary bio-activated and incision-free pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2025. Our first-generation corneal cross-linking therapy, known as Photrexa, which requires removal of the corneal epithelium, received U.S. FDA approval in 2016. All of these products are part of a portfolio of platforms we are developing to support ongoing pharmaceutical and medical device innovations. Products or product candidates for each of these platforms are designed to advance the standard of care through better treatment options across the areas of glaucoma; corneal disorders such as keratoconus, dry eye and refractive vision correction; and retinal diseases such as neovascular age-related macular degeneration, diabetic macular edema and retinal vein occlusion.

Financial Overview

The most important financial indicators that we use to assess our business are net sales, gross margin, operating expenses, and cash on hand.

Please see Results of Operations and Liquidity and Capital Resources below for a detailed discussion of each of the above items including analysis of the fluctuations from year to year.

We incurred net losses for the three and six months ended June 30, 2026 of $18.4 million and $38.2 million, respectively and we incurred net losses for the three and six months ended June 30, 2025 of $19.7 million and $37.8 million, respectively. As of June 30, 2026, we had an accumulated deficit of $971.3 million.

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Recent Developments

On April 15, 2026, the U.S. Centers for Medicare and Medicaid Service (CMS) assigned a unique, permanent Healthcare Common Procedure Coding System (HCPCS) J-code for Epioxa, J2789. The new J-code for Epioxa was effective on July 1, 2026. J-codes are used by U.S. government and commercial payers, to streamline the billing and reimbursement process for procedural pharmaceuticals administered by a healthcare professional, such as Epioxa. Epioxa represents an advancement in keratoconus care, offering an incision-free alternative to traditional corneal cross-linking procedures. We began a controlled commercial launch of Epioxa in the first quarter of 2026 and as part of the launch, we are transitioning commercial efforts and manufacturing from Photrexa to Epioxa, with completion of the transition projected to occur by the end of the third quarter of 2026.

Impact of the Current Global Economic Environment

As a result of the ongoing macroeconomic conditions, global and regional economies continue to experience varying levels of inflation, supply shortages or delays, volatility in in supply and demand conditions, foreign exchange rate fluctuations, uncertainty around global trade, and other conditions that have led to disruptions in commerce and pricing stability. These conditions may be exacerbated by heightened geopolitical tensions in the Middle East, including the ongoing conflict between the U.S. and Iran and the related blockage of the Straight of Hormuz, which has increased oil prices and may cause downstream effects on our logistics, manufacturing, and raw material costs.

Changes to U.S. trade policy, in particular with regard to tariffs, have caused substantial market uncertainty and in certain cases, retaliatory measures by trading partners. Such changes include the imposition of tariffs under the authority of the International Emergency Economic Powers Act, which the U.S. Supreme Court found unlawful in February 2026, the creation of a refund process for such tariff duties, and the imposition of new tariffs under various statutory authorities, including on certain patented pharmaceuticals and active pharmaceutical ingredients. Despite these federal actions and the related uncertainty, we believe our exposure to these tariffs and the potential escalation of trade disputes is limited as we primarily source our raw materials and product components from the U.S. Nevertheless, these tariffs, or the introduction of new or higher tariffs in other countries, could pose a risk to our business, or the businesses of our customers, that could affect our net sales and cost of sourcing materials. We will continue to evaluate the impacts of tariffs on our business and results of operations.

The effects of foreign currency fluctuations were most notably experienced in our international glaucoma business. Our year over year growth rate of net sales of our international glaucoma franchise was positively affected by approximately 85 basis points and approximately 420 basis points for the three and six months ended June 30, 2026 respectively, in both cases primarily related to the Euro, Australian dollar and the Brazilian Real, partially offset by the Japanese Yen. For the three and six months ended June 30, 2025, net sales of our international glaucoma business were positively affected by approximately 410 and 25 basis points, respectively, primarily related to the Euro and Japanese yen.

Developments Impacting Reimbursement Rates and Coverage

In the U.S., healthcare providers use separate billing codes to report the provision of medical procedures and use of supplies to third-party payers, such as government programs or private insurance, and seek reimbursement for all or a portion of those costs. Physician fee payment rates for procedures covered by temporary Current Procedural Terminology (CPT) codes in the Medicare Fee for Service setting, such as a standalone trabecular micro-bypass procedure utilizing the iStent infinite, or the implanting of iDose TR products, are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims. As of June 30, 2026, the professional fees associated with an iDose TR procedure have been formally published by five of the seven MACs. 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 July 2, 2026 and July 14, 2026, the U.S. Centers for Medicare & Medicaid Services (CMS) published its proposed rules for 2027 Medicare hospital outpatient facility payment rates and physician fee payment rates (2027 Proposed Rules), respectively. The 2027 Proposed Rules would maintain the existing ambulatory payment classification assignments for procedures utilizing our glaucoma products and generally maintain Medicare facility payment rates across the ambulatory surgery center setting, while proposing modest increases in hospital outpatient department facility payment rates for certain procedures. The 2027 Proposed Rules also include modest reductions in physician payment rates relative to 2026 for several Category I CPT codes across ophthalmology, including certain cataract and surgical MIGS procedures. The proposed physician fee changes do not affect physician payment rates for iDose TR and iStent infinite, which continue to be reimbursed under temporary CPT codes with payment rates established on a MAC-by-MAC basis.

We estimate that approximately 80% of procedures utilizing our iDose TR and iStent family of products in the U.S. have been performed in the ASC setting and the remaining estimated 20% of procedures have been performed in the hospital.

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Now that Epioxa, our new corneal collagen cross-linking (CXL) procedure, has been approved by the U.S. FDA, reimbursement is expected to primarily involve updates to third-party commercial insurance policies as the vast majority of patients who are diagnosed with, and then treated for, keratoconus are below the Medicare age, with a lesser proportion of patients expected to be treated through Medicaid programs. As an in-office procedure, the procedural component of Epioxa will be covered by a temporary Category III CPT code, 0402T, which is the same code used currently for Photrexa. The professional fees associated with the CXL procedure will be determined by each payer. Reimbursement for physician-administered drugs is typically accomplished administratively through the use of a HCPCS J-code. A unique, permanent HCPCS J-code for Epioxa, J2789, has been established and became effective on July 1, 2026. Coverage and reimbursement can differ significantly from payer to payer, and payers can change or deny coverage for new or existing products without notice.

Business Outlook

Now that reimbursement for the iDose TR drug and procedure for Medicare fee for service patients has become more timely and consistent across all MACs, we have begun seeing increased utilization of iDose TR by our customers in the treatment of patients who have other types of insurance coverage, primarily those with private commercial or Medicare Advantage plans. Additionally, in January 2026, we received FDA approval of our supplemental new drug application (NDA) for the re-administration of iDose TR to patients who have previously received an iDose TR implant.

During the three months ended June 30, 2026, five of the seven Medicare Administrative Contractors ("MACs") issued proposed Local Coverage Determinations ("LCDs") outlining proposed Medicare coverage criteria for iDose TR. The proposed LCDs were subject to a public comment process, which concluded on July 4, 2026, and have not been finalized. We continue to participate in the review process and monitor developments. While w

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes included in this Annual Report on Form 10-K. This discussion and analysis and other parts of this Annual Report on Form 10-K contain forward-looking statements that reflect our current plans, expectations, estimates and beliefs that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events may differ materially from those discussed in these forward-looking statements. You should carefully read Item 1A - “Risk Factors” included in this Annual Report on Form 10-K to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements and Industry Data.”

Overview

We are an ophthalmic pharmaceutical and medical technology company focused on developing novel, dropless platform 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 commercially in 2012. In 2024, we commenced commercialization activities for iDose TR, an intracameral procedural pharmaceutical implant designed to continuously deliver therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time. We also offer commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016. Beyond our approved products, we continue to develop and advance a robust pipeline of novel, dropless platform technologies designed to advance the standard of care and improve outcomes for patients suffering from chronic eye diseases.

Financial Overview

The most important financial indicators that we use to assess our business are net sales, gross margin, operating expenses, and cash on hand.

Please see Results of Operations and Liquidity and Capital Resources below for a detailed discussion of each of the above items including analysis of the fluctuations from year to year.

We incurred net losses of $187.7 million, $146.4 million and $134.7 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively and as of December 31, 2025, we had an accumulated deficit of $933.1 million.

Recent Developments

On October 20, 2025, we announced U.S. FDA approval for Epioxa indicated for the treatment of keratoconus. Epioxa represents an advancement in keratoconus care, offering an incision-free alternative to traditional corneal cross-linking procedures. Epioxa is the first FDA-approved, incision-free, topical drug therapy that does not require removal of the corneal epithelium and is designed to eliminate the pain associated with epithelium removal, streamline the procedure, and minimize recovery. We announced plans to begin commercializing Epioxa in the first quarter of 2026. Accordingly, we assessed our long-lived assets

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for impairment and determined that our remaining developed technology intangible asset related to Photrexa was no longer fully recoverable. As a result, we recorded an impairment charge within cost of sales in the consolidated statements of operations during the year ended December 31, 2025 of $112.9 million related to our Photrexa developed technology intangible asset.

In June 2025, we received European Union (EU) Medical Device Regulation (MDR) certification for our iStent family of products, including the iStent infinite and the iStent inject W. We also received certification for our iStent products under the United Kingdom’s Medical Device Regulation. We commenced some commercial launch activities in certain of our key EU markets in the third and fourth quarters of 2025.

On May 16, 2025, pursuant to a definitive agreement and plan of merger (Mobius Agreement), we acquired all of the outstanding equity interests in Mobius Therapeutics, LLC (Mobius) for $12.4 million, net of cash acquired (Mobius Merger). Pursuant to the Mobius Agreement, we also agreed to pay the former Mobius equity holders contingent consideration in the form of single-digit royalty payments based on net sales of Mobius products for a period of four years, and additional performance-based payments of up to $80.0 million in aggregate upon the achievement of certain net sales milestones with respect to such Mobius products. Mobius’ lead product, Mitosol, is the only FDA-approved ophthalmic formulation of mitomycin-C, which is often utilized as an adjunct in late-stage glaucoma filtration procedures.

On April 4, 2025, we purchased certain real property adjacent to our existing Aliso Viejo, California corporate headquarters (Aliso Facility), consisting of land and an approximately 40,000 square foot, two-story building, located in Aliso Viejo, California (Aliso Building). We paid a purchase price of $16.6 million for the Aliso Building, which is currently occupied by several tenants whose leases, which were assumed by us, run through 2029. We believe that the Aliso Building provides us with future expansion opportunities and potentially reduces future capital expenditures associated with construction of an additional building as part of the Aliso Facility.

Market and Business Update

Impact of the Current Global Economic Environment

As a result of the ongoing macroeconomic conditions, global and regional economies continue to experience varying levels of inflation, supply shortages or delays, changes in supply and demand, foreign exchange rate fluctuations, uncertainty around global trade, including new or increased tariffs, and other conditions that have led to disruptions in commerce and pricing stability. Additionally, some of our vendors are continuing to experience supply challenges, both in the acquisition of raw materials as well as due to labor shortages and other disruptions. These challenges have occasionally led to longer lead times and delays of certain components needed for the manufacture of our products, in some cases requiring us to find alternative sources for materials. As a result of these supply chain challenges and ongoing inflationary pressures, we have experienced higher costs for certain components and raw materials. While these supply challenges have generally stabilized over the course of 2025, if these supply issues persist or worsen in the future, they could impact our gross margin, our ability to ship some of our products to our customers, or bring some of our pipeline products to market, in a timely manner.

During 2025, the U.S. government announced tariffs on product imports from certain countries, including higher tariff levels on goods imported from Canada, Mexico and China. These actions have resulted, and could further result, in retaliatory measures on U.S. goods by those countries and others. 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 these tariffs and the potential escalation of trade disputes is limited as we primarily source our raw materials and product components from the U.S. Nevertheless, these tariffs, or the introduction of new or higher tariffs in other countries, could pose a risk to our business, or the businesses of our customers, that could affect our net sales and cost of sourcing materials. We will continue to evaluate the impacts of tariffs on our business and results of operations.

The effects of foreign currency fluctuations were most notably experienced in our international glaucoma business. Our annual growth rate of net sales of our international glaucoma franchise for the year ended

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December 31, 2025 was positively affected by approximately 208 basis points, primarily related to the Euro. For the year ended December 31, 2024, net sales of our international glaucoma business were negatively impacted by approximately 185 basis points, primarily related to the Japanese Yen.

Developments Impacting Reimbursement Rates and Coverage

In the U.S., healthcare providers use separate billing codes to report the provision of medical procedures and use of supplies to third-party payers, such as government programs or private insurance, and seek reimbursement for all or a portion of those costs. Physician fee payment rates for procedures covered by temporary Current Procedural Terminology (CPT) codes in the Medicare Fee for Service setting, such as a standalone trabecular micro-bypass procedure utilizing the iStent infinite or the implanting of iDose TR products, are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims. As of December 31, 2025, the professional fees associated with an iDose TR procedure have been formally published by four of the seven MACs. 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.

The unique, permanent Healthcare Common Procedure Coding System (HCPCS) J-code for iDose TR, J7355, became effective July 1, 2024. J-codes are used by U.S. government and commercial payers to streamline the billing and reimbursement process for procedural pharmaceuticals administered by a healthcare professional, such as iDose TR. In addition to the J-code, on March 21, 2024, CMS assigned the temporary CPT codes that are designed to be used to cover the procedural component of iDose TR, 0660T and 0661T, to APC 5492 (Level 2 Intraocular Procedures), retroactively effective as of January 1, 2024.

Now that Epioxa, our new CXL procedure, has been approved by the U.S. FDA, reimbursement is expected to primarily involve updates to third-party commercial insurance policies as the vast majority of patients who are diagnosed with, and then treated for, keratoconus are below the Medicare age. Therefore, the procedural component of Epioxa will be covered by a temporary Category III CPT code, 0402T. Next, we will apply for a permanent HCPCS J-Code for Epioxa and we will seek coverage by third-party commercial payers. The professional fees associated with the CXL procedure will be determined by each payer. Coverage and reimbursement can differ significantly from payer to payer, and payers can change or deny coverage for new or existing products without notice.

On October 31, 2025 and November 21, 2025, the U.S. Centers for Medicare & Medicaid Services’ (CMS) published its proposed rules on 2026 Medicare physician fee and facility fee payment rates (2026 Final Rules), respectively. The 2026 Final Rules reflected a modest increase with respect to facility fee payment rates in both the ASC and hospital outpatient set

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