GLAUKOS Corp [GKOS] Filings

10-Q 1 gkos-20220331x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-37463

GLAUKOS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware	33-0945406
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

229 Avenida Fabricante San Clemente, California	92672
(Address of registrant’s principal executive offices)	(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

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, a smaller reporting company or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act:

☒ Large accelerated filer

☐ Accelerated filer

☐ Non-accelerated filer

☐ Smaller reporting company

☐ Emerging growth company

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 2, 2022, there were 47,333,554 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

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GLAUKOS CORPORATION

Form 10-Q

For the Quarterly Period Ended March 31, 2022

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		Page
PART I: FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

PART II: OTHER INFORMATION		30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 6.	Exhibits	45

SIGNATURES		46

We use Glaukos, our logo, iStent, iStent inject, iStent infinite, iPrism, iDose, iPRIME, iAccess, Avedro, Photrexa, iLink, KXL, Epioxa, iLution, Retina XR 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 ™ 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 “we,” “us,” “our,” the “Company,” or “Glaukos” refer to Glaukos Corporation and its consolidated subsidiaries.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GLAUKOS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par values)


	March 31,		December 31,
	2022		2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	106,202	$	100,708
Short-term investments		309,211		313,343
Accounts receivable, net		34,804		33,438
Inventory		24,708		23,011
Prepaid expenses and other current assets		16,278		15,626
Total current assets		491,203		486,126
Restricted cash		9,416		9,416
Property and equipment, net		74,708		68,969
Operating lease right-of-use assets		26,539		28,142
Finance lease right-of-use asset		48,417		49,022
Intangible assets, net		326,553		332,781
Goodwill		66,134		66,134
Deposits and other assets		9,100		9,108
Total assets	$	1,052,070	$	1,049,698

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	7,998	$	7,333
Accrued liabilities		47,598		56,027
Total current liabilities		55,596		63,360
Convertible senior notes		280,370		280,026
Operating lease liability		29,304		29,650
Finance lease liability		72,594		72,699
Deferred tax liability, net		7,312		7,318
Other liabilities		9,330		9,494
Total liabilities		454,506		462,547

Commitments and contingencies (Note 12)

Stockholders' equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding		-		-
Common stock, $0.001 par value; 150,000 shares authorized; 47,117 and 46,993 shares issued and 47,089 and 46,965 shares outstanding as of March 31, 2022 and December 31, 2021 respectively		47		47
Additional paid-in capital		960,870		952,432
Accumulated other comprehensive (loss) income		(3,387)		15
Accumulated deficit		(359,834)		(365,211)
Less treasury stock (28 shares as of March 31, 2022 and December 31, 2021)		(132)		(132)
Total stockholders' equity		597,564		587,151
Total liabilities and stockholders' equity	$	1,052,070	$	1,049,698

See accompanying notes to condensed consolidated financial statements.

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GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended
	March 31,
	2022		2021
Net sales	$	67,681	$	67,968
Cost of sales		17,063		16,633
Gross profit		50,618		51,335
Operating expenses:
Selling, general and administrative		43,949		41,921
Research and development		26,877		21,219
Litigation-related settlement		(30,000)		-
Total operating expenses		40,826		63,140
Income (loss) from operations		9,792		(11,805)
Non-operating expense:
Interest income		287		383
Interest expense		(3,416)		(3,229)
Other expense, net		(960)		(1,539)
Total non-operating expense		(4,089)		(4,385)
Income (loss) before taxes		5,703		(16,190)
Income tax provision		326		279
Net income (loss)	$	5,377	$	(16,469)
Basic net income (loss) per share	$	0.11	$	(0.36)
Diluted net income (loss) per share	$	0.11	$	(0.36)
Weighted average shares used to compute basic net income (loss) per share		47,050		45,709
Weighted average shares used to compute diluted net income (loss) per share		49,506		45,709

See accompanying notes to condensed consolidated financial statements.

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GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands)


	Three Months Ended
	March 31,
	2022		2021
Net income (loss)	$	5,377	$	(16,469)
Other comprehensive (loss) income:
Foreign currency translation gain		492		541
Unrealized loss on short-term investments		(3,894)		(417)
Other comprehensive (loss) income		(3,402)		124
Total comprehensive income (loss)	$	1,975	$	(16,345)

See accompanying notes to condensed consolidated financial statements.

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GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)


						Accumulated
				Additional		other
	Common stock			paid-in		comprehensive		Accumulated		Treasury stock			Total
	Shares	Amount		capital		income (loss)		deficit		Shares	Amount		equity
Balance at December 31, 2021	46,993	$	47	$	952,432	$	15	$	(365,211)	(28)	$	(132)	$	587,151
Common stock issued under stock plans	124		—		1,515		—		—	—		—		1,515
Stock-based compensation	—		—		6,923		—		—	—		—		6,923
Other comprehensive loss	—		—		—		(3,402)		—	—		—		(3,402)
Net income	—		—		—		—		5,377	—		—		5,377
Balance at March 31, 2022	47,117	$	47	$	960,870	$	(3,387)	$	(359,834)	(28)	$	(132)	$	597,564


						Accumulated
				Additional		other
	Common stock			paid-in		comprehensive		Accumulated		Treasury stock			Total
	Shares	Amount		capital		income		deficit		Shares	Amount		equity
Balance at December 31, 2020	45,275	$	45	$	976,590	$	1,004	$	(310,058)	(28)	$	(132)	$	667,449
Effect of adoption of ASU 2020-06	—		—		(81,553)				(5,560)					(87,113)
Common stock issued under stock plans	741		1		17,034		—		—	—		—		17,035
Stock-based compensation	—		—		8,748		—		—	—		—		8,748
Other comprehensive income	—		—		—		124		—	—		—		124
Net loss	—		—		—		—		(16,469)	—		—		(16,469)
Balance at March 31, 2021	46,016	$	46	$	920,819	$	1,128	$	(332,087)	(28)	$	(132)	$	589,774

See accompanying notes to condensed consolidated financial statements.

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GLAUKOS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2022		2021
Operating Activities
Net income (loss)	$	5,377	$	(16,469)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		1,382		1,150
Amortization of intangible assets		6,228		6,228
Amortization of lease right-of-use assets		1,271		1,170
Amortization of debt issuance costs		343		343
Deferred income tax benefit		(6)		(24)
Gain on disposal of fixed assets		(45)		-
Stock-based compensation		6,923		8,748
Unrealized foreign currency (gains) losses		(135)		1,101
Amortization of premium on short-term investments		236		256
Other liabilities		(163)		570
Changes in operating assets and liabilities:
Accounts receivable, net		(1,423)		(547)
Inventory		(1,750)		403
Prepaid expenses and other current assets		(669)		(1,803)
Accounts payable and accrued liabilities		(7,578)		3,023
Other assets		(217)		29
Net cash provided by operating activities		9,774		4,178
Investing activities
Purchases of short-term investments		(16,747)		(54,007)
Proceeds from sales and maturities of short-term investments		17,184		50,349
Purchases of property and equipment		(6,604)		(17,182)
Proceeds from disposal of property and equipment		55		-
Investment in company-owned life insurance		215		(423)
Net cash used in investing activities		(5,897)		(21,263)
Financing activities
Proceeds from exercise of stock options		548		16,552
Proceeds from share purchases under Employee Stock Purchase Plan		1,785		1,549
Payment of employee taxes related to vested restricted stock units		(818)		(1,065)
Principal paid on finance lease		(105)		(251)
Proceeds from tenant improvement allowance		-		629
Net cash provided by financing activities		1,410		17,414
Effect of exchange rate changes on cash and cash equivalents		207		(450)
Net increase (decrease) in cash, cash equivalents and restricted cash		5,494		(121)
Cash, cash equivalents and restricted cash at beginning of period		110,124		106,162
Cash, cash equivalents and restricted cash at end of period	$	115,618	$	106,041
Supplemental disclosures of cash flow information
Taxes paid (refunded)	$	91	$	(35)
Other interest paid	$	1,091	$	3,848
Supplemental schedule of noncash investing and financing activities
Purchases of property and equipment included in accounts payable and accrued liabilities	$	2,705	$	3,848

See accompanying notes to condensed consolidated financial statements.

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GLAUKOS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Organization and Basis of Presentation

Organization and business

Glaukos Corporation (Glaukos or the Company), incorporated in Delaware on July 14, 1998, is an ophthalmic medical technology and pharmaceutical company focused on developing novel therapies for the treatment of glaucoma, corneal disorders, and retinal disease. The Company developed Micro-Invasive Glaucoma Surgery (MIGS) to serve as an alternative to the traditional glaucoma treatment paradigm and launched its first MIGS device commercially in 2012. The Company also offers commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a corneal disorder, keratoconus, that was approved by the U.S. Food and Drug Administration (FDA) in 2016 and is developing a pipeline of sustained pharmaceutical therapies, surgical devices, and implantable biosensors intended to treat glaucoma progression, 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.

The accompanying condensed consolidated financial statements include the accounts of Glaukos and its wholly-owned subsidiaries. All significant intercompany balances and transactions among the consolidated entities have been eliminated in consolidation.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted (GAAP) in the United States of America (U.S.) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.

The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements. As permitted under those rules, certain footnotes and other financial information that are normally required by GAAP have been condensed or omitted. In the opinion of management, the unaudited interim financial statements reflect all adjustments necessary for the fair presentation of the Company’s financial information contained herein. All such adjustments are of a normal and recurring nature. The condensed consolidated balance sheet as of December 31, 2021 has been derived from audited financial statements at that date, but excludes disclosures required by GAAP for complete financial statements. These interim financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the fiscal year ended December 31, 2021, which are contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) on February 28, 2022. The Company’s results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period.

Recent Developments

Settlement of Patent Litigation

On September 14, 2021, the Company entered into a settlement agreement (Settlement Agreement) with Ivantis, Inc. (Ivantis), pursuant to which the Company and Ivantis agreed to terminate the patent infringement lawsuit the Company had filed against Ivantis on April 14, 2018 in the U.S. District Court for the Central District of California, Southern Division (the Lawsuit). In the Lawsuit, the Company alleged that Ivantis’ Hydrus® Microstent device infringes the Company’s U.S. Patent Nos. 6,626,858 and 9,827,143. Pursuant to the terms of the Settlement Agreement, Ivantis was required to pay the Company a cash payment of $60.0 million, $30.0 million of which was paid to the Company during the year ended December 31, 2021, and $30.0 million of which would be paid by the earlier of (i) December 31, 2022, or (ii) 30 days after the consummation of the sale to a third party of all or substantially all of Ivantis’ equity or assets such that the third-party controls Ivantis. The second $30.0 million cash payment, which was received by the Company during the quarter ended March 31, 2022 is included in litigation-related settlement as a reduction of operating expenses on the condensed consolidated statements of operations.

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Additionally, Ivantis will make quarterly royalty payments to the Company in the amount of 10% of Ivantis’ Hydrus Microstent U.S. sales and any international sales supplied out of the U.S. beginning in the fourth quarter of 2021 through April 26, 2025, subject to a per-unit minimum payment.

Note 2. Summary of Significant Accounting Policies

There have been no significant changes in the Company’s significant accounting policies during the three months ended March 31, 2022, as compared with those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates and assumptions. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, this process may result in actual results differing materially from those estimated amounts used in the preparation of the condensed consolidated financial statements.

The Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2022 reflect the Company’s estimates of the impact of the ongoing COVID-19 pandemic. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are uncertain, including the duration and severity of the COVID-19 outbreak, the severity and transmission rates of new and more contagious and/or vaccine-resistant variants of COVID-19, and the actions taken to contain it or treat COVID-19, including the availability, distribution, rate of public acceptance and efficacy of vaccines for COVID-19, as well as the economic impact on local, regional, national and international customers and markets. As a result, there may be changes to the Company’s estimates regarding the impact of COVID-19 in future periods.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that equate to the amount reported in the condensed consolidated statement of cash flows as of the beginning and end of the three months ended March 31, 2022 (in thousands):


	March 31,		December 31,
	2022		2021
Cash and cash equivalents	$	106,202	$	100,708
Restricted cash		9,416		9,416
Cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows	$	115,618	$	110,124

Recently Adopted Accounting Pronouncements

The Company has not adopted any recent accounting pronouncements that had a material impact on its condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

The Company reviewed recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements.

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Note 3. Balance Sheet Details

Short-term Investments

Short-term investments consisted of the following (in thousands):


	At March 31, 2022
	Maturity	Amortized cost		Unrealized		Unrealized		Estimated
	(in years)	or cost		gains		losses		fair value
U.S. government bonds	less than 2	$	76,772	$	-	$	(923)	$	75,849
U.S. government agency bonds	less than 3		123,693		13		(2,099)		121,607
Bank certificates of deposit	less than 2		15,499		4		(29)		15,474
Commercial paper	less than 1		2,999		—		(2)		2,997
Corporate notes	less than 3		52,349		5		(817)		51,537
Asset-backed securities	less than 2		23,900		8		(216)		23,692
Municipal bonds	less than 3		18,471		—		(416)		18,055
Total		$	313,683	$	30	$	(4,502)	$	309,211

	At December 31, 2021
	Maturity	Amortized cost		Unrealized		Unrealized		Estimated
	(in years)	or cost		gains		losses		fair value
U.S. government agency bonds	less than 3		123,803		8		(540)		123,271
U.S. government bonds	less than 1	$	76,765	$	—	$	(240)	$	76,525
Bank certificates of deposit	less than 1		12,500		1		(9)		12,492
Commercial paper	less than 1		2,998		-		(1)		2,997
Corporate notes	less than 3		55,178		37		(183)		55,032
Asset-backed securities	less than 2		23,761		44		(31)		23,774
Municipal bonds	less than 3		19,350		-		(98)		19,252
Total		$	314,355	$	90	$	(1,102)	$	313,343

Accounts Receivable, Net

Accounts receivable consisted of the following (in thousands):


	March 31,		December 31,
	2022		2021
Accounts receivable	$	36,131	$	34,805
Allowance for credit losses		(1,327)		(1,367)
	$	34,804	$	33,438

The Company’s allowance for credit losses represents management’s estimate of current expected credit losses and there were immaterial bad-debt write offs charged during the three months ended March 31, 2022.

Additionally, no customers accounted for more than 10% of net accounts receivable as of March 31, 2022 or December 31, 2021.

Inventory

Inventory consisted of the following (in thousands):


	March 31,		December 31,
	2022		2021
Finished goods	$	8,683	$	6,495
Work in process		6,870		7,010
Raw material		9,155		9,506
	$	24,708	$	23,011

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Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2022		2021
Accrued bonuses	$	6,129	$	17,015
Accrued vacation benefits		4,524		4,196
Other accrued liabilities		36,945		34,816
	$	47,598	$	56,027

Note 4. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.

The valuation of assets and liabilities is subject to fair value measurements using a three-tiered approach and fair value measurements are classified and disclosed by the Company in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):


			At March 31, 2022
			Quoted prices		Significant
			in active		other		Significant
			markets for		observable		unobservable
	March 31,		identical assets		inputs		inputs
	2022		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents:
Money market funds ⁽ⁱ⁾	$	1,060	$	1,060	$	-	$	-
Available for sale securities:
U.S. government agency bonds ⁽ⁱⁱ⁾	$	121,607	$	-	$	121,607	$	-
U.S. government bonds ⁽ⁱⁱ⁾		75,849		-		75,849		-
Bank certificates of deposit ⁽ⁱⁱ⁾		15,474		-		15,474		-
Commercial paper ^(ii)(iii)		6,997		-		6,997		-
Corporate notes ⁽ⁱⁱ⁾		51,537		-		51,537		-
Asset-backed securities ⁽ⁱⁱ⁾		23,692		-		23,692		-
Municipal bonds ⁽ⁱⁱ⁾		18,055		-		18,055		-
Investments held for deferred compensation plans		7,197		-		7,197		-
Total Assets	$	321,468	$	1,060	$	320,408	$	-
Liabilities
Deferred compensation plans	$	7,083	$	-	$	7,083	$	-
Total Liabilities	$	7,083	$	-	$	7,083	$	-

(i)

Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets.

(ii)

Included in short-term investments on the condensed consolidated balance sheets.

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(iii)

As of March 31, 2022, a commercial paper investment totaling $4,000 (in thousands) is included in cash and cash equivalents on the condensed consolidated balance sheets, as the investment had a maturity of three months or less from the date of purchase on the condensed consolidated balance sheets.


			At December 31, 2021
			Quoted prices		Significant
			in active		other		Significant
			markets for		observable		unobservable
	December 31,		identical assets		inputs		inputs
	2021		(Level 1)		(Level 2)		(Level 3)
Assets

Cash equivalents:
Money market funds ⁽ⁱ⁾	$	4,212	$	4,212	$	-	$	-
Available for sale securities:
U.S. government agency bonds ⁽ⁱⁱ⁾	$	123,271	$	-	$	123,271	$	-
U.S. government bonds ⁽ⁱⁱ⁾		76,525		-		76,525		-
Bank certificates of deposit ⁽ⁱⁱ⁾		12,492		-		12,492		-
Commercial paper ⁽ⁱⁱ⁾		2,997		-		2,997		-
Corporate notes ⁽ⁱⁱ⁾		55,032		-		55,032		-
Asset-backed securities ⁽ⁱⁱ⁾		23,774		-		23,774		-
Municipal bonds ⁽ⁱⁱ⁾		19,252		-		19,252		-
Investments held for deferred compensation plans		7,412				7,412		-
Total Assets	$	324,967	$	4,212	$	320,755	$	-
Liabilities
Deferred compensation plans	$	7,302	$	-	$	7,302	$	-
Total Liabilities	$	7,302	$	-	$	7,302	$	-

(i)

Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets.

(ii)

Included in short-term investments on the condensed consolidated balance sheets.

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

U.S. government agency bonds, U.S. government bonds, bank certificates of deposit, commercial paper, municipal bonds, corporate notes and asset-backed securities are measured at fair value using Level 2 inputs. The Company reviews trading activity and pricing for these investments as of each measurement date. Pursuant to the Company’s deferred compensation plan (the Deferred Compensation Plan), the Company has also established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The investments of the rabbi trust and Deferred Compensation Plan liability consist of company-owned life insurance policies (COLIs) and the pricing on these investments can be independently evaluated. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

There were no transfers between levels within the fair value hierarchy during the periods presented.

The Company did not have any assets or liabilities measured at fair value on a recurring basis within Level 3 fair value measurements as of March 31, 2022 and December 31, 2021.

Convertible Senior Notes

As of March 31, 2022 and December 31, 2021, the fair value of the Company’s 2.75% convertible notes due 2027 (Convertible Notes) was $383.4 million and $341.8 million, respectively. The fair value was determined on the

Table of Contents

basis of the market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy. See Note 9, Convertible Senior Notes for additional information.

Note 5. Leases

The Company has operating and finance leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The Company’s leases have remaining non-cancelable lease terms of approximately one year to thirteen years, some of which include options to extend the leases for up to ten years, and some of which include options to terminate the lease within one year. The exercise of lease renewal options is at the Company’s sole discretion. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for common area maintenance, landlord incentives and/or inflation.

The Company’s office building lease in Aliso Viejo, California (Aliso Facility) is one property containing three existing office buildings, comprising approximately 160,000 rentable square feet of space which was accounted for as a finance lease. The term of the Aliso Facility commenced on April 1, 2019 for expense recognition and continues for thirteen years. The lease agreement contains an option to extend the lease for two additional

GLAUKOS Corp [GKOS] Filings
10-Q	[2022-05-05]
10-K	[2022-02-28]
10-Q	[2021-11-08]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-03-01]
10-Q	[2020-11-05]
10-Q	[2020-08-07]
10-Q	[2020-05-07]
10-K	[2020-03-02]
10-Q	[2019-11-06]
10-Q	[2019-08-08]
10-Q	[2019-05-08]
10-K	[2019-02-28]
10-Q	[2018-11-07]
10-Q	[2018-08-06]
10-Q	[2018-05-09]
10-K	[2018-02-28]
10-Q	[2017-11-08]
10-Q	[2017-08-07]
10-Q	[2017-05-04]
10-K	[2017-03-15]
10-Q	[2016-11-14]
10-Q	[2016-08-04]
10-Q	[2016-05-04]
10-K	[2016-03-15]
10-Q	[2015-11-12]
10-Q	[2015-08-13]
S-1	[2015-05-12]