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Glaukos (GKOS) Stock Falls 25.9% Despite Q1 Earnings Beat

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Shares of Glaukos Corporation (GKOS - Free Report) fell 25.9% till May 9, following the company's first-quarter 2022 results announcement on May 4.

Glaukos reported adjusted loss per share of 38 cents for the first quarter of 2022, wider than the adjusted loss of 21 cents reported in the year-ago quarter. Loss per share was narrower than the Zacks Consensus Estimate of a loss of 52 cents.

GAAP earnings per share (“EPS”) for the quarter was 11 cents against year-over-year loss of 36 cents per share.

Revenues in Detail

Glaukos registered revenues of $67.7 million in the first quarter, down 0.4% year over year on a reported basis. The figure, however, surpassed the Zacks Consensus Estimate by 11.4%.

Quarter in Details

In the quarter under review, Glaukos recorded Glaucoma net sales of $51.5 million and Corneal Health net sales of $16.1 million.

Glaukos Corporation Price, Consensus and EPS Surprise

Glaukos Corporation Price, Consensus and EPS Surprise

Glaukos Corporation price-consensus-eps-surprise-chart | Glaukos Corporation Quote

Margin Trend

In the quarter under review, Glaukos’ gross profit rose 16.9% to $73.5 million. Gross margin expanded 446 basis points (bps) to 51.5%.

Selling, general and administrative expenses rose 4.8% to $43.9 million. Research and development expenses went up 26.7% year over year to $26.9 million. Total operating expenses of $70.8 million increased 12.2% year over year.

Operating loss in the reported quarter totaled $70.8 million compared with total operating loss of $63.1 million in the year-ago quarter.

Financial Update

Glaukos exited first-quarter 2022 with cash and cash equivalents, and short-term investments of $415.4 million compared with $414.1 million at the end of 2021. Long-term debt at the end of first-quarter 2022 was $185.9 million compared with $151.3 million at the end of 2021.

2022 Guidance

Glaukos has narrowed its revenue outlook for the full year.

For 2022, Glaukos now projects net sales between $270-$275 million, narrowed from the previous projections of net sales between $265-$275 million. The Zacks Consensus Estimate for the same stands at $273.1 million.

Our Take

Glaukos exited the first quarter of 2022 with better-than-expected results. In March, the company announced the commencement of a Phase 2 clinical program for its third-generation iLink therapy designed to treat keratoconus. Glaukos, during its earnings call, confirmed that it is on track to advance its pipeline following the recent clearances of iAccess and iPRIME, whereas the FDA 510(K) review of iStent infinite is continuing as GKOS remains focused on a potential mid-year clearance for this important product. These developments raise our optimism about the stock.

Per management, the first-quarter performance reflects solid execution across its global glaucoma and Corneal Health franchises despite continued pandemic-induced volatility and global headwinds, which looks promising. Gross margin expansion bodes well for the stock.

However, wider adjusted loss per share and lower overall revenues on a year-over-year basis are disappointing. Glaukos incurred operating loss in the reported quarter, raising our apprehension. The company’s operation is a stiff competitive space is also worrying.

Zacks Rank and Key Picks

Glaukos carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Omnicell, Inc. (OMCL - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Alkermes plc (ALKS - Free Report) .

Omnicell, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13.4%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently flaunts a Zacks Rank #1.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.