GLAUKOS Corp
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
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FY2024 · Filed Feb 25, 2025
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Glaukos Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Glaukos Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),** **and our report dated February 24, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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| | | Classification, completeness, and measurement of customer discounts and revenue related incentive programs |
| Description of the Matter | | As discussed in Note 2 of the consolidated financial statements, the Company derives its revenue from sales of its products in the United States and internationally. The Company has determined the transaction price to be the invoice price, net of adjustments that reduce revenue, which included estimates of volume-based rebates, variable consideration for product returns and warranty replacements and other discounts and incentives that reduce revenue. |
| Auditing the Company’s net sales was challenging, specifically related to the effort required to evaluate the classification, completeness, and measurement of discounts and incentives. This included judgmentally assessing factors including evaluation of contractual terms, incentives offered, and non-volume-based rebate assumptions. | ||
| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process of recording net sales of its products, including controls over the identification, measurement, and approval of incentive programs and classification. We updated our understanding of the discounts and incentives process, performed walkthroughs of the discounts and incentives accrual estimation analysis process, evaluated the design of the related controls, and performed tests of control procedures. We also tested management’s controls related to the completeness and accuracy of data utilized in the controls.To test the classification, completeness, and measurement of discounts and incentives, our audit procedures included, among others, inquiries of sales representatives and other members of management and obtaining confirmations from sales representatives to validate the completeness of customer incentive programs and revenue contracts provided to the finance and accounting department. Additionally, for the largest customers across both Glaucoma and Corneal Health, we obtained confirmations of contract terms. We performed testing of a sample of transactions to assess the appropriateness of the classification. We also performed procedures to analyze trends in gross margin, cost of sales, and selling, general, and administrative costs. To test completeness of the population of customer discount and incentive programs, we examined credit memos issued subsequent to year end. For each material program identified, we tested classification of the discount and incentive programs. We evaluated the measurement and completeness of the material non-volume-based rebates estimated by utilizing hindsight information and gained an understanding of the model and significant assumptions used. We also tested the roll forward of activity recorded in the consolidated statement of operations related to material non-volume-based rebates. We evaluated the completeness and accuracy of data used in the calculations. |
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/s/Ernst & Young LLP
We have served as the Company's auditor since 2006.
Irvine, California
February 24, 2025
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