GLAUKOS Corp Goodwill & Intangibles Disclosure

Note 7. Intangible Assets and Goodwill

Intangible assets

As part of the Mobius Merger, the Company acquired identifiable intangible assets for (i) developed technology related to Mitosol, an ophthalmic formulation of mitomyacin-C, which is often used as an adjunct in late-stage glaucoma filtration procedures, which will be amortized to cost of sales over a weighted-average estimated useful life of approximately 9 years, and (ii) customer relationships, which will be amortized to selling, general and administrative expense over an estimated useful life of 9 years.

The fair value of developed technology and customer relationships assets were determined using an excess earnings methodology. Significant assumptions used in the valuations include: (i) the period in which material net cash inflows are expected to commence, which was estimated to be 2025 for both the developed technology and customer relationships, and (ii) the period in which the present value of cash inflows are expected to become immaterial, which was estimated to be 2054 for developed technology and 2044 for the customer relationships, and (iii) the discount rate of 41.0% for both the developed technology and the customer relationships.

Effective March 17, 2023, the Company entered into a sales agreement (Sales Agreement) with Celanese Canada ULC (Celanese) under which Celanese will make available and supply to the Company certain raw materials used to create a nanoporous membrane utilized in the iDose TR, and authorized the Company to reference its Drug Master File (DMF) with respect to such raw materials, which is required for the Company to commercialize iDose TR. The term of the Sales Agreement is four years after the iDose TR launch date in February 2024. In exchange for the ability to obtain future raw materials and the rights related to the DMF, the Company is subject to minimum compensation payments over four years of $6.3 million and potential additional royalties based on a percentage of sales of the iDose TR product. The Company recognized an intangible asset related to the minimum compensation payments at fair value of $5.2 million upon the date of acquisition, which was determined to be the iDose TR launch date. As of December 31, 2025, the remaining balance of $4.8 million is included in Intangible assets, net on the consolidated balance sheets and will continue to be amortized to cost of sales over its useful life of four years, which is the initial term of the Sales Agreement. A member of the Celanese board of directors also sits on the board of directors of the Company.

The Company evaluated its indefinite-lived intangible assets for impairment and concluded there were no indicators of impairment as of December 31, 2025.

For the year ended December 31, 2025, amortization expense related to the Company’s finite-lived intangible assets was approximately $26.8 million and $0.4 million, recorded in cost of sales and sales, general and administrative expenses, respectively, in the consolidated statements of operations. For the year ended December 31, 2024, amortization expense was $22.2 million and $2.5 million and for the year ended December 31, 2023, amortization expense related to the Company’s finite-lived intangible assets was approximately $22.1 million and $2.8 million, recorded in cost of sales and selling, general and administrative expenses, respectively, in the consolidated statement of operations.

During the year ended December 31, 2025, the Company received FDA approval for Epioxa and as a result, announced plans to commercially launch Epioxa in the first quarter of 2026. As part of the launch, the Company will transition commercial efforts and manufacturing from Photrexa to Epioxa over the course of 2026. Consequently, the Company performed an assessment of its Photrexa long-lived assets for impairment and determined that its developed technology intangible asset related to Photrexa was no longer fully recoverable. As a result, the Company 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 substantially all of its Photrexa developed technology intangible asset. Fair value of the Photrexa developed technology intangible asset was determined using a probability-weighted income-based approach based on expected future cash flows that the asset will generate over the remaining useful life, which is expected to be less than one year. These fair value estimates utilize significant unobservable inputs and thus represent Level 3 fair value measurements.

As a result of Epioxa's FDA approval, the associated indefinite-lived developed technology intangible asset is amortizing over six years, which is management’s estimated useful life of the intangible asset.

There were no impairment charges for long-lived intangible assets for the years ended December 31, 2024 and December 31, 2023.

Goodwill

Actual amortization expense to be reported in future periods could differ from these estimates as a result of asset impairments, acquisitions, or other facts and circumstances.