Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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.

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.

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 we believe the clinical evidence supporting iDose TR, together with real-world outcomes and feedback provided by physicians, medical societies, and other stakeholders during the public comment process, supports appropriate Medicare coverage that preserves physician decision-making and patient access, the timing, content, and potential impact of any final LCDs remain uncertain.

We anticipate some potential disruption within our U.S. Corneal Health franchise during 2026 as the market transitions from Photrexa to Epioxa following Epioxa's approval and our ongoing commercialization efforts. During this transition, market access pathways for Epioxa continue to be established, while commercial availability of Photrexa is expected to conclude by the end of the third quarter of 2026.

For additional information, see the section titled Risks Related to Our Business within Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.

Components of Results of Operations

Net Sales

Our net sales are generated primarily from sales of iDose TR, our iStent family of products, Photrexa, Epioxa and other associated drug formulations, and our proprietary bioactivation systems. Customers are primarily comprised of ambulatory surgery centers, hospitals, and physician private practices, with independent distributors being used in certain international locations where we currently do not have a direct commercial presence. We currently operate in one operating and reportable segment and our primary business activity is the development and commercialization of therapies across several end markets within ophthalmology.

We sell the majority of our products through a direct sales organization in the United States. Internationally, we sell our products primarily through direct sales subsidiaries and through independent distributors in certain countries in which we do not have a direct presence or only maintain a modest commercial presence. The primary end-user customers for our products are surgery centers, hospitals and physician private practices.

Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration to which we expect to be entitled in exchange for those products or services, which includes estimates of reductions to revenue for commercial and governmental rebates owed, variable consideration for product returns and other discounts and incentives.

Cost of Sales

Cost of sales reflects the aggregate costs incurred to manufacture our products, such as raw materials, labor, manufacturing overhead, quality control, and the effect of changes in the balance of reserves for excess and obsolete inventory.

Cost of sales also includes amortization of the developed technology intangible assets recorded as a result of our acquisitions of Avedro, Inc. (Avedro) and Mobius Therapeutics, LLC (Mobius), respectively, and our sales agreement with Celanese Canada ULC (Celanese Agreement). For each of the three months ended June 30, 2026 and June 30, 2025, amortization expense was $5.8 million, respectively. For the six months ended June 30, 2026 and June 30, 2025, amortization expense was $14.9 million and $11.4 million, respectively.

We manufacture our iStent family of products and iDose TR at our facilities in San Clemente, California and our proprietary bioactivation systems at our manufacturing facility in Burlington, Massachusetts. We contract with third-party manufacturers in the U.S. and Germany to produce our Photrexa, Epioxa and other associated drug formulations. We currently intend to maintain our manufacturing facilities at our San Clemente and Burlington locations for the foreseeable future.

Due to the relatively low production volumes of our iStent family of products, iDose TR and our proprietary CXL bioactivation systems compared to our potential capacity for those products, a significant portion of our per unit costs is comprised of manufacturing overhead expenses. These expenses include quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management.

Our future gross profit as a percentage of net sales, or gross margin, will be impacted by numerous factors including commencement of sales of new products currently in our pipeline, or any other future products, which may have higher pricing, or conversely, higher product costs. Our gross margin will also be affected by manufacturing or supply chain costs, disruptions or inefficiencies that we may experience as we attempt to manufacture our products on a larger scale, manufacture new products and change our manufacturing capacity, processes, or output. Additionally, our gross margin will continue to be affected by amortization of Avedro and Mobius developed technology and Celanese Agreement intangible assets, the impact of rebates and allowances associated with government and commercial programs and by royalty expenses on current or future products associated with various licensing agreements. Our gross margin in future periods may also be impacted by other factors adversely affecting our net sales in future periods such as the impact of government pricing programs and reductions of payment rates for certain of our products and related services, and inflationary pressures.

Selling, General and Administrative

Our selling, general and administrative (SG&A) expenses primarily consist of personnel-related expenses, including salaries, sales commissions, bonuses, fringe benefits and stock-based compensation for our executive, sales, marketing, market access, financial, legal, information technology and other administrative functions. Other significant SG&A expenses include marketing programs; advertising; post-approval clinical studies; conferences and congresses; travel expenses; costs associated with obtaining and maintaining our patent portfolio; professional fees for accounting, auditing, consulting and legal services; costs associated with our global enterprise systems and information systems; and allocated facility expenses.

We expect SG&A expenses to continue to grow as we increase our infrastructure for our global sales and marketing functions, commercial support organizations, and general administration departments. We also expect other non-employee-related costs, including sales and marketing program activities for new products, market access efforts, outside services, enhancements in our global enterprise systems, accounting services and general legal and litigation costs to increase as our overall operations grow. The timing of these increased expenditures and their magnitude are primarily dependent on the commercial success and sales growth of our products, as well as on the timing of any new product launches and other potential business and operational activities.

Research and Development

Our research and development (R&D) activities primarily consist of new product development projects, pre-clinical studies, Investigational New Drug studies, and clinical trials. Our R&D expenses primarily consist of personnel-related expenses, including salaries, fringe benefits and stock-based compensation for our R&D employees; research materials; supplies and services; in-licenses, including event-based milestones; and the costs of conducting clinical studies, which include payments to investigational sites and investigators, clinical research organizations, consultants, and other outside technical services; and the costs of materials, supplies and travel. We expense R&D costs as they are incurred. We expect our R&D expenses to continue to increase as we initiate and advance our development programs, including our expanding pharmaceutical development efforts and clinical trials across glaucoma, corneal health and retinal disease.

Costs for our clinical development programs include expenses for all activities necessary for obtaining regulatory approvals. Our research programs vary significantly for each current and future product candidate and completion dates are difficult to predict. As a result, while we expect our R&D costs to continue to increase for the foreseeable future, we cannot estimate with any degree of certainty the timing or the amount of costs we will incur in connection with the development of our product candidates. We anticipate we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program

and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, the availability of funding resources, as well as ongoing assessments as to each current or future product candidate's commercial potential and our likelihood of obtaining necessary regulatory approvals. We are not currently able to fully track expenses by product candidate.

Acquired In-Process Research and Development

Our acquired in-process research and development (IPR&D) expenses generally relate to acquisitions of technologies that management determines are not a business combination and do not have any alternative future uses. Future costs to develop these assets are expensed as R&D when incurred. We may have ongoing milestone and royalty payment obligations depending on the success, development, regulatory approval and commercialization of the proprietary technologies we have acquired.

Non-Operating (Expense) Income, Net

Non-operating (expense) income, net primarily consists of interest income derived from our short-term investments, interest expense associated with our finance lease for our corporate headquarters in Aliso Viejo, California, and unrealized gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar, primarily related to intercompany loans.

Income Taxes

Our tax provision is primarily comprised of state and foreign income taxes offset by release of uncertain tax positions for which the statute of limitations has expired. Our net deferred tax liability of $0.4 million at June 30, 2026 and December 31, 2025 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets. We continue to provide a full valuation allowance against our other net deferred tax assets.

We record reserves for uncertain tax positions where we believe the ability to sustain the tax position does not reach a more likely than not threshold.

Results of Operations

Comparison of Three Months Ended June 30, 2026 and June 30, 2025 (in thousands):

Net Sales

Net sales for the three months ended June 30, 2026 and June 30, 2025 were $185.6 million and $124.1 million, respectively, increasing by approximately 50% primarily related to the factors listed below.

Net sales of glaucoma products in the United States were $118.5 million and $72.3 million for the three months ended June 30, 2026 and June 30, 2025, respectively, increasing by 64%. This increase is primarily due to higher sales volume of iDose TR, which has a higher net sales price than our other products, combined with modest growth in the net sales of our non-iDose products.

International sales of glaucoma products for the three months ended June 30, 2026 and June 30, 2025 were $36.6 million and $31.3 million, respectively, increasing by 17%. The increase in international sales reflects continued broad-based volume growth in many key international markets for glaucoma procedures, primarily France, the United Kingdom and Australia, partially offset by reimbursement challenges in Germany. Additionally, the dollar-based results of our international sales were affected by favorable foreign exchange rates, primarily related to the Euro, Australian dollar and Brazilian Real, partially offset by the Japanese Yen, during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

Net sales of corneal health products were $30.4 million and $20.6 million for the three months ended June 30, 2026 and June 30, 2025, respectively, increasing by 48%. The $9.8 million increase in net sales generated by our corneal health products were primarily related to U.S. net sales of Epioxa using direct sales operations, partially offset by a modest decrease in U.S. sales of Photrexa using direct sales operations, as customers transition from Photrexa to Epioxa. Our net sales of iLink devices in the U.S. also increased because of new account placements for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Cost of Sales

Cost of sales for the three months ended June 30, 2026 and June 30, 2025 were $34.0 million and $26.9 million, respectively, reflecting an increase of approximately $7.1 million, which is generally proportionate to the increase in net sales for the corresponding period, as well as contributions from increased iDose TR production and net sales of iDose TR and Epioxa. Our gross margin was 82% for three months ended June 30, 2026 and 78% for the three months ended June 30, 2025.

Selling, General and Administrative Expenses

SG&A expenses for the three months ended June 30, 2026 and June 30, 2025 were $116.1 million and $83.4 million, respectively, reflecting an increase of $32.7 million or 39%.

Of the total $32.7 million increase in SG&A expenses for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, $17.5 million related to increased compensation and related employee costs, with $9.4 million of the incremental amount related to an increase in stock-based compensation expense, the majority of which was associated with performance equity awards that were achieved during the quarter. The residual increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.

The remaining increase of $14.8 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities, and allocated expenses; marketing and market access expenses, as well as reserves for accounts receivable, which are calculated based on our accounts receivable reserve methodology.

Research and Development Expenses

R&D expenses for the three months ended June 30, 2026 and June 30, 2025 were $51.3 million and $36.5 million, respectively, reflecting an increase of $14.8 million or 40%. Of the total $14.8 million increase, $7.1 million and $7.7 million related to core R&D and clinical expenses, respectively.

Compensation and related employee expenses increased $4.6 million, $1.1 million of which was related to increased stock-based compensation. The remaining increase in R&D expenses of $10.2 million was spent on continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generation iDose and Epioxa products; and our earlier stage programs for glaucoma, corneal, retinal and other therapeutic investments.

Non-Operating (Expense) Income, Net

We had non-operating expense, net of $0.5 million for the three months ended June 30, 2026, and non-operating income, net of $3.3 million for the three months ended June 30, 2025, respectively. This primarily relates to a change in unrealized foreign currency amounts recognized due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the three months ended June 30, 2025.

Income Tax Provision

Our effective tax rate for the second quarter of 2026 and 2025 was (3.70)% and (1.28)%, respectively. For the three months ended June 30, 2026 and June 30, 2025, we recorded a provision for income taxes of $0.7 million and $0.2 million, respectively, which was primarily comprised of state and foreign income tax expense, offset by release of uncertain tax positions for which the statute of limitations has expired.

Comparison of Six Months Ended June 30, 2026 and June 30, 2025 (in thousands):

Net Sales

Net sales for the six months ended June 30, 2026 and June 30, 2025 were $336.2 million and $230.8 million, respectively, increasing by approximately 46% primarily related to the factors listed below.

Net sales of glaucoma products in the United States were $212.0 million and $131.4 million for the six months ended June 30, 2026 and June 30, 2025, respectively, increasing by 61%. This increase is primarily due to higher sales volume of iDose TR, which has a higher net sales price than our other products, combined with modest growth in the net sales of our non-iDose products.

International sales of glaucoma products for the six months ended June 30, 2026 and June 30, 2025 were $72.4 million and $60.3 million, respectively, increasing by 20%. The increase in international sales reflects continued broad-based volume growth in many key international markets for glaucoma procedures, primarily France, the United Kingdom, and Australia, partially offset by reimbursement challenges in Germany. Additionally, the dollar-based results of our international sales were affected by favorable foreign exchange rates, primarily related to the Euro, Australian dollar and Brazilian Real, partially offset by the Japanese Yen, during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

Net sales of corneal health products were $51.7 million and $39.1 million for the six months ended June 30, 2026 and June 30, 2025, respectively, increasing by 32%. The $12.6 million increase in net sales generated by our corneal health products is primarily related to U.S. net sales of Epioxa using direct sales operations, as customers transition from Photrexa to Epioxa. Our net sales of

iLink devices in the U.S. also increased due to new account placements for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Cost of Sales

Cost of sales for the six months ended June 30, 2026 and June 30, 2025 were $67.4 million and $51.2 million, respectively, reflecting an increase of approximately $16.1 million, which is generally proportionate to the increase in net sales for the corresponding period, as well as contributions from increased iDose TR production and iDose TR and Epioxa net sales. Our gross margin was 80% for the six months ended June 30, 2026 and 78% for the six months ended June 30, 2025.

Selling, General and Administrative Expenses

SG&A expenses for the six months ended June 30, 2026 and June 30, 2025 were $209.0 million and $154.0 million, respectively, reflecting an increase of $55.0 million or 36%.

Of the total $55.0 million increase in SG&A expenses for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, $31.1 million related to increased compensation and related employee costs, with $15.2 million of the incremental amount related to an increase in stock-based compensation expense, the majority of which was associated with performance equity awards that were achieved during the quarter. The residual increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.

The remaining increase of $23.4 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities, and allocated expenses; marketing and market access expenses, as well as reserves for accounts receivable, which are calculated based on our accounts receivable reserve methodology.

Research and Development Expenses

R&D expenses for the six months ended June 30, 2026 and June 30, 2025 were $95.4 million and $68.9 million, respectively, reflecting an increase of $26.6 million or 39%. Of the total $26.6 million increase, $13.1 million and $13.4 million related to core R&D and clinical expenses, respectively.

Compensation and related employee expenses increased $8.0 million, $1.4 million of which was related to increased stock-based compensation. The remaining increase in R&D expenses of $18.6 million was spent on continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generation iDose and Epioxa products; and our earlier stage programs for glaucoma, corneal, retinal and other therapeutic investments.

Non-Operating Income, Net

We had non-operating income, net of $0.1 million and $6.1 million for the six months ended June 30, 2026 and June 30, 2025, respectively. This primarily relates to a change in unrealized foreign currency amounts recognized due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the six months ended June 30, 2025.

Income Tax Provision

Our effective tax rate for the six months ended June 30, 2026 and June 30, 2025 was (3.08)% and (1.54)%, respectively. For the six months ended June 30, 2026 and June 30, 2025, we recorded a provision for income taxes of $1.1 million and $0.6 million, respectively, which was primarily comprised of state and foreign income tax expense, offset by release of uncertain tax positions for which the statute of limitations has expired.

Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash, cash equivalents and short-term investments, and generally cash generated from operating, financing and investing activities. Our primary uses of cash have been for commercial activities, clinical and research and development programs, general and administrative expenses, acquired in-process research and development, and capital expenditures.

The following table summarizes our cash and cash equivalents, short-term investments and selected working capital data as of June 30, 2026 and December 31, 2025 (in thousands):

Main Sources of Liquidity

We plan to fund our operations, commitments for capital expenditures and other short and long-term known contractual and other obligations using existing cash and investments and, to the extent available, cash received from commercial operations as well as cash generated from employee stock option exercises.

We may seek to obtain additional financing in the future through debt or equity financings. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, or at all and although we have been profitable for certain periods in our operating history, there can be no assurance that we will be profitable or generate cash from operations in the future.

Cash, Cash Equivalents, Short-term Investments and Restricted Cash

As of June 30, 2026, our cash, cash equivalents and short-term investments totaled approximately $286.2 million and our restricted cash totaled approximately $3.1 million.

Cash Flow provided by (used in) Operations

For the six months ended June 30, 2026, our operating activities provided $2.3 million in net cash and for the six months ended June 30, 2025 our operating activities used $11.5 million.

Short-term Liquidity Requirements

Our short-term liquidity requirements primarily consist of regular operating costs, including information technology related costs and support, R&D project funding, capital expenditures as we continue the development of our manufacturing facilities and office spaces, operating and financing lease obligations, government rebate obligations, and other firm purchase commitments. As of June 30, 2026, we had net working capital of $413.4 million, which indicates that our current assets are sufficient to cover our short-term liabilities.

We expect levels of our capital expenditures to be higher in 2026 than in 2025 as we upgrade certain manufacturing facilities and technologies and continue investing in R&D equipment needed to advance our pipeline.

Long-term Liquidity Requirements

Our long-term liquidity requirements primarily consist of capital expenditures for the continued development of our manufacturing facilities and office spaces, potential future payments related to our licensing agreements and acquisitions, and firm purchase commitments. As demand grows for our products, we will continue to expand global operations to meet demand through

investments in our manufacturing capabilities. To that end, we entered into agreements with the city of Huntsville, Alabama that provide an opportunity to develop a new 200,000 square foot R&D and manufacturing facility, which is anticipated to result in more than $80.0 million in capital expenditures over the multi-year project. We expect construction to begin in 2026.

Cash Flows

Our historical cash outflows have primarily been associated with cash used for operating activities such as the expansion of our commercial and R&D activities; deployment of working capital for accounts receivable, inventory and other items; the acquisition of intellectual property; and expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency and for overall facility expansion.

The following table is a condensed summary of our cash flows for the periods indicated:

At June 30, 2026, our cash and cash equivalents were held for working capital purposes. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity.

Operating Activities

In the six months ended June 30, 2026 and June 30, 2025, our operating activities provided $2.3 million and used $11.5 million of net cash, respectively.

For the six months ended June 30, 2026, our net cash provided by operating activities reflected our net loss of $38.2 million, adjusted for non-cash items of $75.5 million, primarily consisting of stock-based compensation expense of $48.0 million, depreciation of $5.9 million, amortization of intangible assets of $14.8 million and noncash lease expense of $2.4 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $35.0 million, which resulted primarily from an increase in accounts receivable of $31.9 million primarily due to increased iDose TR and Epioxa sales during the six months ended June 30, 2026 given iDose TR and Epioxa sales have extended terms, a decrease in accounts payable and accrued liabilities of $2.2 million, and an increase in prepaid expenses and other current assets of $7.4 million partially offset by a decrease in inventory of $2.4 million.

For the six months ended June 30, 2025, our net cash used in operating activities reflected our net loss of $37.8 million, adjusted for non-cash items of $56.5 million, primarily consisting of stock-based compensation expense of $31.0 million, depreciation of $5.4 million, amortization of intangible assets of $11.4 million, noncash lease expense of $2.1 million, allowance for doubtful accounts of $4.1 million, and amortization of premium on short-term investments of $2.2 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $30.2 million, which resulted primarily from an increase in inventory of $4.4 million, and an increase in accounts receivable of $24.0 million, primarily due to increased iDose TR sales during the six months ended June 30, 2025 given iDose TR sales have extended terms.

Investing Activities

In the six months ended June 30, 2026 and June 30, 2025, our investing activities provided $5.2 million and used $57.7 million of net cash, respectively.

For the six months ended June 30, 2026, we received cash of approximately $82.6 million from sales and maturities of short-term investments, we used cash of approximately $66.8 million for purchases of short-term investments, approximately $6.7 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; and we used approximately $3.9 million related to investments in company-owned life insurance.

For the six months ended June 30, 2025, we used cash of approximately $116.8 million for purchases of short-term investments, approximately $16.6 million related to the purchase of certain real property consisting of land, a building and certain assumed leases, approximately $12.4 million related to our May 2025 acquisition of the outstanding equity interests in Mobius Therapeutics, LLC, the Mobius Merger, approximately $3.1 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; approximately $2.5 million related to investments in company-owned life insurance, and we received cash of approximately $94.4 million from sales and maturities of short-term investments.

Financing Activities

In the six months ended June 30, 2026 and June 30, 2025, our financing activities provided $16.8 million and $4.2 million, respectively.

For the six months ended June 30, 2026, we received $25.8 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan and used $8.4 million for payment of employee taxes related to restricted stock unit vesting.

For the six months ended June 30, 2025, we received $12.0 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan and used $7.3 million for payment of employee taxes related to restricted stock unit vesting.

We do not have any off-balance sheet arrangements.

Material Cash Requirements

There have been no significant changes to our material cash requirements, including commitments for capital expenditures and known contractual and other obligations, as of June 30, 2026 from those disclosed in our Annual Report.

We believe that cash from operating, financing and investing activities, together with our cash and investment balances, will be sufficient to meet ongoing operations, capital expenditures, commitments, working capital requirements and other known contractual and other obligations and satisfy our liquidity requirements for at least the next 12 months and the foreseeable future.

Critical accounting policies and significant estimates

Management's discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the condensed consolidated financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to our financial position and results of operations.

Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Estimates" included in Part II, Item 7 of our Annual Report. There have been no material changes to our critical accounting policies and estimates as disclosed therein, during the three and six months ended June 30, 2026, as compared with those disclosed in our Annual Report.