William Blair Downgrades Glaukos After Disappointing CMS Rate; Shares Drop

Centers for Medicare and Medicaid Services (CMS) issued its fiscal 2022 proposed physician fee schedule, which included two combined Category I cataract plus stent procedure codes.
The physicians will use the codes to seek reimbursement utilizing Glaukos Corporation's GKOS trabecular micro-bypass technologies (iStent, iStent inject, iStent inject W) when used as approved in combination with cataract surgery.
Glaukos estimates a proposed 2022 physician fee of approximately $565.23, representing incremental physician fee payment for the insertion of an aqueous draining device of roughly $34.25 versus the proposed 2022 physician fee of roughly $530.98 for non-complex cataract surgery alone.
William Blair downgraded Glaukos to Market Perform from Outperform, noting a "disappointing and surprising" preliminary physician reimbursement rate for a code that will combine cataract surgery and the iStent procedure into one code.
Analyst Brian Weinstein writes that the proposed rate calls for incremental reimbursement for the iStent procedure to be approximately $34, well below the analyst's expectation of somewhere just south of $300.
The proposed rate represents an approximately 90% cut to the current rate at which most procedures are reimbursed under the Category III code, says Weinstein. He believes this will put an overhang on Glaukos shares.
Price Action: GKOS shares are down 18.5% at $59.95 during the premarket session on the last check Wednesday.