Benzinga | Jul 14, 2021 07:43AM EDT

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 (NYSE: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.