MONROVIA, Calif., Feb. 25, 2015 /PRNewswire/ -- STAAR Surgical Company (NASDAQ: STAA) a leading developer, manufacturer and marketer of implantable lenses and delivery systems for the eye, today reported sales for the fourth quarter and fiscal year ended January 2, 2015. For the fiscal year, total sales of $75.0 million increased 4% compared to fiscal year 2013 and increased 6% on a constant currency basis. ICL sales were flat compared to prior year while IOL sales grew 1% as reported or 5% in constant currency. Sales of lower margin Other products, including IOL injectors, increased 68%.
As previously announced, sales for the fourth quarter were $16.6 million compared with $18.9 million for the fourth quarter of 2013. The effect of changes in foreign currency reduced sales by $556,000. The fourth quarter of 2014 had five fewer shipping days than the fourth quarter of 2013. Backorders due to a voluntary hold on product and the timing of an order from the Company’s Korean distributor reduced ICL sales by approximately $2.0 million in the quarter. The Company is filling backorders as it manufactures product not subject to the voluntary hold. STAAR continues to work toward a resolution of the voluntary shipping hold.
The Company showed progress in two important international markets during the fourth quarter. In China, STAAR received final approval for the ICL and TICL with CentraFLOW® in November and began shipping product during the quarter. The approval also expanded the ranges for treatment on both myopic and astigmatic corrections. The Company has now trained 200 ophthalmic surgeons in China on the new technology and during January 51% of all ICLs shipped from the distributor to customers were the CentraFLOW technology. China is the largest refractive market in the world according to Market Scope with an estimated 875,000 refractive procedures in 2013. These approvals enable a significant future potential opportunity for the Company to expand its estimated 1.6% market share.
In Korea, ICL sales declined in both the quarter and for the full year, largely due to the previously discussed and disclosed negative media coverage of LASIK complications. Data from major centers in Korea report the impact from that coverage continues to drive declines in all refractive surgery. The Company’s partner in the Korean market continues its direct-to-consumer campaign that highlights the advantages of the Visian ICL refractive procedure.
For the fourth quarter, gross profit margin was 56.7% compared to 68.5% in the fourth quarter of 2013. Approximately 660 basis points of the decline was due to recording inventory reserves, the majority of which was for Toric ICL inventory that had been built in Switzerland in anticipation of the U.S. launch. Other negative impacts included higher ICL unit costs (210 basis points), a higher mix of low margin IOL injector sales (130 basis points), and lower average selling prices (110 basis points).
Operating expenses for the quarter declined 8% to $13.1 million from $14.2 million in the prior year primarily due to lower stock-based compensation expense and the timing of ESCRS conference expenses, partially offset by remediation expenses and costs related to the FDA inspections. General and administrative expense was $0.4 million lower, and selling and marketing expense was $1.7 million lower, compared with the prior year’s quarter. These decreases in expenses were partially offset by a $1.3 million increase in research and development expense, which includes approximately $1.2 million in remediation expenses and costs related to the FDA inspections in the fourth quarter. Remediation expenses and costs related to the FDA panel and inspections were approximately $3.3 million for the fiscal year.
During the fourth quarter of 2014, the Company recorded a $1.4 million income tax benefit, as compared to a benefit of $172,000 in the prior year period. The tax benefit in the quarter was driven by finalization of Swiss tax authority rulings in connection with the Company’s manufacturing consolidation project completed June 2014.
The GAAP net loss for the fourth quarter of 2014 was $2.5 million or $0.07 on a per diluted share basis, compared with a net loss of $876,000 or $0.02 on a per diluted share basis, in the fourth quarter of 2013. Adjusted net loss (excluding manufacturing consolidation expenses for the prior year’s quarter, gain (loss) on foreign currency transactions, stock-based compensation expense and FDA panel and remediation expenses) for the fourth quarter ended January 2, 2015 was $1.2 million or $0.03 per diluted share versus adjusted net income for the prior year’s quarter of $850,000 or $0.02 per diluted share. The reconciliation between GAAP and non-GAAP financial information is provided in the financial tables included with this release.
The GAAP net loss for the fiscal year ending January 2, 2015 was $8.4 million or $0.22 on a per diluted share basis, compared to net income of $398,000 or $0.01 on a per diluted share basis for the prior year. Adjusted net income for the full year was $779,000 or $0.02 per diluted share versus adjusted net income of $7.5 million or $0.19 per diluted share for the prior year.
Cash and cash equivalents at January 2, 2015 and October 3, 2014 totaled $13.0 million and $18.4 million respectively. During the quarter ended January 2, 2015, the Company used $3.5 million in cash for operating activities and $1.5 million for the purchase of property and equipment. Cash used for operating activities during the quarter resulted primarily from payments made for FDA remediation activities and an $800,000 increase in inventory.
Recent Visian Implantable Collamer® Lens (ICL) Highlights.
- In February, the total number of Visian ICLs successfully implanted globally surpassed 500,000.
- ICL sales were $9.0 million during the fourth quarter compared with the $11.5 million reported for the prior year quarter. The decrease was largely due to approximately $2 million in orders that the company was unable to fill by year-end and the timing of orders received from the Company’s distributor in Korea.
- ICLs with CentraFLOW represented 79% of all ICLs shipped during the quarter, and approximately 100,000 Visian ICLs with the CentraFLOW technology have been successfully implanted since introduction.
- For fiscal year 2014, ICL sales were $44.0 million, essentially flat compared to $44.1 million in fiscal year 2013. Changes in foreign currency exchange rates had minimal impact on total ICL sales for fiscal year 2014.
- In China the CFDA approved the Visian ICL with CentraFLOW in November and the launch of this product has begun.
- In December, the FDA approved the On-line Calculator, a Class III device allowing surgeons to determine power and length for individual ICLs linking to our online ordering system allowing customers to place orders directly from available inventory. We anticipate completing training for the Company’s top five customers by the end of the first quarter with a subsequent roll out to the remainder of our customer base.
Recent Intraocular Lens (IOL) Highlights
- IOL sales were $5.5 million during the fourth quarter compared with $6.6 million reported for the prior year period. There was a negative currency impact of $314,000 in the quarter.
- Japan represented 49% of the Company’s total IOL sales and 39% of total IOL units. Revenue in Japan decreased 13% during the quarter, and 3% in constant currency, while Japanese IOL unit sales increased only by 1% during the quarter, despite a growth in units of 6% for the full year. The Company received fewer bulk IOL orders during the quarter as compared to the prior year’s quarter.
- Europe represented 23% of total IOL sales and 32% of total IOL units in the quarter. European IOL sales decreased by 8% in dollars and 3% in units compared to the prior year quarter.
- The U.S. accounted for 21% of total IOL sales and 18% of units during the quarter. US IOL sales decreased by 26% in dollars and 28% in units versus the fourth quarter of 2013.
- For fiscal year 2014, total IOL sales were $24.3 million compared with $24.2 million in fiscal year 2013. The effect of changes in foreign currency exchange rates negatively impacted 2014 IOL sales by approximately $1.1 million. Total IOL units increased 8% in 2014 versus the prior year.
Regulatory Update
The Company continues to work to resolve observations issued in the FDA Warning Letter of May 21, 2014 and the related Form 483.
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