STAAR Surgical Reports First Quarter 2023 Results

STAAR Surgical Company, a leading developer, manufacturer and marketer of implantable lenses for the eye, reported financial results for the first quarter ended March 31, 2023.

  • Q1 2023 Net Sales of $73.5 Million; ICL Sales of $70.6 Million Up 20% Y/Y
  • Fiscal 2023 Net Sales Outlook Raised to $348 Million; ICL Sales to $345 Million Up 28% Y/Y

LAKE FOREST, Calif.--(BUSINESS WIRE)-- STAAR Surgical Company (NASDAQ: STAA), a leading developer, manufacturer and marketer of implantable lenses for the eye, today reported financial results for the first quarter ended March 31, 2023.

First Quarter 2023 Overview

  • Net Sales of $73.5 Million Up 16% and Constant Currency Net Sales of $75.5 Million Up 20% Y/Y
  • ICL Sales of $70.6 Million Up 20% and Constant Currency ICL Sales of $72.4 Million Up 23% Y/Y
  • ICL Units Up 20% Y/Y
  • Gross Margin at 78.3% vs. 77.9% in the Prior Year Quarter
  • Net Income of $0.05 per Share vs. $0.19 per Share in the Prior Year Quarter
  • Cash, Cash Equivalents and Investments Available for Sale Ended the Quarter at $217.3 Million

“STAAR’s performance in the first quarter demonstrates the global strength of our business with ICL units and sales both up 20% over the prior year as surgeons and patients seeking visual freedom from glasses and contact lenses increasingly make our EVO ICL lenses their first choice,” said Tom Frinzi, President and CEO of STAAR Surgical. “Strength in our business during the quarter was broad-based across APAC, EMEA and the U.S. In China, ICL procedure volumes increased strongly in the first quarter of 2023 with end-market procedures reaching a record level. We are maintaining a keen focus on execution against our targeted priorities and anticipate accelerating sales momentum as we move through the year. We are therefore raising our outlook for fiscal 2023 net sales from $340 million to approximately $348 million, which includes approximately $3 million of Other Product sales in the first quarter. Our updated outlook represents 28% global ICL sales growth year over year.”

Financial Overview – Q1 2023

Net sales were $73.5 million for the first quarter of 2023, up 16% compared to $63.2 million reported in the prior year quarter. Changes in currency, primarily the Japanese Yen as well as the Euro, negatively impacted reported net sales by $2.0 million for the first quarter of 2023. The sales increase in the first quarter was driven by ICL sales and unit growth which were each 20%, as compared to the prior year period. Other Product sales decreased 36% compared to the prior year quarter. ICL sales were 96% of total net sales for the first quarter of 2023.

Gross profit margin for the first quarter of 2023 was 78.3% compared to the prior year quarter of 77.9%. Factors impacting the favorability in gross margin in the first quarter of 2023, as compared to the prior year quarter, include product and geographic mix, partially offset by increased period costs associated with manufacturing projects.

Operating expenses for the first quarter of 2023 were $54.8 million compared to the prior year quarter of $37.2 million. General and administrative expenses were $18.1 million compared to the prior year quarter of $11.9 million. The increase in general and administrative expenses was due to increased compensation related expenses, outside services and facilities costs. Selling and marketing expenses were $26.4 million compared to the prior year quarter of $17.3 million. The increase in selling and marketing expenses is due to increased advertising and promotional activities, compensation related expenses and trade shows and sales meetings. Research and development expenses were $10.3 million compared to the prior year quarter of $7.9 million. The increase in research and development expenses is due to increased compensation related expenses and clinical trial expenses related to U.S. post-approval studies.

Net income for the first quarter of 2023 was $2.7 million or $0.05 per diluted share compared with net income of $9.6 million or $0.19 per diluted share for the prior year quarter. The year over year decrease in net income is attributable to higher operating expenses partially offset by higher gross profit and interest income. Adjusted Net Income for the first quarter of 2023 was $8.7 million or $0.18 per diluted share compared to $14.4 million or $0.29 per diluted share for the prior year quarter. The reconciliation between GAAP and non-GAAP financial information is provided in the financial tables included with this release.

Cash, cash equivalents, short-term and long-term investments available for sale at March 31, 2023, totaled $217.3 million, compared to $225.5 million at end of the fourth quarter of 2022.

Conference Call

The Company will host a conference call and webcast today, Wednesday, May 3 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss its financial results and operational progress. To access the conference call (Access Code 835957), please dial 833-470-1428 for domestic participants and 404-975-4839 for international participants. The live webcast can be accessed from the investor relations section of the STAAR website at www.staar.com.

A taped replay of the conference call (Replay Code 208036) will be available beginning approximately one hour after the call’s conclusion for seven days. This replay can be accessed by dialing 866-813-9403 for domestic callers and 929-458-6194 for international callers. An archived webcast will also be available at www.staar.com.

Use of Non-GAAP Financial Measures

This press release includes supplemental non-GAAP financial information, which STAAR believes investors will find helpful in understanding its operating performance. “Adjusted Net Income” excludes the following items that are included in “Net Income” as calculated in accordance with U.S. generally accepted accounting principles (“GAAP”): gain or loss on foreign currency transactions, stock-based compensation expenses, and valuation allowance adjustments. Management believes that “Adjusted Net Income” is useful to investors in gauging the outcome of the key drivers of the business performance: the ability to increase sales revenue and our ability to increase profit margin by improving the mix of high value products while reducing the costs over which management has control.

Management has excluded gains and losses on foreign currency transactions because of the significant fluctuations that can result from period to period as a result of market driven factors. Stock-based compensation expenses consist of expenses for stock options and restricted stock under the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 718. Valuation allowance adjustments can occur from time to time based on forecasted changes in operating results until all net operating loss carryforwards are fully utilized. In calculating Adjusted Net Income, STAAR excludes stock-based compensation expenses and valuation allowance adjustments because they are non-cash expenses and because of the considerable judgment involved in calculating their values. In addition, these expenses tend to be driven by fluctuations in the price of our stock and not by the same factors that generally affect our other business expenses.

The Company also uses Constant Currency as a Non-GAAP financial measure to exclude the effects of currency fluctuations on net sales. The Company conducts a significant part of its activities outside the U.S. It receives sales revenue and pays expenses principally in U.S. dollars, Swiss francs, Japanese yen and euros. The exchange rates between dollars and non-U.S. currencies can fluctuate greatly and can have a significant effect on the Company’s results when reported in U.S. dollars. In order to compare the Company's performance from period to period without the effect of currency, the Company will apply the same average exchange rate applicable in the prior period, or the "constant currency" rate to sales or expenses in the current period as well. Because changes in currency are outside of the control of the Company and its managers, management finds this non-GAAP measure useful in determining the long-term progress of its initiatives and determining whether its managers are achieving their performance goals. The Company believes that the non-GAAP constant-currency sales results measures provided in this press release are similarly useful to investors to give insight on long term trends in the Company's performance without the external effect of changes in relative currency values. The table provided in this press release shows sales results calculated in accordance with GAAP, the effect of currency, and the resulting non-GAAP measure expressed in constant currency.

About STAAR Surgical

STAAR, which has been dedicated solely to ophthalmic surgery for over 40 years, designs, develops, manufactures and markets implantable lenses for the eye. These lenses are intended to provide visual freedom for patients, lessening or eliminating the reliance on glasses or contact lenses. All of these lenses are foldable, which permits the surgeon to insert them through a small incision. STAAR’s lens used in refractive surgery is called an Implantable Collamer® Lens or “ICL,” which includes the EVO ICL™ product line. More than 2,000,000 ICLs have been sold to date and STAAR markets these lenses in over 75 countries. To learn more about the ICL go to: EVOICL.com. Headquartered in Lake Forest, CA, the company operates manufacturing and packaging facilities in Aliso Viejo, CA, Monrovia, CA and Nidau, Switzerland. For more information, please visit the Company’s website at www.staar.com.

Safe Harbor

All statements that are not statements of historical fact are forward-looking statements, including statements about any of the following: any financial projections (including sales), plans, strategies, and objectives of management for 2023 or prospects for achieving such plans, expectations for sales, revenue, margin, expenses or earnings, and any statements of assumptions underlying any of the foregoing, including those relating to financial performance in the second quarter and fiscal year 2023. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties related to the COVID-19 pandemic and related public health measures, as well as the factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 30, 2022 under the caption “Risk Factors,” which is on file with the Securities and Exchange Commission and available in the “Investor Information” section of the company’s website under the heading “SEC Filings.” We disclaim any intention or obligation to update or revise any financial projections or forward-looking statement due to new information or events. These statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties include the following: global economic conditions; the impact of the COVID-19 pandemic on markets; the discretion of regulatory agencies to approve or reject existing, new or improved products, or to require additional actions before approval, or to take enforcement action; international trade disputes; and the willingness of surgeons and patients to adopt a new or improved product and procedure.

Consolidated Balance Sheets        
(in 000's)        
Unaudited        
         
         
ASSETS   March 31,
2023
  December 30,
2022
Current assets:        
Cash and cash equivalents  

$

89,968

   

$

86,480

 
Investments available for sale    

113,879

     

125,159

 
Accounts receivable trade, net    

63,494

     

62,447

 
Inventories, net    

27,808

     

24,161

 
Prepayments, deposits, and other current assets    

17,722

     

13,476

 
Total current assets    

312,871

     

311,723

 
Investments available for sale    

13,445

     

13,902

 
Property, plant, and equipment, net    

53,453

     

50,921

 
Finance lease right-of-use assets, net    

303

     

342

 
Operating lease right-of-use assets, net    

31,182

     

30,270

 
Intangible assets, net    

165

     

173

 
Goodwill    

1,786

     

1,786

 
Deferred income taxes    

4,744

     

4,824

 
Other assets    

956

     

957

 
Total assets  

$

418,905

   

$

414,898

 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable  

$

9,102

   

$

11,576

 
Obligations under finance leases    

171

     

169

 
Obligations under operating leases    

3,538

     

3,524

 
Allowance for sales returns    

5,303

     

5,706

 
Other current liabilities    

28,949

     

30,741

 
Total current liabilities    

47,063

     

51,716

 
Obligations under finance leases    

167

     

210

 
Obligations under operating leases    

28,030

     

27,136

 
Deferred income taxes    

1,369

     

1,489

 
Asset retirement obligations    

218

     

220

 
Pension liability    

3,134

     

1,935

 
Total liabilities    

79,981

     

82,706

 
         
         
         
Stockholders' equity:        
Common stock    

483

     

482

 
Additional paid-in capital    

409,303

     

404,189

 
Accumulated other comprehensive income (loss)    

(937

)

   

156

 
Accumulated deficit    

(69,925

)

   

(72,635

)

Total stockholders' equity    

338,924

     

332,192

 
Total liabilities and stockholders' equity  

$

418,905

   

$

414,898

 
Consolidated Statements of Income                    
(In 000's except for per share data)                    
Unaudited                    
                     
                     
    Three Months Ended
    % of March 31, 2023   % of April 1, 2022   Fav (Unfav)
    Sales   Sales   Amount   %
Net sales  

100.0%

$

73,528

 

100.0%

$

63,200

   

$

10,328

   

16.3%

                     
Cost of sales  

21.7%

 

15,966

 

22.1%

 

13,936

     

(2,030

)

 

-14.6%

                     
Gross profit  

78.3%

 

57,562

 

77.9%

 

49,264

     

8,298

   

16.8%

                     
Selling, general and administrative expenses:                    
General and administrative  

24.7%

 

18,098

 

18.9%

 

11,940

     

(6,158

)

 

-51.6%

Selling and marketing  

35.8%

 

26,354

 

27.3%

 

17,270

     

(9,084

)

 

-52.6%

Research and development  

14.0%

 

10,310

 

12.6%

 

7,941

     

(2,369

)

 

-29.8%

Total selling, general, and administrative expenses  

74.5%

 

54,762

 

58.8%

 

37,151

     

(17,611

)

 

-47.4%

                     
Operating income  

3.8%

 

2,800

 

19.1%

 

12,113

     

(9,313

)

 

-76.9%

                     
Other income (expense), net:                    
Interest income (expense), net  

2.5%

 

1,822

 

0.0%

 

(6

)

   

1,828

   

30466.7%

Gain (loss) on foreign currency transactions  

0.0%

 

34

 

-1.4%

 

(915

)

   

949

   

103.7%

Royalty income  

0.0%

 

0

 

0.4%

 

273

     

(273

)

 

-100.0%

Other income, net  

0.1%

 

63

 

0.1%

 

62

     

1

   

1.6%

Total other income (expense), net  

2.6%

 

1,919

 

-0.9%

 

(586

)

   

2,505

   

427.5%

                     
Income before provision for income taxes  

6.4%

 

4,719

 

18.2%

 

11,527

     

(6,808

)

 

-59.1%

                     
Provision for income taxes  

2.7%

 

2,009

 

3.0%

 

1,925

     

(84

)

 

-4.4%

                     
Net income  

3.7%

$

2,710

 

15.2%

$

9,602

   

$

(6,892

)

 

-71.8%

                     
                     
Net income per share - basic    

$

0.06

   

$

0.20

         
Net income per share - diluted    

$

0.05

   

$

0.19

         
                     
Weighted average shares outstanding - basic      

48,247

     

47,755

         
Weighted average shares outstanding - diluted      

49,500

     

49,288

         
Consolidated Statements of Cash Flows        
(in 000's)        
Unaudited        
    Three Months Ended
    March 31, 2023   April 1, 2022
Cash flows from operating activities:        
Net income  

$

2,710

   

$

9,602

 
Adjustments to reconcile net income to net cash used in operating activities:        
Depreciation of property and equipment    

1,113

     

994

 
Amortization of long-lived intangibles    

7

     

8

 
Accretion/Amortization of investments available for sale    

(983

)

   

-

 
Deferred income taxes    

57

     

-

 
Change in net pension liability    

(13

)

   

41

 
Stock-based compensation expense    

6,065

     

3,894

 
Provision for sales returns and bad debts    

(377

)

   

(194

)

Inventory provision    

614

     

434

 
Changes in working capital:        
Accounts receivable    

(1,110

)

   

(3,927

)

Inventories    

(3,920

)

   

(1,483

)

Prepayments, deposits and other current assets    

(4,249

)

   

(4,505

)

Accounts payable    

(3,168

)

   

2,668

 
Other current liabilities    

(1,840

)

   

(12,142

)

Net cash used in operating activities    

(5,094

)

   

(4,610

)

         
Cash flows from investing activities:        
Acquisition of property and equipment    

(2,901

)

   

(2,539

)

Purchase of investments available for sale    

(27,445

)

   

-

 
Proceeds from sale or maturity of investments available for sale    

40,279

     

-

 
Net cash provided by (used in) investing activities    

9,933

     

(2,539

)

         
Cash flows from financing activities:        
Repayment of finance lease obligations    

(42

)

   

(18

)

Repurchase of employee common stock for taxes withheld    

(1,849

)

   

-

 
Proceeds from vested restricted stock and exercise of stock options    

530

     

912

 
Net cash provided by (used in) financing activities    

(1,361

)

   

894

 
         
Effect of exchange rate changes on cash and cash equivalents    

10

     

(384

)

         
Increase (decrease) in cash and cash equivalents    

3,488

     

(6,639

)

Cash and cash equivalents, at beginning of the period    

86,480

     

199,706

 
Cash and cash equivalents, at end of the period  

$

89,968

   

$

193,067

 
Reconciliation of Non-GAAP Financial Measure        
Adjusted Net Income and Net Income Per Share        
(in 000's)        
Unaudited   Three Months Ended
    March 31, 2023   April 1, 2022
Net income (as reported)  

$

2,710

   

$

9,602

Less:        
Foreign currency impact    

(34

)

   

915

Stock-based compensation expense    

6,065

     

3,894

Net income (adjusted)  

$

8,741

   

$

14,411

         
Net income per share, basic (as reported)  

$

0.06

   

$

0.20

Foreign currency impact    

-

     

0.02

Stock-based compensation expense    

0.13

     

0.08

Net income per share, basic (adjusted)  

$

0.18

   

$

0.30

         
Net income per share, diluted (as reported)  

$

0.05

   

$

0.19

Foreign currency impact    

-

     

0.02

Stock-based compensation expense    

0.12

     

0.08

Net income per share, diluted (adjusted)  

$

0.18

   

$

0.29

         
Weighted average shares outstanding - Basic    

48,247

     

47,755

Weighted average shares outstanding - Diluted    

49,500

     

49,288

         
Note: Net income per share (adjusted), basic and diluted, may not add due to rounding
STAAR Surgical Company
Reconciliation of Non-GAAP Financial Measure
Constant Currency Sales
(in 000's)
Unaudited
                       
  Three Months Ended                
 

March 31,
2023

Effect of

Constant

 

April 1,
2022

 

As Reported

 

Constant Currency

Sales

Currency

Currency

   

$ Change

% Change

 

$ Change

% Change

ICL

$

70,625

$

1,726

$

72,351

 

$

58,675

 

$

11,950

 

20.4%

 

$

13,676

 

23.3%

                       
Cataract IOL  

1,476

 

157

 

1,633

   

2,902

   

(1,426

)

-49.1%

   

(1,269

)

-43.7%

Other  

1,427

 

127

 

1,554

   

1,623

   

(196

)

-12.1%

   

(69

)

-4.3%

Other Products  

2,903

 

284

 

3,187

   

4,525

   

(1,622

)

-35.8%

   

(1,338

)

-29.6%

                       
Total Sales

$

73,528

$

2,010

$

75,538

 

$

63,200

 

$

10,328

 

16.3%

 

$

12,338

 

19.5%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230503005843/en/

Contacts

Investors and Media
Brian Moore
Vice President, Investor, Media Relations and Corporate Development
(626) 303-7902, Ext. 3023
bmoore@staar.com

Source: STAAR Surgical Company

Powered by Business Wire

View this news release online at:
http://www.businesswire.com/news/home/20230503005843/en

MORE ON THIS TOPIC