STAAR Surgical Reports Record Second Quarter Net Sales of $81.1 Million Up 30% Y/Y

LAKE FOREST, Calif.--(BUSINESS WIRE)-- STAAR Surgical Company (NASDAQ: STAA), a leading developer, manufacturer and marketer of implantable lenses and companion delivery systems for the eye, today reported financial results for the second quarter ended July 1, 2022.

Second Quarter 2022 Overview

• Record Net Sales of $81.1 Million Up 30% and Constant Currency Net Sales of $84.2 Million Up 35% from the Prior Year Quarter
• Record ICL Sales of $77.9 Million Up 32% and Constant Currency ICL Sales of $80.5 Million Up 36% from the Prior Year Quarter
• Record ICL Units Up 42% from the Prior Year Quarter
• Gross Margin at 78.8% vs. 78.9% in the Prior Year Quarter
• Net Income of $0.26 per Share vs. $0.17 per Share in the Prior Year Quarter
• Cash and Cash Equivalents Ended the Quarter at $202.5 Million

“We achieved 30% sales growth and a record level of sales in the second quarter while advancing our EVO ICL Family of Lenses including in China and the U.S., the two largest market opportunities for refractive vision correction. The entire STAAR organization is energized by our ability to effectively manage COVID-19 challenges during the quarter, exceed our growth commitments and vault to a new record level of $81.1 million in quarterly net sales despite foreign currency headwinds,” said Caren Mason, President and CEO of STAAR Surgical. “In the second quarter, we achieved strong global ICL unit growth up 42% highlighted by unit growth in China up 45%, the U.S. up 36%, Japan up 41%, India up 181% and Asia Pacific distributor markets up 66%, all as compared to the prior year quarter. We are very proud to achieve the second quarter milestone results while also holding fast to our culture of quality and manufacturing excellence which contributed to our official five-year MDR Certification on July 15, 2022.”

Ms. Mason continued, “The U.S. commercial launch of our EVO family of myopia lenses is well underway, and we are thrilled to announce our partnership today with Joe Jonas, who earlier this month received EVO lenses to correct his distance vision. In the next several weeks, Joe will begin sharing his journey to Visual Freedom via a global advertising, marketing and social media campaign. Our goal in the U.S. is to drive awareness and education of the benefits and Visual Freedom offered by our lenses. Joe Jonas needed EVO lenses below -5.0 diopters to correct his myopia and chose EVO. He is thrilled with the outcome which further demonstrates that EVO is an excellent solution for achieving Visual Freedom at all approved levels - low, mid and high, along the diopter curve. Next month we will showcase our entire EVO Family of Lenses at our Experts Meeting and the 40^th Annual Congress of the European Society of Cataract and Refractive Surgeons in Milan, Italy where we will feature Viva, an innovative lens for individuals with presbyopia. Finally, we are today reaffirming our previously provided outlook for fiscal 2022 net sales of approximately $295 million, which takes into account a significant currency headwind and a continuation of the current level of COVID-19 related challenges in China and elsewhere, offset by stronger than expected demand for our EVO lenses, which has continued through the beginning of the third quarter.”

Financial Overview – Q2 2022

Net sales were $81.1 million for the second quarter of 2022, up 30% compared to $62.4 million reported in the prior year quarter. The sales increase was driven by ICL sales and unit growth of 32% and 42%, respectively, as compared to the prior year period. Other Product sales increased 1% compared to the prior year quarter. ICL sales were 96% of total Net sales for the second quarter of 2022. Changes in currency, primarily in the Japanese Yen as well as the Euro, negatively impacted reported total net sales by $3.1 million for the second quarter of 2022.

Gross profit margin for the second quarter of 2022 was 78.8% compared to the prior year quarter of 78.9%. Factors impacting gross margin in the second quarter of 2022, as compared to the prior year quarter, include an inventory reserve recognized as a result of discontinuance of Visian ICL in the U.S. and increased period costs associated with manufacturing projects, offset by favorable product and geographic sales mix.

Operating expenses for the second quarter of 2022 were $46.9 million compared to the prior year quarter of $38.6 million. General and administrative expenses were $14.0 million compared to the prior year quarter of $11.4 million. The increase in general and administrative expenses was due to increased facilities costs and compensation related expenses. Selling and marketing expenses were $24.2 million compared to the prior year quarter of $18.9 million. The increase in selling and marketing expenses is due to increased marketing, promotion and advertising expenses and trade show expenses, partially offset by decreased compensation related expenses. Research and development expenses were $8.6 million compared to the prior year quarter of $8.3 million due to increased compensation related expenses, partially offset by lower clinical trial expenses.

Net income for the second quarter of 2022 was $13.0 million or $0.26 per diluted share compared with net income of $8.6 million or $0.17 per diluted share for the prior year quarter. The year over year increase is attributable to higher sales and gross profit and, as a percentage of sales, lower operating expenses. Adjusted Net Income for the second quarter of 2022 was $20.7 million or $0.42 per diluted share compared to $13.5 million or $0.27 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 and cash equivalents at July 1, 2022 totaled $202.5 million compared to $199.7 million at December 31, 2021.

Conference Call

The Company will host a conference call and webcast today, Wednesday, August 10 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 904311), please dial 844-200-6205 for domestic participants and 929-526-1599 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 944172) 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 also 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 with companion delivery systems. 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 Visian ICL™ product line. More than 2,000,000 Visian^® 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 2022 or prospects for achieving such plans, expectations for sales, revenue, margin, expenses or earnings, the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to its impact on sales, operations or clinical trials globally), product safety or effectiveness, the status of our current and pipeline of ICL products with regulators, and any statements of assumptions underlying any of the foregoing, including those relating to our current and pipeline of ICL products and market expansion activities. 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 31, 2021 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.

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