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

ICL Units Up 42% Y/Y; Constant Currency Net Sales of $84.2 Million

Announces Partnership with Joe Jonas to Raise EVO Global Awareness

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 40th 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.

 
Consolidated Balance Sheets
(in 000's)
Unaudited
December 31,
ASSETS July 1, 2022 2021
Current assets:
Cash and cash equivalents

$

202,490

 

$

199,706

 

Accounts receivable trade, net

 

62,811

 

 

43,531

 

Inventories, net

 

18,089

 

 

17,274

 

Prepayments, deposits, and other current assets

 

13,066

 

 

10,900

 

Total current assets

 

296,456

 

 

271,411

 

Property, plant, and equipment, net

 

42,813

 

 

35,912

 

Finance lease right-of-use assets, net

 

420

 

 

506

 

Operating lease right-of-use assets, net

 

30,363

 

 

31,310

 

Intangible assets, net

 

184

 

 

218

 

Goodwill

 

1,786

 

 

1,786

 

Deferred income taxes

 

3,217

 

 

3,813

 

Other assets

 

786

 

 

822

 

Total assets

$

376,025

 

$

345,778

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

12,716

 

$

8,699

 

Obligations under finance leases

 

166

 

 

127

 

Obligations under operating leases

 

3,708

 

 

3,283

 

Allowance for sales returns

 

5,550

 

 

4,816

 

Other current liabilities

 

24,374

 

 

31,877

 

Total current liabilities

 

46,514

 

 

48,802

 

Obligations under finance leases

 

295

 

 

382

 

Obligations under operating leases

 

26,880

 

 

28,269

 

Deferred income taxes

 

1,037

 

 

811

 

Asset retirement obligations

 

169

 

 

198

 

Pension liability

 

1,823

 

 

8,758

 

Total liabilities

 

76,718

 

 

87,220

 

 
 
 
Stockholders' equity:
Common stock

 

480

 

 

477

 

Additional paid-in capital

 

387,328

 

 

373,519

 

Accumulated other comprehensive loss

 

249

 

 

(4,048

)

Accumulated deficit

 

(88,750

)

 

(111,390

)

Total stockholders' equity

 

299,307

 

 

258,558

 

Total liabilities and stockholders' equity

$

376,025

 

$

345,778

 

 
Consolidated Statements of Income
(In 000's except for per share data)
Unaudited
 
Three Months Ended Six Months Ended
% of July 1, 2022 % of July 2, 2021 Fav (Unfav) % of July 1, 2022 % of July 2, 2021 Fav (Unfav)
Sales Sales Amount % Sales Sales Amount %
Net sales

100.0

%

$

81,101

 

100.0

%

$

62,367

 

$

18,734

 

30.0

%

100.0

%

$

144,301

 

100.0

%

$

113,119

 

$

31,182

 

27.6

%

 
Cost of sales

21.2

%

 

17,229

 

21.1

%

 

13,164

 

 

(4,065

)

-30.9

%

21.6

%

 

31,165

 

21.9

%

 

24,774

 

 

(6,391

)

-25.8

%

 
Gross profit

78.8

%

 

63,872

 

78.9

%

 

49,203

 

 

14,669

 

29.8

%

78.4

%

 

113,136

 

78.1

%

 

88,345

 

 

24,791

 

28.1

%

 
Selling, general and administrative expenses:
General and administrative

17.2

%

 

13,983

 

18.4

%

 

11,441

 

 

(2,542

)

-22.2

%

18.0

%

 

25,923

 

19.1

%

 

21,653

 

 

(4,270

)

-19.7

%

Selling and marketing

29.9

%

 

24,233

 

30.2

%

 

18,853

 

 

(5,380

)

-28.5

%

28.8

%

 

41,503

 

28.4

%

 

32,054

 

 

(9,449

)

-29.5

%

Research and development

10.7

%

 

8,636

 

13.2

%

 

8,260

 

 

(376

)

-4.6

%

11.4

%

 

16,577

 

14.6

%

 

16,519

 

 

(58

)

-0.4

%

Total selling, general, and administrative expenses

57.8

%

 

46,852

 

61.8

%

 

38,554

 

 

(8,298

)

-21.5

%

58.2

%

 

84,003

 

62.1

%

 

70,226

 

 

(13,777

)

-19.6

%

 
Operating income

21.0

%

 

17,020

 

17.1

%

 

10,649

 

 

6,371

 

59.8

%

20.2

%

 

29,133

 

16.0

%

 

18,119

 

 

11,014

 

60.8

%

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

0.1

%

 

43

 

0.0

%

 

(5

)

 

48

 

960.0

%

0.0

%

 

37

 

0.0

%

 

(12

)

 

49

 

408.3

%

Loss on foreign currency transactions

-2.3

%

 

(1,860

)

-0.2

%

 

(131

)

 

(1,729

)

-1319.8

%

-1.9

%

 

(2,775

)

-1.3

%

 

(1,430

)

 

(1,345

)

-94.1

%

Royalty income

0.2

%

 

177

 

0.2

%

 

151

 

 

26

 

17.2

%

0.3

%

 

450

 

0.3

%

 

311

 

 

139

 

44.7

%

Other income (expense), net

0.1

%

 

89

 

0.1

%

 

51

 

 

38

 

74.5

%

0.1

%

 

151

 

0.0

%

 

(34

)

 

185

 

544.1

%

Total other income (expense), net

-1.9

%

 

(1,551

)

0.1

%

 

66

 

 

(1,617

)

-2450.0

%

-1.5

%

 

(2,137

)

-1.0

%

 

(1,165

)

 

(972

)

-83.4

%

 
Income before provision for income taxes

19.1

%

 

15,469

 

17.2

%

 

10,715

 

 

4,754

 

44.4

%

18.7

%

 

26,996

 

15.0

%

 

16,954

 

 

10,042

 

59.2

%

 
Provision for income taxes

3.0

%

 

2,431

 

3.5

%

 

2,148

 

 

(283

)

-13.2

%

3.0

%

 

4,356

 

3.0

%

 

3,395

 

 

(961

)

-28.3

%

 
Net income

16.1

%

$

13,038

 

13.7

%

$

8,567

 

$

4,471

 

52.2

%

15.7

%

$

22,640

 

12.0

%

$

13,559

 

$

9,081

 

67.0

%

 
 
Net income per share - basic

$

0.27

 

$

0.18

 

$

0.47

 

$

0.29

 

Net income per share - diluted

$

0.26

 

$

0.17

 

$

0.46

 

$

0.27

 

 
Weighted average shares outstanding - basic

 

47,889

 

 

47,099

 

 

47,822

 

 

46,858

 

Weighted average shares outstanding - diluted

 

49,223

 

 

49,491

 

 

49,264

 

 

49,373

 

 
Consolidated Statements of Cash Flows
(in 000's)
Unaudited

Three Months Ended

 

Six Months Ended

July 1, 2022

 

July 2, 2021

 

July 1, 2022

 

July 2, 2021

 

 

 

Cash flows from operating activities:
Net income

$

13,038

 

$

8,567

 

$

22,640

 

$

13,559

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment

 

1,030

 

 

889

 

 

2,024

 

 

1,754

 

Amortization of long-lived intangibles

 

7

 

 

8

 

 

15

 

 

17

 

Deferred income taxes

 

-

 

 

845

 

 

-

 

 

845

 

Change in net pension liability

 

11

 

 

(154

)

 

52

 

 

(27

)

Stock-based compensation expense

 

5,754

 

 

3,992

 

 

9,648

 

 

7,322

 

Loss on disposal of property and equipment

 

-

 

 

-

 

 

-

 

 

2

 

Provision for sales returns and bad debts

 

994

 

 

829

 

 

800

 

 

932

 

Inventory provision

 

994

 

 

313

 

 

1,428

 

 

697

 

Changes in working capital:
Accounts receivable

 

(16,210

)

 

(14,935

)

 

(20,137

)

 

(13,797

)

Inventories

 

(342

)

 

1,254

 

 

(1,825

)

 

2,238

 

Prepayments, deposits and other current assets

 

2,245

 

 

(164

)

 

(2,260

)

 

(307

)

Accounts payable

 

575

 

 

131

 

 

3,243

 

 

(268

)

Other current liabilities

 

5,150

 

 

4,807

 

 

(6,992

)

 

181

 

Net cash provided by operating activities

 

13,246

 

 

6,382

 

 

8,636

 

 

13,148

 

 
Cash flows from investing activities:
Acquisition of property and equipment

 

(5,271

)

 

(3,524

)

 

(7,810

)

 

(5,683

)

Net cash used in investing activities

 

(5,271

)

 

(3,524

)

 

(7,810

)

 

(5,683

)

 
Cash flows from financing activities:
Repayment of finance lease obligations

 

(27

)

 

(43

)

 

(45

)

 

(278

)

Proceeds from vested restricted stock and exercise of stock options

 

2,234

 

 

7,876

 

 

3,146

 

 

14,111

 

Net cash provided by financing activities

 

2,207

 

 

7,833

 

 

3,101

 

 

13,833

 

 
Effect of exchange rate changes on cash and cash equivalents

 

(759

)

 

48

 

 

(1,143

)

 

(668

)

 
Increase in cash and cash equivalents

 

9,423

 

 

10,739

 

 

2,784

 

 

20,630

 

Cash and cash equivalents, at beginning of the period

 

193,067

 

 

162,344

 

 

199,706

 

 

152,453

 

Cash and cash equivalents, at end of the period

$

202,490

 

$

173,083

 

$

202,490

 

$

173,083

 

 
Reconciliation of Non-GAAP Financial Measure
Adjusted Net Income and Net Income Per Share
(in 000's)
Unaudited Three Months Ended Six Months Ended
July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021
Net income (as reported)

$

13,038

$

8,567

$

22,640

$

13,559

Less:
Foreign currency impact

 

1,860

 

131

 

2,775

 

1,430

Stock-based compensation expense

 

5,754

 

3,992

 

9,648

 

7,322

Valuation allowance adjustment

 

-

 

845

 

-

 

845

Net income (adjusted)

$

20,652

$

13,535

$

35,063

$

23,156

 
Net income per share, basic (as reported)

$

0.27

$

0.18

$

0.47

$

0.29

Foreign currency impact

 

0.04

 

-

 

0.06

 

0.03

Stock-based compensation expense

 

0.12

 

0.09

 

0.20

 

0.15

Valuation allowance adjustment

 

-

 

0.02

 

-

 

0.02

Net income per share, basic (adjusted)

$

0.43

$

0.29

$

0.73

$

0.49

 
Net income per share, diluted (as reported)

$

0.26

$

0.17

$

0.46

$

0.27

Foreign currency impact

 

0.04

 

-

 

0.06

 

0.03

Stock-based compensation expense

 

0.12

 

0.08

 

0.19

 

0.15

Valuation allowance adjustment

 

-

 

0.02

 

-

 

0.02

Net income per share, diluted (adjusted)

$

0.42

$

0.27

$

0.71

$

0.47

 
Weighted average shares outstanding - Basic

 

47,889

 

47,099

 

47,822

 

46,858

Weighted average shares outstanding - Diluted

 

49,223

 

49,491

 

49,264

 

49,373

 
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
July 1, 2022 Effect of

Currency
Constant

Currency
July 2, 2021 As Reported Constant Currency
Sales $ Change % Change $ Change % Change
ICL

$

77,922

$

2,575

$

80,497

$

59,235

$

18,687

 

31.5

%

$

21,262

 

35.9

%

 
Cataract IOL

 

2,547

 

391

 

2,938

 

3,074

 

(527

)

-17.1

%

 

(136

)

-4.4

%

Other

 

632

 

177

 

809

 

58

 

574

 

989.7

%

 

751

 

1294.8

%

Other Products

 

3,179

 

568

 

3,747

 

3,132

 

47

 

1.5

%

 

615

 

19.6

%

 
Total Sales

$

81,101

$

3,143

$

84,244

$

62,367

$

18,734

 

30.0

%

$

21,877

 

35.1

%

 
Six Months Ended
July 1, 2022 Effect of

Currency
Constant

Currency
July 2, 2021 As Reported Constant Currency
Sales $ Change % Change $ Change % Change
ICL

$

136,597

$

3,956

$

140,553

$

105,736

$

30,861

 

29.2

%

$

34,817

 

32.9

%

 
Cataract IOL

 

5,449

 

653

 

6,102

 

6,799

 

(1,350

)

-19.9

%

 

(697

)

-10.3

%

Other

 

2,255

 

437

 

2,692

 

584

 

1,671

 

286.1

%

 

2,108

 

361.0

%

Other Products

 

7,704

 

1,090

 

8,794

 

7,383

 

321

 

4.3

%

 

1,411

 

19.1

%

 
Total Sales

$

144,301

$

5,046

$

149,347

$

113,119

$

31,182

 

27.6

%

$

36,228

 

32.0

%

 

Contacts

Investors

Brian Moore

Vice President, Investor, Media Relations and Corporate Development

(626) 303-7902, Ext. 3023

bmoore@staar.com

Media

Jen Jones

Gold PR | Social Media

(310) 918-4313

jjones@goldpr.com

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