STAAR Surgical Reports Fourth Quarter and Fiscal Year 2022 Results

Rhea-AI Summary

STAAR Surgical Company (NASDAQ: STAA) reported robust financial results for Q4 and FY 2022, showcasing a strong growth trajectory. Q4 net sales rose to $64.0 million, a 9% increase year-over-year, driven by a 15% rise in ICL sales to $61.2 million. Fiscal 2022 net sales reached $284.4 million, up 23%, with ICL sales soaring 27%. Gross margins improved to 77.7% in Q4 and 78.5% for the year. Net income for Q4 was $5.9 million ($0.12 per share), reflecting a year-over-year increase. Looking ahead, STAAR anticipates approximately $340 million in total ICL sales for FY 2023, representing a 26% growth. The company's cash reserves totaled $225.5 million at year-end.

Positive

• Q4 net sales increased 9% to $64.0 million.
• FY 2022 net sales reached $284.4 million, up 23%.
• ICL sales increased 27% year-over-year.
• Gross margin improved to 78.5% for FY 2022.
• Net income for FY 2022 rose to $38.8 million or $0.78 per share.
• Strong outlook for FY 2023 with expected ICL sales of approximately $340 million.

Negative

• Operating expenses increased by 24% year-over-year to $179.6 million in FY 2022.
• Other product sales decreased 52% in Q4 compared to the prior year quarter.

ICL Unit Growth Up 33% Y/Y in Fiscal 2022

STAAR Reaffirms Outlook for Strong Trajectory of Growth in 2023

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 fourth quarter and fiscal year ended December 30, 2022.

Fourth Quarter 2022 Overview

• Net Sales of $64.0 Million Up 9% and Constant Currency Net Sales of $67.9 Million Up 15% from Prior Year Quarter
• ICL Sales of $61.2 Million Up 15% and Constant Currency ICL Sales of $64.3 Million Up 21% from Prior Year Quarter
• ICL Units Up 20% from the Prior Year Quarter
• Gross Margin at 77.7% vs. 76.3% in the Prior Year Quarter
• Net Income of $0.12 per Share vs. $0.10 per Share in the Prior Year Quarter
• Cash, Cash Equivalents and Investments Available for Sale Ended the Quarter at $225.5 Million

Fiscal Year 2022 Overview

• Net Sales of $284.4 Million Up 23% and Constant Currency Net Sales of $297.3 Million Up 29% from Prior Year
• ICL Sales of $269.7 Million Up 27% and Constant Currency Net Sales of $280.0 Million Up 32% from Prior Year
• ICL Units Up 33% from the Prior Year
• Gross Margin at 78.5% of Sales from 77.5% of Sales in the Prior Year
• Full Year Net Income of $0.78 per Share vs. Prior Year Net Income of $0.50 per Share

“Our fourth quarter and fiscal 2022 results continue STAAR’s multi-quarter track record of industry leading growth with fiscal 2022 global ICL sales up 27% and in constant currency up 32% and units up 33% year over year. These levels of ICL growth exceed the ambitious goals we previously announced for 2022. Moreover, our growth significantly outpaced the roughly flat growth for refractive industry procedures over the same period¹,” said Tom Frinzi, President and CEO of STAAR Surgical. “For the fourth quarter ICL unit growth was up 20% year over year, including U.S. units up 109% and China units up 18%. In China, transient COVID-related headwinds that impacted our results in the fourth quarter are subsiding as we move through the first quarter of 2023. Our outlook for fiscal 2023 total ICL sales is approximately $340 million, which represents 26% year over year growth. STAAR will move forward in 2023 with purpose and increased investment to further accelerate consumer awareness, surgeon confidence and adoption of our EVO ICL family of lenses, all while continuing our industry leading position as a high growth and profitable ophthalmic medical device company.”

¹ STAAR Market Share Refractive Procedures and ICL Trends proprietary model as of January 12, 2023 estimates 4,322,688 global refractive procedures in 2022 and 4,345,812 refractive procedures in 2021, a 0.53% decline Y/Y.

Financial Overview – Q4 2022

Net sales were $64.0 million for the fourth quarter of 2022, up 9% compared to $59.0 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 $3.8 million for the fourth quarter of 2022. The sales increase in the fourth quarter was driven by ICL sales and unit growth of 15% and 20%, respectively, as compared to the prior year period. Other Product sales decreased 52% compared to the prior year quarter. ICL sales were 96% of total net sales for the fourth quarter of 2022.

Gross profit margin for the fourth quarter of 2022 was 77.7% compared to the prior year quarter of 76.3%. Factors impacting the favorability in gross margin in the fourth quarter of 2022, 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 fourth quarter of 2022 were $48.8 million compared to the prior year quarter of $37.6 million. General and administrative expenses were $14.8 million compared to the prior year quarter of $11.5 million. The increase in general and administrative expenses was due to increased compensation related expenses, facilities costs and outside services. Selling and marketing expenses were $24.2 million compared to the prior year quarter of $17.1 million. The increase in selling and marketing expenses is due to increased advertising and promotional activities, trade shows and sales meetings, travel expenses and compensation related expenses. Research and development expenses were $9.8 million compared to the prior year quarter of $9.1 million. The increase in research and development expenses is due to increased clinical trial expenses related to U.S. post-approval studies.

Net income for the fourth quarter of 2022 was $5.9 million or $0.12 per diluted share compared with net income of $4.9 million or $0.10 per diluted share for the prior year quarter. The year over year increase in net income is attributable to higher other income, gross profit and a lower provision for income taxes, offset by increased SG&A expenses. Adjusted Net Income for the fourth quarter of 2022 was $6.8 million or $0.14 per diluted share compared to $9.5 million or $0.19 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.

Financial Overview – Fiscal Year 2022

Net sales were $284.4 million for fiscal year 2022, up 23% compared to $230.5 million reported in the prior year. The increase in Net sales was driven by ICL sales and unit growth of 27% and 33%, respectively. Other Products Sales decreased 16% compared to the prior year. ICL sales were 95% of total Net sales for fiscal 2022 and 92% of total Net sales for fiscal 2021. Changes in currency, primarily in the Japanese Yen as well as the Euro, negatively impacted reported total net sales by $12.9 million for fiscal year 2022.

Gross profit margin for fiscal year 2022 increased to 78.5% of total net sales compared to 77.5% of total net sales for fiscal year 2021. The increase in gross margin for the year is due to geographic sales mix and an increased mix of ICL sales which carry a higher margin, partially offset by increased period costs associated with the manufacturing expansion projects.

Operating expenses for fiscal year 2022 were $179.6 million compared to $145.3 million in the prior year. The 24% increase in operating expense is primarily due to higher marketing, promotion and advertising, compensation-related expenses, tradeshows and sales meetings and facilities costs.

Net income for fiscal year 2022 was $38.8 million or $0.78 per diluted share compared with net income of $24.5 million or $0.50 per diluted share for the prior year. The year over year increase in net income is due to higher gross profit and other income, primarily from changes in interest income and foreign currency transactions, partially offset by increased SG&A expenses. Adjusted Net Income for fiscal year 2022 was $60.0 million or $1.22 per diluted share, compared with an Adjusted Net Income of $42.9 million or $0.87 per diluted share for fiscal year 2021. 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 December 30, 2022 totaled $225.5 million, compared to $199.7 million at end of the fourth quarter of 2021. The Company generated $35.7 million in cash from operations for fiscal year 2022 and invested $18.1 million in property and equipment.

Conference Call

The Company will host a conference call and webcast today, Tuesday, February 21 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 268065), 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 120085) 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 first 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 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
ASSETS		December 30, 2022				December 31, 2021
Current assets:
Cash and cash equivalents		$	86,480			$	199,706
Investments available for sale			125,159				-
Accounts receivable trade, net			62,447				43,531
Inventories, net			24,161				17,274
Prepayments, deposits, and other current assets			13,476				10,900
Total current assets			311,723				271,411
Investments available for sale			13,902				-
Property, plant, and equipment, net			50,921				35,912
Finance lease right-of-use assets, net			342				506
Operating lease right-of-use assets, net			30,270				31,310
Intangible assets, net			173				218
Goodwill			1,786				1,786
Deferred income taxes			4,824				3,813
Other assets			957				822
Total assets		$	414,898			$	345,778
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	11,576			$	8,699
Obligations under finance leases			169				127
Obligations under operating leases			3,524				3,283
Allowance for sales returns			5,706				4,816
Other current liabilities			30,741				31,877
Total current liabilities			51,716				48,802
Obligations under finance leases			210				382
Obligations under operating leases			27,136				28,269
Deferred income taxes			1,489				811
Asset retirement obligations			220				198
Pension liability			1,935				8,758
Total liabilities			82,706				87,220
Stockholders' equity:
Common stock			482				477
Additional paid-in capital			404,189				373,519
Accumulated other comprehensive income (loss)			156				(4,048	)
Accumulated deficit			(72,635	)			(111,390	)
Total stockholders' equity			332,192				258,558
Total liabilities and stockholders' equity		$	414,898			$	345,778

Consolidated Statements of Income
(In 000's except for per share data)
Unaudited
		Three Months Ended																Twelve Months Ended
		% of	December 30, 2022				% of	December 31, 2021				Fav (Unfav)						% of	December 30, 2022				% of	December 31, 2021				Fav (Unfav)
		Sales					Sales					Amount				%		Sales					Sales					Amount				%
Net sales		100.0%	$	64,044			100.0%	$	59,001			$	5,043			8.5%		100.0%	$	284,391			100.0%	$	230,472			$	53,919			23.4%
Cost of sales		22.3%		14,259			23.7%		14,010				(249	)		-1.8%		21.5%		61,008			22.5%		51,835				(9,173	)		-17.7%
Gross profit		77.7%		49,785			76.3%		44,991				4,794			10.7%		78.5%		223,383			77.5%		178,637				44,746			25.0%
Selling, general and administrative expenses:
General and administrative		23.1%		14,808			19.5%		11,471				(3,337	)		-29.1%		19.2%		54,742			19.1%		44,142				(10,600	)		-24.0%
Selling and marketing		37.8%		24,223			28.9%		17,065				(7,158	)		-41.9%		31.2%		88,856			29.2%		67,294				(21,562	)		-32.0%
Research and development		15.3%		9,790			15.4%		9,072				(718	)		-7.9%		12.7%		35,983			14.7%		33,862				(2,121	)		-6.3%
Total selling, general, and administrative expenses		76.2%		48,821			63.8%		37,608				(11,213	)		-29.8%		63.1%		179,581			63.0%		145,298				(34,283	)		-23.6%
Operating income		1.5%		964			12.5%		7,383				(6,419	)		-86.9%		15.4%		43,802			14.5%		33,339				10,463			31.4%
Other expense, net:
Interest income (expense), net		2.4%		1,514			0.0%		(3	)			1,517			50566.7%		0.9%		2,448			0.0%		(38	)			2,486			6542.1%
Gain (loss) on foreign currency transactions		5.0%		3,197			-1.6%		(924	)			4,121			446.0%		-0.6%		(1,707	)		-1.3%		(2,964	)			1,257			42.4%
Royalty income		0.4%		277			0.9%		519				(242	)		-46.6%		0.3%		804			0.4%		1,015				(211	)		-20.8%
Other income (expense), net		0.0%		27			0.0%		(1	)			28			2800.0%		0.0%		205			0.0%		(48	)			253			527.1%
Total other expense, net		7.8%		5,015			-0.7%		(409	)			5,424			1326.2%		0.6%		1,750			-0.9%		(2,035	)			3,785			186.0%
Income before provision for income taxes		9.3%		5,979			11.8%		6,974				(995	)		-14.3%		16.0%		45,552			13.6%		31,304				14,248			45.5%
Provision for income taxes		0.2%		126			3.5%		2,052				1,926			93.9%		2.4%		6,797			3.0%		6,803				6			0.1%
Net income		9.1%	$	5,853			8.3%	$	4,922			$	931			18.9%		13.6%	$	38,755			10.6%	$	24,501			$	14,254			58.2%
Net income per share - basic			$	0.12				$	0.10										$	0.81				$	0.52
Net income per share - diluted			$	0.12				$	0.10										$	0.78				$	0.50
Weighted average shares outstanding - basic				48,203					47,652											47,987					47,210
Weighted average shares outstanding - diluted				49,389					49,478											49,380					49,456

Consolidated Statements of Cash Flows
(in 000's)
Unaudited
		Three Months Ended								Twelve Months Ended
		December 30, 2022				December 31, 2021				December 30, 2022				December 31, 2021
Cash flows from operating activities:
Net income		$	5,853			$	4,922			$	38,755			$	24,501
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			1,380				937				4,481				3,608
Amortization of long-lived intangibles			6				8				28				34
Accretion/Amortization of investments available for sale			(891	)			-				(1,198	)			-
Deferred income taxes			(1,367	)			650				(1,344	)			1,495
Change in net pension liability			13				46				53				137
Stock-based compensation expense			4,996				3,620				20,371				14,605
Accretion of asset retirement obligation			47				-				47				-
Loss on disposal of property and equipment			65				-				65				2
Provision for sales returns and bad debts			552				(751	)			913				318
Inventory provision			403				557				2,423				1,654
Changes in working capital:
Accounts receivable			(6,493	)			(1,796	)			(19,601	)			(8,868	)
Inventories			(3,820	)			(1,235	)			(7,943	)			66
Prepayments, deposits and other current assets			(3,075	)			(1,999	)			(2,549	)			(711	)
Accounts payable			3,639				148				1,805				108
Other current liabilities			1,662				3,391				(591	)			7,013
Net cash provided by operating activities			2,970				8,498				35,715				43,962
Cash flows from investing activities:
Acquisition of property and equipment			(4,025	)			(4,689	)			(18,108	)			(13,645	)
Purchase of investments available for sale			(60,172	)			-				(155,748	)			-
Proceeds from sale or maturity of investments available for sale			17,480				-				17,480				-
Net cash used in investing activities			(46,717	)			(4,689	)			(156,376	)			(13,645	)
Cash flows from financing activities:
Repayment on line of credit			-				(1,297	)			-				(1,297	)
Repayment of finance lease obligations			(41	)			(34	)			(126	)			(348	)
Proceeds from vested restricted stock and exercise of stock options			243				1,115				8,423				19,438
Net cash provided by financing activities			202				(216	)			8,297				17,793
Effect of exchange rate changes on cash and cash equivalents			783				(133	)			(862	)			(857	)
Increase (decrease) in cash and cash equivalents			(42,762	)			3,460				(113,226	)			47,253
Cash and cash equivalents, at beginning of the period			129,242				196,246				199,706				152,453
Cash and cash equivalents, at end of the period		$	86,480			$	199,706			$	86,480			$	199,706

Reconciliation of Non-GAAP Financial Measure
Adjusted Net Income and Net Income Per Share
(in 000's)
Unaudited		Three Months Ended							Twelve Months Ended
		December 30, 2022			December 31, 2021				December 30, 2022			December 31, 2021
Net income (as reported)		$	5,853		$	4,922			$	38,755		$	24,501
Less:
Foreign currency impact			(3,197	)		924				1,707			2,964
Stock-based compensation expense			4,996			3,620				20,371			14,605
Valuation allowance adjustment			(829	)		-				(829	)		845
Net income (adjusted)		$	6,823		$	9,466			$	60,004		$	42,915
Net income per share, basic (as reported)		$	0.12		$	0.10			$	0.81		$	0.52
Foreign currency impact			(0.06	)		0.02				0.04			0.06
Stock-based compensation expense			0.10			0.08				0.42			0.31
Valuation allowance adjustment			(0.02	)		-				(0.02	)		0.02
Net income per share, basic (adjusted)		$	0.14		$	0.20			$	1.25		$	0.91
Net income per share, diluted (as reported)		$	0.12		$	0.10			$	0.78		$	0.50
Foreign currency impact			(0.06	)		0.02				0.04			0.06
Stock-based compensation expense			0.10			0.07				0.41			0.29
Valuation allowance adjustment			(0.02	)		-				(0.01	)		0.02
Net income per share, diluted (adjusted)		$	0.14		$	0.19			$	1.22		$	0.87
Weighted average shares outstanding - Basic			48,203			47,652				47,987			47,210
Weighted average shares outstanding - Diluted			49,389			49,478				49,380			49,456
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
	December 30, 2022			Effect of			Constant				December 31, 2021				As Reported					Constant Currency
Sales				Currency			Currency								$ Change			% Change		$ Change			% Change
ICL	$	61,162		$	3,141		$	64,303			$	53,016			$	8,146		15.4%		$	11,287		21.3%
Cataract IOL		1,998			409			2,407				3,195				(1,197	)	-37.5%			(788	)	-24.7%
Other		884			298			1,182				2,790				(1,906	)	-68.3%			(1,608	)	-57.6%
Other Products		2,882			707			3,589				5,985				(3,103	)	-51.8%			(2,396	)	-40.0%
Total Sales	$	64,044		$	3,848		$	67,892			$	59,001			$	5,043		8.5%		$	8,891		15.1%
	Twelve Months Ended
	December 30, 2022			Effect of			Constant				December 31, 2021				As Reported					Constant Currency
Sales				Currency			Currency								$ Change			% Change		$ Change			% Change
ICL	$	269,712		$	10,307		$	280,019			$	212,905			$	56,807		26.7%		$	67,114		31.5%
Cataract IOL		9,638			1,546			11,184				12,519				(2,881	)	-23.0%			(1,335	)	-10.7%
Other		5,041			1,019			6,060				5,048				(7	)	-0.1%			1,012		20.0%
Other Products		14,679			2,565			17,244				17,567				(2,888	)	-16.4%			(323	)	-1.8%
Total Sales	$	284,391		$	12,872		$	297,263			$	230,472			$	53,919		23.4%		$	66,791		29.0%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230221005677/en/

Investors

Brian Moore

Vice President, Investor, Media Relations and Corporate Development

(626) 303-7902, Ext. 3023

bmoore@staar.com

Source: STAAR Surgical Company

FAQ

What were STAAR Surgical's Q4 financial results for 2022?

STAAR Surgical reported Q4 net sales of $64.0 million, a 9% increase year-over-year.

How did STAAR Surgical perform in fiscal year 2022?

In FY 2022, STAAR Surgical achieved net sales of $284.4 million, up 23% from the previous year.

What is the outlook for STAAR Surgical in 2023?

STAAR expects total ICL sales of approximately $340 million in FY 2023, representing 26% growth.

What was the gross margin for STAAR Surgical in 2022?

The gross margin for STAAR Surgical improved to 78.5% for fiscal year 2022.

How much cash did STAAR Surgical have at the end of 2022?

STAAR Surgical ended 2022 with $225.5 million in cash, cash equivalents, and investments.