STAAR Surgical Reports Record First Quarter 2021 Net Sales of $50.8 Million Up 44% Y/Y

Rhea-AI Summary

STAAR Surgical Company (NASDAQ: STAA) reported record first-quarter 2021 net sales of $50.8 million, a 44% increase from the previous year. Implantable Collamer Lens (ICL) sales reached $46.5 million, up 58%, with unit sales growing 54%. Gross margin improved to 77.1% from 70.4% a year ago. The company achieved a net income of $5.0 million ($0.10/share), reversing the prior year's loss. Cash reserves rose to $162.3 million. STAAR forecasts fiscal 2021 net sales between $215 million and $217 million, reflecting over 30% anticipated growth year-over-year.

Positive

• Record net sales of $50.8 million, up 44% year-over-year.
• ICL sales of $46.5 million, up 58% from the previous year.
• Gross margin increased to 77.1% from 70.4%.
• Net income of $5.0 million compared to a net loss the previous year.
• Cash and cash equivalents rose to $162.3 million.

Negative

• Other product sales decreased by 27% due to issues with a third-party manufacturer's product yield.

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 first quarter ended April 2, 2021.

First Quarter 2021 Overview

• Record Quarterly Net Sales of $50.8 Million Up 44% from the Prior Year Quarter
• Record Quarterly ICL Sales of $46.5 Million Up 58% from the Prior Year Quarter
• Record Quarterly ICL Units, Up 54% from the Prior Year Quarter
• Gross Margin at 77.1% vs. 70.4% in the Prior Year Quarter
• Net Income of $0.10 per Share vs. Prior Year Quarter Net Loss of Approximately Breakeven
• Cash and Cash Equivalents Ended the Quarter at $162.3 Million Up from $152.5 Million in Q4 2020

“Every major market delivered outstanding performance during the first quarter of 2021 providing a record breaking quarterly achievement of net sales of $50.8 million. First quarter ICL sales of $46.5 Million and unit growth of 54% continued the increasing momentum from second half 2020 results and represents a return to the strong demand for ICL lenses we experienced in January 2020 prior to the pandemic taking hold,” said Caren Mason, President and CEO of STAAR Surgical. “ICL unit growth in the first quarter, year over year, included China up 63%, Japan up 72%, Korea up 29%, Rest of Asia Pacific up 63%, Spain up 42%, Germany up 48%, Distributor Markets in Europe up 54%, and the U.S. up 46%.”

“The record results for the first quarter of 2021 demonstrate that the promise for a lens-based future of refractive vision correction is accelerating, led by STAAR’s EVO Visian family of implantable Collamer lenses. STAAR’s imperatives around surgeon training and partnership, clinical support and extraordinary consumer outreach such as our newest campaign in Japan, continue to be the underpinnings of our excellent results. In China, the largest market for refractive surgery in the world, we now turn our attention to preparing for and delivering excellence during the upcoming busy implant season which typically begins in June. In late April, the FDA received our clinical data for our EVO family of myopia lenses with the goal of bringing EVO to the U.S. market later this year. We also recently launched the third phase of our newest commercial initiative in the U.S., Refractive ReLook, a program focused on driving adoption of lower diopter lenses in the U.S. We have increasing visibility into market dynamics and expect the momentum in our ICL business to continue. Therefore, today, we are introducing a sales outlook for fiscal 2021 full year net sales of approximately $215 million to $217 million which represents an exciting level of growth, exceeding 30% year over year even taking into account the strong performance in the second half of 2020,” concluded Ms. Mason.

Financial Overview – Q1 2021

Net sales were $50.8 million for the first quarter of 2021, up 44% compared to $35.2 million reported in the prior year quarter. The sales increase was driven by ICL net sales and unit growth up 58% and 54%, respectively, as compared to the prior year period. Other Product Sales decreased 27% compared to the prior year quarter due primarily to lower sales of injector parts related to a third party manufacturer’s product yield issue requiring rework. ICL net sales were 92% of total Net sales for the first quarter of 2021.

Gross profit margin for the first quarter of 2021 was 77.1% compared to the prior year period of 70.4%. Factors positively impacting gross margin in the first quarter of 2021, as compared to the prior year period, include geographic sales mix and a decreased mix of injector part sales which carry a lower margin, and for the three months ended April 3, 2020 there were period costs recorded as a result of COVID-19 and the resulting manufacturing pause which began on March 17, 2020.

Operating expenses for the first quarter of 2021 were $31.7 million compared to the prior year quarter of $25.9 million. General and administrative expenses were $10.2 million compared to the prior year quarter of $8.0 million. The increase in general and administrative expenses was due to increased variable compensation, salary-related expenses, facility costs and corporate insurance, partially offset by decreased tax consulting costs. Selling and marketing expenses were $13.2 million compared to the prior year quarter of $11.0 million. The increase in selling and marketing expenses is due to increased salary-related expenses, variable compensation, advertising and promotional activities, slightly offset by travel expenses. Research and development expenses were $8.3 million compared to the prior year quarter of $6.9 million. The increase in research and development expenses is primarily due to increased variable compensation, clinical expenses associated with our EVO clinical trial in the U.S. and salary-related expenses.

Net income for the first quarter of 2021 was $5.0 million or $0.10 per diluted share compared with net loss of ($0.1) million or approximately ($0.00) per diluted share for the prior year quarter. Adjusted Net Income for the first quarter of 2021 was $9.6 million or $0.20 per diluted share compared to $1.9 million or $0.04 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 April 2, 2021 totaled $162.3 million compared to $152.5 million at January 1, 2021.

Conference Call

The Company will host a conference call and webcast today, Wednesday, May 5 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss its financial results and operational progress. To access the conference call (Conference ID 4495547), please dial 833-350-1429 for domestic participants and 647-689-6661 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 (Conference ID 4495547) will be available beginning approximately one hour after the call’s conclusion for seven days. This replay can be accessed by dialing 800-585-8367 for domestic callers and 416-621-4642 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 these expenses 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 below 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 30 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 1,000,000 Visian^® ICLs have been implanted to date and STAAR markets these lenses in over 75 countries. To learn more about the ICL go to: www.discovericl.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 2021 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 pipeline of ICL products with regulators, including our EVO family of lenses in the U.S., and any statements of assumptions underlying any of the foregoing, including those relating to our product pipeline 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 January 1, 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. The EVO version of our ICL lens is not yet approved for sale in the United States.

Consolidated Balance Sheets
(in 000's)
Unaudited
		April 2, 2021				January 1, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	162,344			$	152,453
Accounts receivable trade, net			33,733				35,229
Inventories, net			16,789				18,111
Prepayments, deposits, and other current assets			10,649				10,625
Total current assets			223,515				216,418
Property, plant, and equipment, net			26,314				24,030
Finance lease right-of-use assets, net			80				596
Operating lease right-of-use assets, net			8,666				8,764
Intangible assets, net			249				270
Goodwill			1,786				1,786
Deferred income taxes			4,536				4,944
Other assets			660				608
Total assets		$	265,806			$	257,416
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit		$	1,288			$	1,379
Accounts payable			7,834				7,874
Obligations under finance leases			124				360
Obligations under operating leases			2,373				2,485
Allowance for sales returns			4,595				4,532
Other current liabilities			19,915				24,606
Total current liabilities			36,129				41,236
Obligations under finance leases			28				38
Obligations under operating leases			6,316				6,537
Deferred income taxes			222				222
Asset retirement obligations			206				221
Pension liability			8,729				11,940
Total liabilities			51,630				60,194
Stockholders' equity:
Common stock			469				464
Additional paid-in capital			348,063				338,194
Accumulated other comprehensive loss			(3,457	)			(5,545	)
Accumulated deficit			(130,899	)			(135,891	)
Total stockholders' equity			214,176				197,222
Total liabilities and stockholders' equity		$	265,806			$	257,416

Consolidated Statements of Operations
(In 000's except for per share data)
Unaudited
		Three Months Ended
		% of		April 2, 2021				% of		April 3, 2020				Fav (Unfav)
		Sales						Sales						Amount				%
Net sales		100.0	%	$	50,752			100.0	%	$	35,187			$	15,565			44.2	%
Cost of sales		22.9	%		11,610			29.6	%		10,427				(1,183	)		-11.3	%
Gross profit		77.1	%		39,142			70.4	%		24,760				14,382			58.1	%
Selling, general and administrative expenses:
General and administrative		20.1	%		10,212			22.6	%		7,969				(2,243	)		-28.1	%
Selling and marketing		26.0	%		13,201			31.4	%		11,028				(2,173	)		-19.7	%
Research and development		16.3	%		8,259			19.6	%		6,898				(1,361	)		-19.7	%
Total selling, general, and administrative expenses		62.4	%		31,672			73.6	%		25,895				(5,777	)		-22.3	%
Operating income (loss)		14.7	%		7,470			-3.2	%		(1,135	)			8,605			758.1	%
Other expense:
Interest income (expense), net		0.0	%		(7	)		0.6	%		216				(223	)		-103.2	%
Loss on foreign currency transactions		-2.5	%		(1,299	)		-1.3	%		(468	)			(831	)		-177.6	%
Royalty income		0.3	%		160			0.2	%		94				66			70.2	%
Other income (expense), net		-0.2	%		(85	)		0.0	%		1				(86	)		-8600.0	%
Total other expense, net		-2.4	%		(1,231	)		-0.5	%		(157	)			(1,074	)		-684.1	%
Income (loss) before provision (benefit) for income taxes		12.3	%		6,239			-3.7	%		(1,292	)			7,531			582.9	%
Provision (benefit) for income taxes		2.5	%		1,247			-3.3	%		(1,158	)			(2,405	)		-207.7	%
Net income (loss)		9.8	%	$	4,992			-0.4	%	$	(134	)		$	5,126			3825.4	%
Net income (loss) per share - basic				$	0.11					$	-
Net income (loss) per share - diluted				$	0.10					$	-
Weighted average shares outstanding - basic					46,617						44,953
Weighted average shares outstanding - diluted					49,213						44,953

Consolidated Statements of Cash Flows
(in 000's)
Unaudited
		Three Months Ended
		April 2, 2021				April 3, 2020
Cash flows from operating activities:
Net income (loss)		$	4,992			$	(134	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property and equipment			865				766
Amortization of long-lived intangibles			9				9
Deferred income taxes			-				(1,369	)
Change in net pension liability			127				173
Stock-based compensation expense			3,330				2,921
Loss on disposal of property and equipment			2				3
Provision for sales returns and bad debts			103				80
Inventory provision			384				336
Changes in working capital:
Accounts receivable			1,138				(3,462	)
Inventories			984				(491	)
Prepayments, deposits and other current assets			(143	)			(2,446	)
Accounts payable			(399	)			907
Other current liabilities			(4,626	)			(5,464	)
Net cash provided by (used in) operating activities			6,766				(8,171	)
Cash flows from investing activities:
Acquisition of property and equipment			(2,159	)			(2,185	)
Net cash used in investing activities			(2,159	)			(2,185	)
Cash flows from financing activities:
Repayment on line of credit			-				(505	)
Repayment of finance lease obligations			(235	)			(236	)
Proceeds from vested restricted stock and exercise of stock options			6,235				2,005
Net cash provided by financing activities			6,000				1,264
Effect of exchange rate changes on cash and cash equivalents			(716	)			(25	)
Increase (decrease) in cash and cash equivalents			9,891				(9,117	)
Cash, cash equivalents and restricted cash, at beginning of the period			152,453				119,968
Cash, cash equivalents and restricted cash, at end of the period		$	162,344			$	110,851

Reconciliation of Non-GAAP Financial Measure
Adjusted Net Income (Loss) and Net Income (Loss) Per Share
(in 000's)
Unaudited		Three Months Ended
		April 2, 2021		April 3, 2020
Net income (loss) (as reported)		$	4,992	$	(134	)
Less:
Foreign currency impact			1,299		468
Stock-based compensation expense			3,330		2,921
Valuation allowance adjustment			-		(1,369	)
Net income (adjusted)		$	9,621	$	1,886
Net income (loss) per share, basic (as reported)		$	0.11	$	-
Foreign currency impact			0.03		0.01
Stock-based compensation expense			0.07		0.06
Valuation allowance adjustment			-		(0.03	)
Net income per share, basic (adjusted)		$	0.21	$	0.04
Net income (loss) per share, diluted (as reported)		$	0.10	$	-
Foreign currency impact			0.03		0.01
Stock-based compensation expense			0.07		0.06
Valuation allowance adjustment			-		(0.03	)
Net income per share, diluted (adjusted)		$	0.20	$	0.04
Weighted average shares outstanding - Basic			46,617		44,953
Weighted average shares outstanding - Diluted			49,213		47,131
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
	April 2, 2021			Effect of				Constant			April 3, 2020			As Reported							Constant Currency
Sales				Currency				Currency						$ Change				% Change			$ Change			% Change
ICL	$	46,501		$	(984	)		$	45,517		$	29,340		$	17,161			58.5	%		$	16,177		55.1	%
IOL		3,725			(174	)			3,551			3,994			(269	)		-6.7	%			(443	)	-11.1	%
Other		526			(9	)			517			1,853			(1,327	)		-71.6	%			(1,336	)	-72.1	%
Other Products		4,251			(183	)			4,068			5,847			(1,596	)		-27.3	%			(1,779	)	-30.4	%
Total Sales	$	50,752		$	(1,167	)		$	49,585		$	35,187		$	15,565			44.2	%		$	14,398		40.9	%

 

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FAQ

What were STAAR Surgical's Q1 2021 net sales?

STAAR Surgical reported net sales of $50.8 million for Q1 2021.

How much did ICL sales increase in Q1 2021?

ICL sales increased by 58% year-over-year to $46.5 million.

What is the gross margin for STAAR Surgical in Q1 2021?

The gross margin for Q1 2021 was 77.1%.

What is the net income for STAAR Surgical in Q1 2021?

STAAR Surgical reported a net income of $5.0 million, or $0.10 per share.

What is STAAR Surgical's sales outlook for fiscal 2021?

STAAR Surgical expects net sales between $215 million and $217 million for fiscal 2021.