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 third quarter ended October 2, 2020.
Third Quarter 2020
Overview
- Record Quarterly Net Sales of $47.1 Million Up 21% from the
Prior Year Quarter
- Record Quarterly ICL Sales of $41.5 Million Up 23% from the
Prior Year Quarter
- Record Quarterly ICL Units, Up 25% from the Prior Year
Quarter
- Gross Margin at 74.1% vs. 74.4% in the Prior Year Quarter
- Net Income of $0.08 per Share vs. Prior Year Quarter Net Income
of $0.05 per Share
- Cash and Cash Equivalents Ended the Quarter at $128.3 Million
up from $116.3 Million in Q2 2020
“STAAR achieved 25% year-over-year global ICL unit growth for
the third quarter of 2020 with demand building each month
throughout the quarter. Third quarter results reflect strong growth
in our North America, Europe and APAC markets, partially offset by
the India and Middle East markets which significantly
underperformed and were more greatly impacted by COVID-19,” said
Caren Mason, President and CEO of STAAR Surgical. “Standout markets
in the third quarter included China up 33%, Japan up 67%, Korea up
21%, Rest of Asia Pacific up 67%, Spain up 24%, Germany up 13% and
distributor markets in Europe up 17% in ICL units year over year.
ICL implanted units in the U.S. were up 74% sequentially in the
quarter as STAAR supported our physician customers with a
Refractive Restart program designed to encourage doctor
recommendation and patient selection of our current Visian ICL
lenses. Lens-based practice support in the U.S. using
STAAR-provided clinical and business development validation
continues to gain adoption by surgeons who speak to us of happy
patients today and excitement about the possibilities of a future
with the EVO version of our ICL lenses.”
“In a year of considerable uncertainty, STAAR is endeavoring to
provide a level of predictability to both our financial performance
and the clinical experience. We achieved strong unit and sales
growth while also demonstrating an operating discipline that
allowed increased operating income. During the third quarter we
also advanced our pipeline of new products for the U.S. and Europe.
We completed enrollment for the primary study analysis cohort of
300 subjects in our U.S. EVO clinical trial and are pleased to
report they have now been implanted with the EVO lens and will be
followed pursuant to the clinical trial protocol. Today, we also
announced via press release, the initial implementation of the
phased rollout of STAAR’s innovative EVO Viva™
presbyopia-correcting lens in Europe. A paper on the EVO
Viva lens has been published in Clinical
Ophthalmology, consumer websites were recently launched, and
the first commercial EVO Viva lens patient has been
implanted in Belgium,” concluded Ms. Mason.
Financial Overview – Q3
2020
Net sales were $47.1 million for the third quarter of 2020, up
21% compared to $39.1 million reported in the prior year quarter.
The sales increase was driven by ICL revenue and unit growth of 23%
and 25%, respectively, as compared to the prior year period. Other
Product Sales increased 7% compared to the prior year quarter due
to increased injector parts sales. ICL revenue was 88% of total Net
sales for the third quarter of 2020.
Gross profit margin for the third quarter of 2020 was 74.1%
compared to the prior year period of 74.4%. Factors negatively
impacting gross margin in the third quarter of 2020, as compared to
the prior year period, include geographic sales mix, period costs
associated with manufacturing expansion projects, and the increased
mix of injector part sales which carry a lower margin.
Operating expenses for the third quarter were $30.0 million
compared to the prior year quarter of $25.7 million. General and
administrative expenses were $8.6 million compared to the prior
year quarter of $7.1 million. The increase in general and
administrative expenses was due to due to increased salary-related
expenses, variable compensation and facility costs. Selling and
marketing expenses were $12.6 million compared to the prior year
quarter of $12.5 million. The increase in selling and marketing
expenses is due to increased salary-related expenses, advertising
and promotional activities and variable compensation, offset by
decreased trade show and travel expenses. Research and development
expenses were $8.8 million compared to the prior year quarter of
$6.2 million. The increase in research and development expenses is
primarily due to increased clinical expenses associated with the
EVO clinical trial in the U.S., and increased salary-related
expenses and variable compensation.
Net income for the third quarter of 2020 was $3.9 million or
$0.08 per diluted share compared with net income of $2.4 million or
$0.05 per diluted share for the prior year quarter. Adjusted Net
Income for the third quarter of 2020 was $6.7 million or $0.14 per
diluted share compared to $5.5 million or $0.12 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 October 2, 2020 totaled $128.3
million, compared to $116.3 million at July 3, 2020. The Company
had $1.4 million drawn on its line of credit in Japan and no other
debt at October 2, 2020. The sequential increase in cash is
primarily due to $9.6 million of cash generated from operations
during the third quarter.
Conference Call
The Company will host a conference call and webcast today,
Wednesday, November 4 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 6253229), 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 6253229)
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, plans, strategies, and
objectives of management for 2020 or 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 Quarterly Report on
Form 10-Q for the quarter ended April 3, 2020, and Annual Report on
Form 10-K for the year ended January 3, 2020 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 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; uncertainty caused by the outcome of
the U.S. election; 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 October 2, 2020 January 3,
2020 ASSETS Current assets: Cash and cash equivalents
$
128,338
$
119,968
Accounts receivable trade, net
42,063
30,996
Inventories, net
18,234
17,142
Prepayments, deposits, and other current assets
7,368
6,560
Total current assets
196,003
174,666
Property, plant, and equipment, net
22,662
17,065
Finance lease right-of-use assets, net
640
1,867
Operating lease right-of-use assets, net
7,725
6,684
Intangible assets, net
275
296
Goodwill
1,786
1,786
Deferred income taxes
5,007
3,750
Other assets
600
751
Total assets
$
234,698
$
206,865
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Line of credit
$
1,353
$
1,827
Accounts payable
7,830
8,050
Obligations under finance leases
422
560
Obligations under operating leases
2,215
2,700
Allowance for sales returns
4,427
3,644
Other current liabilities
17,612
17,697
Total current liabilities
33,859
34,478
Obligations under finance leases
73
366
Obligations under operating leases
5,571
4,086
Asset retirement obligations
216
211
Pension liability
8,587
7,840
Total liabilities
48,306
46,981
Stockholders' equity: Common stock
461
448
Additional paid-in capital
328,074
304,288
Accumulated other comprehensive loss
(2,925
)
(3,048
)
Accumulated deficit
(139,218
)
(141,804
)
Total stockholders' equity
186,392
159,884
Total liabilities and stockholders' equity
$
234,698
$
206,865
Consolidated Statements of Income (In 000's except for
per share data) Unaudited Three Months
Ended Nine Months Ended % of October 2,
2020 % of September 27, 2019 Fav (Unfav)
% of October 2, 2020 % of September 27,
2019 Fav (Unfav) Sales Sales Amount
% Sales Sales Amount % Net sales
100.0
%
$
47,081
100.0
%
$
39,055
$
8,026
20.6
%
100.0
%
$
117,462
100.0
%
$
111,302
$
6,160
5.5
%
Cost of sales
25.9
%
12,210
25.6
%
10,004
(2,206
)
-22.1
%
28.4
%
33,401
25.3
%
28,172
(5,229
)
-18.6
%
Gross profit
74.1
%
34,871
74.4
%
29,051
5,820
20.0
%
71.6
%
84,061
74.7
%
83,130
931
1.1
%
Selling, general and administrative expenses: General and
administrative
18.2
%
8,589
18.2
%
7,098
(1,491
)
-21.0
%
20.8
%
24,406
19.3
%
21,443
(2,963
)
-13.8
%
Selling and marketing
26.9
%
12,649
31.9
%
12,463
(186
)
-1.5
%
29.0
%
34,003
30.8
%
34,288
285
0.8
%
Research and development
18.6
%
8,751
15.8
%
6,156
(2,595
)
-42.2
%
19.5
%
22,960
16.1
%
17,889
(5,071
)
-28.3
%
Total selling, general, and administrative expenses
63.7
%
29,989
65.9
%
25,717
(4,272
)
-16.6
%
69.3
%
81,369
66.2
%
73,620
(7,749
)
-10.5
%
Operating income
10.4
%
4,882
8.5
%
3,334
1,548
46.4
%
2.3
%
2,692
8.5
%
9,510
(6,818
)
-71.7
%
Other income (expense): Interest income, net
0.0
%
1
0.6
%
266
(265
)
-99.6
%
0.2
%
237
0.7
%
796
(559
)
-70.2
%
Gain (loss) on foreign currency transactions
1.0
%
468
-1.5
%
(584
)
1,052
180.1
%
0.3
%
388
-0.7
%
(821
)
1,209
147.3
%
Royalty income
0.2
%
93
0.3
%
106
(13
)
-12.3
%
0.2
%
239
0.4
%
440
(201
)
-45.7
%
Other income (expense), net
-0.1
%
(63
)
0.1
%
26
(89
)
-342.3
%
0.0
%
(83
)
0.1
%
124
(207
)
-166.9
%
Total other income (expense), net
1.1
%
499
-0.5
%
(186
)
685
368.3
%
0.7
%
781
0.5
%
539
242
44.9
%
Income before provision for income taxes
11.5
%
5,381
8.0
%
3,148
2,233
70.9
%
3.0
%
3,473
9.0
%
10,049
(6,576
)
-65.4
%
Provision for income taxes
3.2
%
1,489
1.9
%
760
(729
)
-95.9
%
0.8
%
887
2.1
%
2,380
1,493
62.7
%
Net income
8.3
%
$
3,892
6.1
%
$
2,388
$
1,504
63.0
%
2.2
%
$
2,586
6.9
%
$
7,669
$
(5,083
)
-66.3
%
Net income (loss) per share - basic
$
0.08
$
0.05
$
0.06
$
0.17
Net income (loss) per share - diluted
$
0.08
$
0.05
$
0.05
$
0.16
Weighted average shares outstanding - basic
45,903
44,563
45,394
44,426
Weighted average shares outstanding - diluted
48,180
46,857
47,589
46,848
Consolidated Statements of Cash Flows (in 000's)
Unaudited Three Months Ended Nine Months Ended
October 2, 2020 September 27, 2019 October 2,
2020 September 27, 2019 Cash flows from operating
activities: Net income
$
3,892
$
2,388
$
2,586
$
7,669
Adjustments to reconcile net income to net cash provided by
operatingactivities: Depreciation of property and equipment
758
870
2,276
2,853
Amortization of long-lived intangibles
9
9
26
26
Deferred income taxes
154
133
(1,215
)
526
Change in net pension liability
146
61
522
264
Stock-based compensation expense
3,126
2,558
8,965
7,778
Loss on disposal of property and equipment
-
14
3
14
Provision for sales returns and bad debts
210
341
815
309
Inventory provision
379
435
1,195
1,222
Changes in working capital: Accounts receivable
(2,566
)
2,273
(10,975
)
(4,260
)
Inventories
(421
)
(285
)
(1,353
)
(179
)
Prepayments, deposits and other current assets
1,536
924
(636
)
(230
)
Accounts payable
(954
)
(17
)
(657
)
546
Other current liabilities
3,320
2,090
(151
)
(536
)
Net cash provided by operating activities
9,589
11,794
1,401
16,002
Cash flows from investing activities: Acquisition of
property and equipment
(2,049
)
(2,568
)
(6,259
)
(7,169
)
Increase in patents and licenses
-
-
-
(30
)
Net cash used in investing activities
(2,049
)
(2,568
)
(6,259
)
(7,199
)
Cash flows from financing activities: Repayment on line of
credit
(3
)
(513
)
(511
)
(1,512
)
Repayment of finance lease obligations
(109
)
(317
)
(455
)
(998
)
Proceeds from vested restricted stock and exercise of stock options
4,429
719
13,987
1,831
Net cash provided by (used in) financing activities
4,317
(111
)
13,021
(679
)
Effect of exchange rate changes on cash and cash equivalents
166
(39
)
207
204
Increase in cash and cash equivalents
12,023
9,076
8,370
8,328
Cash, cash equivalents and restricted cash, at beginning of the
period
116,315
103,251
119,968
103,999
Cash, cash equivalents and restricted cash, at end of the period
$
128,338
$
112,327
$
128,338
$
112,327
Reconciliation of Non-GAAP Financial Measure Adjusted Net
Income and Net Income Per Share (in 000's)
Unaudited Three Months Ended Nine Months Ended
October 2, 2020 September 27, 2019 October 2,
2020 September 27, 2019 Net income (as reported)
$
3,892
$
2,388
$
2,586
$
7,669
Less: Foreign currency impact
(468
)
584
(388
)
821
Stock-based compensation expense
3,126
2,558
8,965
7,778
Valuation allowance adjustment
154
-
(1,215
)
-
Net income (adjusted)
$
6,704
$
5,530
$
9,948
$
16,268
Net income per share, basic (as reported)
$
0.08
$
0.05
$
0.06
$
0.17
Foreign currency impact
(0.01
)
0.01
(0.01
)
0.02
Stock-based compensation expense
0.08
0.06
0.20
0.18
Valuation allowance adjustment
-
-
(0.03
)
-
Net income per share, basic (adjusted)
$
0.15
$
0.12
$
0.22
$
0.37
Net income per share, diluted (as reported)
$
0.08
$
0.05
$
0.05
$
0.16
Foreign currency impact
(0.01
)
0.01
(0.01
)
0.02
Stock-based compensation expense
0.07
0.06
0.19
0.17
Valuation allowance adjustment
-
-
(0.02
)
-
Net income per share, diluted (adjusted)
$
0.14
$
0.12
$
0.21
$
0.35
Weighted average shares outstanding - Basic
45,903
44,563
45,394
44,426
Weighted average shares outstanding - Diluted
48,180
46,857
47,589
46,848
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 October 2, 2020 Effect of
Constant September 27, 2019 As Reported
Constant Currency Sales Currency
Currency $ Change % Change $ Change
% Change ICL
$
41,493
$
(346
)
$
41,147
$
33,815
$
7,678
22.7
%
$
7,332
21.7
%
IOL
3,325
(76
)
3,249
4,093
(768
)
-18.8
%
(844
)
-20.6
%
Other
2,263
(25
)
2,238
1,147
1,116
97.3
%
1,091
95.1
%
Other Products
5,588
(101
)
5,487
5,240
348
6.6
%
247
4.7
%
Total Sales
$
47,081
$
(447
)
$
46,634
$
39,055
$
8,026
20.6
%
$
7,579
19.4
%
Nine Months Ended October 2, 2020 Effect
of Constant September 27, 2019 As Reported
Constant Currency Sales Currency
Currency $ Change % Change $ Change
% Change ICL
$
101,561
$
(251
)
$
101,310
$
96,033
$
5,528
5.8
%
$
5,277
5.5
%
IOL
9,880
(117
)
9,763
11,984
(2,104
)
-17.6
%
(2,221
)
-18.5
%
Other
6,021
(92
)
5,929
3,285
2,736
83.3
%
2,644
80.5
%
Other Products
15,901
(209
)
15,692
15,269
632
4.1
%
423
2.8
%
Total Sales
$
117,462
$
(460
)
$
117,002
$
111,302
$
6,160
5.5
%
$
5,700
5.1
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201104005614/en/
Investors & Media Brian Moore Vice President,
Investor, Media Relations and Corporate Development (626) 303-7902,
Ext. 3023 bmoore@staar.com
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