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 3, 2020.
Second Quarter 2020
Overview
- Net Sales of $35.2 Million Down 11% from the Prior Year
Quarter
- ICL Sales of $30.7 Million Down 11% and Units Down 3% from the
Prior Year Quarter
- Gross Margin at 69.4% vs. 75.4% in the Prior Year Quarter
- Net Loss of ($0.03) per Share vs. Prior Year Quarter Net Income
of $0.08 per Share
- Cash and Cash Equivalents Ended the Quarter at $116.3
Million.
“The outlook we provided in May accurately assessed the market
dynamics and STAAR’s ability to perform well in the midst of a
prolonged shutdown of elective surgeries in most of the global
markets we serve. While refractive procedures were down
significantly or came to a halt in April and May in much of North
America, Europe, Latin America, India and the Middle East,
continuing recovery and growth were recorded in Japan, Korea and
China. In June, ICL implant procedures recorded strong
year-over-year growth with units up 65% in Japan, 24% in Rest of
Asia Pacific, 17% in Germany, 15% in Distributor Markets in Europe
and 11% in Korea. The positive trending continued in July with
China experiencing stronger than anticipated demand as the peak
season began in earnest. While COVID-19 hotspots and government
public health mandates may reoccur moving forward, we anticipate
less business interruption and continued increased interest in our
EVO ICL lens-based refractive solutions in Q3 and Q4. Our team is
squarely focused on generating significant growth by supporting our
surgeon partners as they restart their practices with patient
recruiting programs, training and digital marketing,” said Caren
Mason, President and CEO of STAAR Surgical.
“During Q3, we plan to launch the European commercialization of
our innovative EVO Viva™ presbyopia-correcting lens. We will
begin our phased rollout of the EVO Viva lens to select
surgeons in early September. We are also anticipating completing
enrollment in our U.S. EVO clinical trial in the September
timeframe,” concluded Ms. Mason.
Financial Overview – Q2
2020
Net sales were $35.2 million for the second quarter of 2020,
down 11% compared to $39.7 million reported in the prior year
quarter. The sales decrease was driven by ICL revenue and unit
growth declines of 11% and 3%, respectively, as compared to the
prior year period. Other Product Sales decreased 15% compared to
the prior year quarter. ICL revenue was 87% of total Net sales for
the second quarter of 2020.
Gross profit margin for the second quarter of 2020, was 69.4%
compared to the prior year period of 75.4%. The decrease in gross
margin is primarily attributable to geographic sales mix and a
voluntary six-week COVID-19 related manufacturing pause that ended
on April 27, 2020. Excluding the manufacturing pause related
expenses from the second quarter of 2020 gross profit margin would
have been 72.2%.
Operating expenses for the second quarter were $25.5 million
compared to the prior year quarter of $25.3 million. General and
administrative expenses were $7.8 million compared to the prior
year quarter of $7.5 million. The increase in general and
administrative expenses was due to increased headcount and
salary-related expenses, partially offset by a decrease in variable
compensation and travel expenses. Marketing and selling expenses
were $10.3 million compared to the prior year quarter of $11.7
million. The decrease in marketing and selling expenses is due to
decreased trade show expenses and travel expenses, partially offset
by increased advertising and promotional activities. Research and
development expenses were $7.3 million compared to the prior year
quarter of $6.1 million. The increase in research and development
expenses was due to increased clinical expenses associated with our
EVO clinical trial in the U.S., and increased headcount and
salary-related expenses, partially offset by variable compensation
and travel expense.
Net loss for the second quarter of 2020 was ($1.2) million or
approximately ($0.03) per diluted share compared with net income of
$3.9 million or $0.08 per diluted share for the prior year quarter.
Adjusted Net Income for the second quarter of 2020 was $1.4 million
or $0.03 per diluted share compared to $6.5 million or $0.14 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 3, 2020 totaled $116.3
million, compared to $120.0 million at the end of fiscal 2019. The
Company had $1.3 million drawn on its line of credit in Japan and
no other debt at July 3, 2020. During the second quarter of 2020,
the Company achieved breakeven cash from operations and invested
$2.0 million in property and equipment.
Conference Call
The Company will host a conference call and webcast today,
Wednesday, August 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 9428649), 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 9428649)
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” and
“Adjusted Net Income Per Share” exclude 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” and “Adjusted Net Income per share” are
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 and Adjusted Net Income Per Share, 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 in this press release 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
prospects for achieving such plans, expectations for sales,
revenue, 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; and the willingness of surgeons and
patients to adopt a new or improved product and procedure. The
Visian ICL with CentraFLOW, now known as EVO Visian ICL, is not yet
approved for sale in the United States.
Consolidated Balance Sheets (in 000's)
Unaudited July 3, 2020 January 3, 2020
ASSETS Current assets: Cash and cash equivalents
$
116,315
$
119,968
Accounts receivable trade, net
39,469
30,996
Inventories, net
17,836
17,142
Prepayments, deposits, and other current assets
8,897
6,560
Total current assets
182,517
174,666
Property, plant, and equipment, net
21,478
17,065
Finance lease right-of-use assets, net
687
1,867
Operating lease right-of-use assets, net
5,587
6,684
Intangible assets, net
280
296
Goodwill
1,785
1,786
Deferred income taxes
5,114
3,750
Other assets
591
751
Total assets
$
218,039
$
206,865
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Line of credit
$
1,325
$
1,827
Accounts payable
8,890
8,050
Obligations under finance leases
493
560
Obligations under operating leases
2,355
2,700
Allowance for sales returns
4,285
3,644
Other current liabilities
14,241
17,697
Total current liabilities
31,589
34,478
Obligations under finance leases
108
366
Obligations under operating leases
3,320
4,086
Asset retirement obligations
212
211
Pension liability
8,136
7,840
Total liabilities
43,365
46,981
Stockholders' equity: Common stock
458
448
Additional paid-in capital
320,235
304,288
Accumulated other comprehensive loss
(2,909
)
(3,048
)
Accumulated deficit
(143,110
)
(141,804
)
Total stockholders' equity
174,674
159,884
Total liabilities and stockholders' equity
$
218,039
$
206,865
Consolidated Statements of Operations (In 000's except
for per share data) Unaudited Three Months Ended
% of July 3, 2020 % of June
28, 2019 Fav (Unfav) Sales Sales
Amount % Net sales
100.0
%
$
35,194
100.0
%
$
39,664
$
(4,470
)
-11.3
%
Cost of sales
30.6
%
10,764
24.6
%
9,765
(999
)
-10.2
%
Gross profit
69.4
%
24,430
75.4
%
29,899
(5,469
)
-18.3
%
Selling, general and administrative expenses:
General and administrative
22.3
%
7,848
18.9
%
7,508
(340
)
-4.5
%
Marketing and selling
29.3
%
10,326
29.5
%
11,682
1,356
11.6
%
Research and development
20.8
%
7,311
15.4
%
6,098
(1,213
)
-19.9
%
Total selling, general, and administrative expenses
72.4
%
25,485
63.8
%
25,288
(197
)
-0.8
%
Operating income (loss)
-3.0
%
(1,055
)
11.6
%
4,611
(5,666
)
-122.9
%
Other income (expense): Interest
income, net
0.1
%
20
0.7
%
259
(239
)
-92.3
%
Gain (loss) on foreign currency transactions
1.1
%
388
0.0
%
11
377
3427.3
%
Royalty income
0.1
%
52
0.4
%
163
(111
)
-68.1
%
Other income (expense), net
-0.1
%
(21
)
0.0
%
1
(22
)
-2200.0
%
Total other income, net
1.2
%
439
1.1
%
434
5
1.2
%
Income (loss) before provision for income
taxes
-1.8
%
(616
)
12.7
%
5,045
(5,661
)
-112.2
%
Provision (benefit) for income taxes
1.5
%
556
2.9
%
1,131
575
50.8
%
Net income (loss)
-3.3
%
$
(1,172
)
9.8
%
$
3,914
$
(5,086
)
-129.9
%
Net income (loss) per
share - basic
$
(0.03
)
$
0.09
Net income (loss) per share - diluted
$
(0.03
)
$
0.08
Weighted average shares outstanding - basic
45,354
44,479
Weighted average shares outstanding - diluted
45,354
46,733
Consolidated Statements of Cash Flows (in 000's)
Unaudited Three Months Ended Six Months Ended
July 3, 2020 June 28, 2019 July 3, 2020
June 28, 2019 Cash flows from operating activities:
Net income (loss)
$
(1,172
)
$
3,914
$
(1,306
)
$
5,281
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation of property and equipment
752
761
1,518
1,983
Amortization of long-lived intangibles
8
9
17
17
Deferred income taxes
-
314
(1,369
)
393
Change in net pension liability
203
84
376
203
Stock-based compensation expense
2,918
2,579
5,839
5,220
Loss on disposal of property and equipment
-
-
3
-
Provision for sales returns and bad debts
525
2
605
(32
)
Inventory provision
480
332
816
787
Changes in working capital: Accounts receivable
(4,947
)
(5,979
)
(8,409
)
(6,533
)
Inventories
(441
)
113
(932
)
106
Prepayments, deposits and other current assets
274
1,163
(2,172
)
(1,154
)
Accounts payable
(610
)
748
297
563
Other current liabilities
1,993
(563
)
(3,471
)
(2,626
)
Net cash provided by (used in) operating activities
(17
)
3,477
(8,188
)
4,208
Cash flows from investing activities: Acquisition of
property and equipment
(2,025
)
(2,398
)
(4,210
)
(4,601
)
Increase in patents and licenses
-
-
-
(30
)
Net cash used in investing activities
(2,025
)
(2,398
)
(4,210
)
(4,631
)
Cash flows from financing activities: Repayment on line of
credit
(3
)
(500
)
(508
)
(999
)
Repayment of finance lease obligations
(110
)
(316
)
(346
)
(681
)
Proceeds from vested restricted stock and exercise of stock options
7,553
488
9,558
1,112
Net cash provided by (used in) financing activities
7,440
(328
)
8,704
(568
)
Effect of exchange rate changes on cash and cash equivalents
66
267
41
243
Increase (decrease) in cash and cash equivalents
5,464
1,018
(3,653
)
(748
)
Cash, cash equivalents and restricted cash, at beginning of the
period
110,851
102,233
119,968
103,999
Cash, cash equivalents and restricted cash, at end of the period
$
116,315
$
103,251
$
116,315
$
103,251
Reconciliation of Non-GAAP Financial Measure Adjusted Net
Income (Loss) and Net Income (Loss) Per Share (in 000's)
Unaudited Three Months Ended Six Months
Ended July 3, 2020 June 28, 2019
July 3, 2020 June 28, 2019
Net income (loss) (as reported)
$
(1,172
)
$
3,914
$
(1,306
)
$
5,281
Less: Foreign currency impact
(388
)
(11
)
80
237
Stock-based compensation expense
2,918
2,579
5,839
5,220
Valuation allowance adjustment
-
-
(1,369
)
-
Net income (adjusted)
$
1,358
$
6,482
$
3,244
$
10,738
Net income (loss) per share, basic (as
reported)
$
(0.03
)
$
0.09
$
(0.03
)
$
0.12
Foreign currency impact
-
-
-
-
Stock-based compensation expense
0.06
0.06
0.13
0.12
Valuation allowance adjustment
-
-
(0.03
)
-
Net income per share, basic (adjusted)
$
0.03
$
0.15
$
0.07
$
0.24
Net income (loss) per share, diluted
(as reported)
$
(0.03
)
$
0.08
$
(0.03
)
$
0.11
Foreign currency impact
-
-
-
0.01
Stock-based compensation expense
0.06
0.06
0.12
0.11
Valuation allowance adjustment
-
-
(0.02
)
-
Net income per share, diluted (adjusted)
$
0.03
$
0.14
$
0.07
$
0.23
Weighted average shares outstanding -
Basic
45,354
44,479
45,152
44,357
Weighted average shares outstanding - Diluted
47,546
46,733
47,328
46,842
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 3,
2020 Effect of Constant June 28,
2019 As Reported Constant Currency Sales
Currency Currency $
Change % Change $ Change %
Change ICL
$
30,728
$
(6
)
$
30,722
$
34,432
$
(3,704
)
-10.8
%
$
(3,710
)
-10.8
%
IOL
2,561
(41
)
2,520
3,874
(1,313
)
-33.9
%
(1,354
)
-35.0
%
Other
1,905
(67
)
1,838
1,358
547
40.3
%
480
35.3
%
Other Products
4,466
(108
)
4,358
5,232
(766
)
-14.6
%
(874
)
-16.7
%
Total Sales
$
35,194
$
(114
)
$
35,080
$
39,664
$
(4,470
)
-11.3
%
$
(4,584
)
-11.6
%
Six Months
Ended July 3, 2020 Effect
of Constant June 28, 2019 As
Reported Constant Currency Sales
Currency Currency $ Change %
Change $ Change % Change ICL
$
60,068
$
95
$
60,163
$
62,218
$
(2,150
)
-3.5
%
$
(2,055
)
-3.3
%
IOL
6,555
(41
)
6,514
7,891
(1,336
)
-16.9
%
(1,377
)
-17.5
%
Other
3,758
(67
)
3,691
2,138
1,620
75.8
%
1,553
72.6
%
Other Products
10,313
(108
)
10,205
10,029
284
2.8
%
176
1.8
%
Total Sales
$
70,381
$
(13
)
$
70,368
$
72,247
$
(1,866
)
-2.6
%
$
(1,879
)
-2.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005984/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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