Press Release Details

STAAR Surgical Reports Fourth Quarter and Full Year 2020 Results

February 24, 2021

LAKE FOREST, Calif.--(BUSINESS WIRE)-- 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 fourth quarter and fiscal year ended January 1, 2021.

Fourth Quarter 2020 Overview

  • Net Sales of $46.0 Million Up 18% from the Prior Year Quarter
  • ICL Sales of $39.8 Million Up 20% from the Prior Year Quarter
  • ICL Units Up 13% from the Prior Year Quarter
  • Gross Margin at 74.6% vs. 74.1% in the Prior Year Quarter
  • Net Income of $0.07 per Share vs. Prior Year Quarter Net Income of $0.14 per Share
  • Net Income in Prior Year, Fourth Quarter 2019, included a $0.07 per Share tax benefit
  • Cash and Cash Equivalents Ended the Quarter at $152.5 Million

Full Year 2020 Overview

  • Record Net Sales of $163.5 Million Up 9% from Prior Year
  • ICL Sales Up 9% and Units Up 11% from the Prior Year
  • Gross Margin at 72.4% of Sales from 74.5% of Sales in the Prior Year
  • Full Year Net Income of $0.12 per Share vs. Prior Year Net Income of $0.30 per Share
  • Net Income in Prior Year, Full Year 2019, included a $0.07 per Share tax benefit

“Our 2020 performance reflects the continued momentum behind STAAR’s commercial growth and product innovation. Consequently, we achieved strong fourth quarter results and met our original sales targets for the second half of 2020, despite the unprecedented global pandemic. Our momentum has continued into the first weeks of 2021,” said Caren Mason, President and CEO of STAAR Surgical. “For the full year 2020 ICL unit growth was up 11% as compared to a 21% decline in industry-wide refractive procedures.1 STAAR’s positive growth affirms the increasing adoption for our EVO ICL family of implantable lenses and illustrates that our lenses continue to capture refractive market share. We believe our lenses are likely to grow the overall market demand for refractive procedures. In 2021 we are confident that our strategies will continue to expand the ICL’s position as a transformational pathway to Visual Freedom for patients seeking a life independent of glasses and frequent replacement contact lenses as we support a lens-based future of refractive vision correction.”

Financial Overview – Q4 2020

Net sales were $46.0 million for the fourth quarter of 2020, up 18% compared to $38.9 million reported in the prior year quarter. The sales increase was driven by ICL revenue and unit growth of 20% and 13%, respectively, as compared to the prior year period. Other Product Sales increased 10% compared to the prior year quarter due to increased injector parts sales. ICL revenue was 87% of total Net sales for the fourth quarter of 2020.

Gross profit margin for the fourth quarter of 2020 was 74.6% compared to the prior year period of 74.1%. Factors impacting gross margin in the fourth quarter of 2020, as compared to the prior year period, include geographic sales mix partially offset by inventory reserves taken on certain lower margin IOL products which are being discontinued, and manufacturing projects.

Operating expenses for the fourth quarter were $30.2 million compared to the prior year quarter of $26.5 million. General and administrative expenses were $9.5 million compared to the prior year quarter of $7.9 million. The increase in general and administrative expenses was due to increased salary-related costs, variable compensation, corporate insurance and facilities costs. Selling and marketing expenses were $11.8 million compared to the prior year quarter of $11.2 million. The increase in selling and marketing expenses is due to increased salary-related costs and advertising and promotional expenses, partially offset by decreased travel, sales meetings and trade show expenses. Research and development expenses were $9.0 million compared to the prior year quarter of $7.4 million. The increase in research and development expenses is primarily due to increased clinical expenses associated with our EVO clinical trial in the U.S., and increased salary-related expenses and variable compensation.

Net income for the fourth quarter of 2020 was $3.3 million or $0.07 per diluted share compared with net income of $6.4 million or $0.14 per diluted share for the prior year quarter. The year over year decrease is attributable to higher provision for income taxes as the result of a $0.07 per diluted share tax benefit in 2019. Adjusted Net Income for the fourth quarter of 2020 was $6.8 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.

Financial Overview – Full Year 2020

Net sales were $163.5 million for full year (“FY”) 2020, up 9% compared to $150.2 million reported in the prior year. The sales increase was driven by ICL revenue and unit growth of 9% and 11%, respectively. Other Products Sales increased 6% compared to the prior year. ICL revenue was 87% of total net sales for FY 2020.

Gross profit margin for FY 2020 decreased to 72.4% of total net sales compared to 74.5% of total net sales for FY 2019. The decrease in gross margin for the year is due to geographic sales mix, a voluntary pause in manufacturing at the Company’s principal manufacturing facility commencing in March due to the pandemic, and period costs related to manufacturing projects.

Operating expenses for FY 2020 were $111.6 million compared to prior year of $100.1 million. The increase in operating expense is due to increased salary-related costs, variable compensation, corporate insurance and facilities costs, and increased clinical expenses associated with the Company’s EVO clinical trial in the U.S.

Net income for FY 2020 was $5.9 million or approximately $0.12 per share compared with net income of $14.0 million or $0.30 per diluted share for the prior year. The year over year decrease in net income is due to lower operating income and a higher provision for income taxes as the result of a $0.07 per diluted share tax benefit in 2019. Adjusted Net Income for FY 2020 was $16.7 million or $0.35 per diluted share, compared with an Adjusted Net Income of $21.7 million or $0.46 per diluted share for FY 2019. The reconciliation between GAAP and non-GAAP financial information is provided in the financial tables included with this release.

Cash and cash equivalents at January 1, 2021 totaled $152.5 million, compared to $120.0 million at end of the fourth quarter of 2019. The Company generated $21.0 million in cash from operations for FY 2020.

1 Market Scope Refractive Surgery Report, January 2021.

Conference Call

The Company will host a conference call and webcast today, Wednesday, February 24 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 7649387), 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 7649387) 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 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; 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
 
January 1, 2021 January 3, 2020
ASSETS
Current assets:
Cash and cash equivalents

$ 152,453

 

$ 119,968

 

Accounts receivable trade, net

35,229

 

30,996

 

Inventories, net

18,111

 

17,142

 

Prepayments, deposits, and other current assets

10,625

 

6,560

 

Total current assets

216,418

 

174,666

 

Property, plant, and equipment, net

24,030

 

17,065

 

Finance lease right-of-use assets, net

596

 

1,867

 

Operating lease right-of-use assets, net

8,764

 

6,684

 

Intangible assets, net

270

 

296

 

Goodwill

1,786

 

1,786

 

Deferred income taxes

4,944

 

4,408

 

Other assets

608

 

751

 

Total assets

$ 257,416

 

$ 207,523

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit

$ 1,379

 

$ 1,827

 

Accounts payable

7,874

 

8,050

 

Obligations under finance leases

360

 

560

 

Obligations under operating leases

2,485

 

2,700

 

Allowance for sales returns

4,532

 

3,644

 

Other current liabilities

24,606

 

17,697

 

Total current liabilities

41,236

 

34,478

 

Obligations under finance leases

38

 

366

 

Obligations under operating leases

6,537

 

4,086

 

Deferred income taxes

222

 

658

 

Asset retirement obligations

221

 

211

 

Pension liability

11,940

 

7,840

 

Total liabilities

60,194

 

47,639

 

 
 
 
Stockholders' equity:
Common stock

464

 

448

 

Additional paid-in capital

338,194

 

304,288

 

Accumulated other comprehensive loss

(5,545

)

(3,048

)

Accumulated deficit

(135,891

)

(141,804

)

Total stockholders' equity

197,222

 

159,884

 

Total liabilities and stockholders' equity

$ 257,416

 

$ 207,523

 

Consolidated Statements of Income
(In 000's except for per share data)
Unaudited
 
 
Three Months Ended Twelve Months Ended
% of January 1, 2021 % of January 3, 2020 Fav (Unfav) % of January 1, 2021 % of January 3, 2020 Fav (Unfav)
Sales Sales Amount % Sales Sales Amount %
Net sales

100.0

%

$ 45,998

100.0

%

$ 38,883

 

$ 7,115

 

18.3

%

100.0

%

$ 163,460

 

100.0

%

$ 150,185

 

$ 13,275

 

8.8

%

 
Cost of sales

25.4

%

11,697

25.9

%

10,059

 

(1,638

)

-16.3

%

27.6

%

45,098

 

25.5

%

38,231

 

(6,867

)

-18.0

%

 
Gross profit

74.6

%

34,301

74.1

%

28,824

 

5,477

 

19.0

%

72.4

%

118,362

 

74.5

%

111,954

 

6,408

 

5.7

%

 
Selling, general and administrative expenses:
General and administrative

20.7

%

9,505

20.2

%

7,870

 

(1,635

)

-20.8

%

20.7

%

33,911

 

19.5

%

29,313

 

(4,598

)

-15.7

%

Selling and marketing

25.6

%

11,761

28.8

%

11,203

 

(558

)

-5.0

%

28.0

%

45,764

 

30.3

%

45,491

 

(273

)

-0.6

%

Research and development

19.5

%

8,958

19.1

%

7,409

 

(1,549

)

-20.9

%

19.6

%

31,918

 

16.8

%

25,298

 

(6,620

)

-26.2

%

Total selling, general, and administrative expenses

65.8

%

30,224

68.1

%

26,482

 

(3,742

)

-14.1

%

68.3

%

111,593

 

66.6

%

100,102

 

(11,491

)

-11.5

%

 
Operating income

8.8

%

4,077

6.0

%

2,342

 

1,735

 

74.1

%

4.1

%

6,769

 

7.9

%

11,852

 

(5,083

)

-42.9

%

 
Other income (expense):
Interest income, net

0.0

%

1

0.5

%

192

 

(191

)

-99.5

%

0.1

%

238

 

0.6

%

988

 

(750

)

-75.9

%

Gain (loss) on foreign currency transactions

1.0

%

476

0.8

%

304

 

172

 

56.6

%

0.5

%

864

 

-0.3

%

(517

)

1,381

 

267.1

%

Royalty income

0.5

%

201

0.3

%

111

 

90

 

81.1

%

0.3

%

440

 

0.4

%

551

 

(111

)

-20.1

%

Other income (expense), net

0.1

%

39

0.1

%

28

 

11

 

39.3

%

0.0

%

(44

)

0.1

%

152

 

(196

)

-128.9

%

Total other income (expense), net

1.6

%

717

1.7

%

635

 

82

 

12.9

%

0.9

%

1,498

 

0.8

%

1,174

 

324

 

27.6

%

 
Income before provision for income taxes

10.4

%

4,794

7.7

%

2,977

 

1,817

 

61.0

%

5.0

%

8,267

 

8.7

%

13,026

 

(4,759

)

-36.5

%

 
Provision for income taxes

3.2

%

1,467

-8.7

%

(3,402

)

(4,869

)

-143.1

%

1.4

%

2,354

 

-0.7

%

(1,022

)

(3,376

)

-330.3

%

 
Net income

7.2

%

$ 3,327

16.4

%

$ 6,379

 

$ (3,052

)

-47.8

%

3.6

%

$ 5,913

 

9.4

%

$ 14,048

 

$ (8,135

)

-57.9

%

 
 
Net income (loss) per share - basic

$ 0.07

$ 0.14

 

$ 0.13

 

$ 0.32

 

Net income (loss) per share - diluted

$ 0.07

$ 0.14

 

$ 0.12

 

$ 0.30

 

 
Weighted average shares outstanding - basic

46,264

44,681

 

45,605

 

44,493

 

Weighted average shares outstanding - diluted

48,808

47,009

 

47,953

 

46,895

 

Consolidated Statements of Cash Flows
(in 000's)
Unaudited
Three Months Ended Twelve Months Ended
January 1,
2021
January 3,
2020
January 1,
2021
January 3,
2020
 
Cash flows from operating activities:
Net income

$ 3,327

 

$ 6,379

 

$ 5,913

 

$ 14,048

 

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

784

 

812

 

3,060

 

3,665

 

Amortization of long-lived intangibles

9

 

8

 

35

 

34

 

Deferred income taxes

366

 

(4,007

)

(849

)

(3,481

)

Change in net pension liability

134

 

95

 

656

 

359

 

Stock-based compensation expense

3,181

 

2,769

 

12,146

 

10,547

 

Loss on disposal of property and equipment

210

 

-

 

213

 

14

 

Provision for sales returns and bad debts

20

 

(34

)

835

 

275

 

Inventory provision

511

 

358

 

1,706

 

1,580

 

Changes in working capital:
Accounts receivable

7,001

 

(242

)

(3,974

)

(4,502

)

Inventories

(37

)

(771

)

(1,390

)

(950

)

Prepayments, deposits and other current assets

(3,117

)

(1,083

)

(3,753

)

(1,313

)

Accounts payable

(155

)

538

 

(812

)

1,084

 

Other current liabilities

7,316

 

4,971

 

7,165

 

4,435

 

Net cash provided by operating activities

19,550

 

9,793

 

20,951

 

25,795

 

 
Cash flows from investing activities:
Acquisition of property and equipment

(2,145

)

(2,926

)

(8,404

)

(10,095

)

Increase in patents and licenses

-

 

(53

)

-

 

(83

)

Net cash used in investing activities

(2,145

)

(2,979

)

(8,404

)

(10,178

)

 
Cash flows from financing activities:
Repayment on line of credit

(4

)

(506

)

(515

)

(2,018

)

Repayment of finance lease obligations

(106

)

(296

)

(561

)

(1,294

)

Proceeds from vested restricted stock and exercise of stock options

6,660

 

1,630

 

20,647

 

3,461

 

Net cash provided by (used in) financing activities

6,550

 

828

 

19,571

 

149

 

 
Effect of exchange rate changes on cash and cash equivalents

160

 

(1

)

367

 

203

 

 
Increase in cash and cash equivalents

24,115

 

7,641

 

32,485

 

15,969

 

Cash, cash equivalents and restricted cash, at beginning of the period

128,338

 

112,327

 

119,968

 

103,999

 

Cash, cash equivalents and restricted cash, at end of the period

$ 152,453

 

$ 119,968

 

$ 152,453

 

$ 119,968

 

Reconciliation of Non-GAAP Financial Measure
Adjusted Net Income and Net Income Per Share
(in 000's)
Unaudited Three Months Ended Twelve Months Ended
January 1, 2021 January 3, 2020 January 1, 2021 January 3, 2020
 
Net income (as reported)

$ 3,327

 

$ 6,379

 

$ 5,913

 

$ 14,048

 

Less:
Foreign currency impact

(476

)

(304

)

(864

)

517

 

Stock-based compensation expense

3,181

 

2,769

 

12,146

 

10,547

 

Valuation allowance adjustment

720

 

(3,376

)

(495

)

(3,376

)

Net income (adjusted)

$ 6,752

 

$ 5,468

 

$ 16,700

 

$ 21,736

 

 
Net income per share, basic (as reported)

$ 0.07

 

$ 0.14

 

$ 0.13

 

$ 0.32

 

Foreign currency impact

(0.01

)

(0.01

)

(0.02

)

0.01

 

Stock-based compensation expense

0.07

 

0.06

 

0.27

 

0.24

 

Valuation allowance adjustment

0.02

 

(0.07

)

(0.01

)

(0.08

)

Net income per share, basic (adjusted)

$ 0.15

 

$ 0.12

 

$ 0.37

 

$ 0.49

 

 
Net income per share, diluted (as reported)

$ 0.07

 

$ 0.14

 

$ 0.12

 

$ 0.30

 

Foreign currency impact

(0.01

)

(0.01

)

(0.02

)

0.01

 

Stock-based compensation expense

0.07

 

0.06

 

0.25

 

0.22

 

Valuation allowance adjustment

0.01

 

(0.07

)

-

 

(0.07

)

Net income per share, diluted (adjusted)

$ 0.14

 

$ 0.12

 

$ 0.35

 

$ 0.46

 

 
Weighted average shares outstanding - Basic

46,264

 

44,681

 

45,605

 

44,493

 

Weighted average shares outstanding - Diluted

48,808

 

47,009

 

47,953

 

46,895

 

 
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
January 1, 2021 Effect of Constant January 3, 2020 As Reported Constant Currency
Sales Currency Currency $ Change % Change $ Change % Change
ICL

$ 39,846

$ (754

)

$ 39,092

$ 33,289

$ 6,557

 

19.7

%

$ 5,803

 

17.4

%

 
IOL

3,694

(163

)

3,531

3,705

(11

)

-0.3

%

(174

)

-4.7

%

Other

2,458

(85

)

2,373

1,889

569

 

30.1

%

484

 

25.6

%

Other Products

6,152

(248

)

5,904

5,594

558

 

10.0

%

310

 

5.5

%

 
Total Sales

$ 45,998

$ (1,002

)

$ 44,996

$ 38,883

$ 7,115

 

18.3

%

$ 6,113

 

15.7

%

 
Twelve Months Ended
January 1, 2021 Effect of Constant January 3, 2020 As Reported Constant Currency
Sales Currency Currency $ Change % Change $ Change % Change
ICL

$ 141,407

$ (1,005

)

$ 140,402

$ 129,322

$ 12,085

 

9.3

%

$ 11,080

 

8.6

%

 
IOL

13,574

(280

)

13,294

15,689

(2,115

)

-13.5

%

(2,395

)

-15.3

%

Other

8,479

(177

)

8,302

5,174

3,305

 

63.9

%

3,128

 

60.5

%

Other Products

22,053

(457

)

21,596

20,863

1,190

 

5.7

%

733

 

3.5

%

 
Total Sales

$ 163,460

$ (1,462

)

$ 161,998

$ 150,185

$ 13,275

 

8.8

%

$ 11,813

 

7.9

%

 

Investors & Media
Brian Moore
Vice President, Investor, Media Relations and Corporate Development
(626) 303-7902, Ext. 3023
bmoore@staar.com

Source: STAAR Surgical Company