Record Quarterly Net Sales of $99.0 Million; $100.4 Million in Constant Currency

Raises Fiscal 2024 Net Sales and Adjusted EBITDA Outlook

STAAR Surgical Company (NASDAQ: STAA), a leading developer, manufacturer and marketer of the EVO family of Implantable Collamer® Lenses (EVO ICL™) for myopia, astigmatism and presbyopia, today reported financial results for the second quarter ended June 28, 2024.

Second Quarter 2024 Overview

• Net sales up 7% to $99.0 million and up 9% to $100.4 million in constant currency
• ICL sales up 7% to $99.4 million and units up 3%
• Gross margin at 79.2% vs. 76.6% year ago
• Net income of $7.4 million or $0.15 per share vs. net income of $6.1 million or $0.12 per share year ago
• Adjusted EBITDA of $22.5 million or $0.45 per share vs. $18.3 million or $0.37 per share year ago
• Cash, cash equivalents and investments available for sale of $235.5 million at June 28, 2024

“STAAR Surgical reported record net sales for the second quarter of 2024, including milestone sales over $100 million on a constant currency basis,” said Tom Frinzi, President and CEO of STAAR Surgical. “We are committed to enhancing surgeon confidence and practice implementation, growing the category and seizing market share throughout the business cycle. For our surgeon customers globally, our EVO ICL technology is increasingly instrumental in enhancing their offerings, market competitiveness and practice economics. As a result, our commercial momentum is accelerating – as evidenced by these latest financial results, which are due to execution against our vital few strategic priorities.”

Mr. Frinzi continued, “For the second quarter, our ICL growth exceeded the market in all key geographies. U.S. sales were $5.5 million, up 25% year over year and 10% sequentially. In APAC, we generated 6% sales growth, including 3% growth in China. Rounding out our global performance, EMEA was also strong with sales growth of 10% in the second quarter. STAAR is truly disrupting the refractive industry to benefit our surgeon customers, their patients and our shareholders. We are moving down the diopter curve and as a result are beginning to realize our near-term goal of becoming the choice for surgeons and their patients -6D of myopia and above. Given our momentum and the opportunity before us, we are raising our outlook for net sales, now to be in the range of $340 million to $345 million and Adjusted EBITDA to be approximately $42 million for fiscal 2024.”

Second Quarter 2024 Financial Results

Net sales were $99.0 million for the second quarter of 2024, up 7% compared to $92.3 million reported in the prior year quarter. The sales increase in the second quarter was driven by ICL sales growth of $6.3 million, up 7%, and unit growth of 3% as compared to the prior year period. Other Product sales were up $0.4 million as compared to the prior year period.

Gross profit margin for the second quarter of 2024 was 79.2% of net sales compared to the prior year quarter of 76.6% of net sales. Gross margin in the second quarter was favorably impacted primarily due to changes in reserves related to cataract IOLs in the prior year quarter. The Company exited its cataract IOL business in fiscal 2023.

Operating expenses for the second quarter of 2024 were $66.5 million compared to the prior year quarter of $62.1 million. General and administrative expenses were $23.6 million compared to the prior year quarter of $18.1 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 $28.8 million compared to the prior year quarter of $32.3 million. The decrease in selling and marketing expenses was due to lower marketing, promotion and advertising activities. Research and development expenses were $14.1 million compared to the prior year quarter of $11.8 million. The increase in research and development expenses was due primarily to increased compensation-related expenses partially offset by lower clinical trial costs.

Operating income for the second quarter of 2024 was $11.9 million or 12.0% of net sales as compared to operating income of $8.6 million or 9.3% of net sales for the second quarter of 2023.

Net income for the second quarter of 2024 was $7.4 million or $0.15 income per share compared with net income of $6.1 million or $0.12 income per share for the prior year quarter. The increase in net income was attributable to higher sales and gross profit, partially offset by higher operating expense and loss on foreign currency transactions.

Cash, cash equivalents and investments available for sale at June 28, 2024, totaled $235.5 million, compared to $232.4 million at December 29, 2023.

Outlook

The Company raised its outlook for fiscal year 2024 net sales and Adjusted EBITDA. The Company now expects the following for fiscal year 2024:

• Net sales of $340 million to $345 million, increased from prior outlook for net sales of $335 million to $340 million.
• Adjusted EBITDA of approximately $42 million and Adjusted EBITDA per diluted share of approximately $0.80, increased from prior outlook of Adjusted EBITDA of approximately $39 million and Adjusted EBITDA per diluted share of approximately $0.75.

The outlook above contemplates EVO ICL sales growth in the Americas of 15% including 25% in the U.S. (prior outlook was 10%); EMEA sales growth of 6% (prior outlook was for sales consistent with fiscal year 2023); and APAC growth of 7%, including approximately 10% in China.

Earnings Webcast

The Company will host an earnings webcast today, Wednesday, August 7 at 4:15 p.m. Eastern / 1:15 p.m. Pacific to discuss its financial results and operational progress. To access the webcast please use the following link: https://staar-surgical-2q24-earnings.open-exchange.net/

The live webcast, earnings webcast presentation and an archived version of the webcast can be accessed from the investor relations section of the STAAR website at www.staar.com.

Use of Non-GAAP Financial Measures

To supplement the Company’s financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables include certain non-GAAP financial measures, including Adjusted EBITDA. Management uses these non-GAAP financial measures in its evaluation of Company operating performance and believes investors will find them useful in evaluating the Company’s operating performance, including cash flow generation, and in analyzing period-to-period financial performance of core business operations and underlying business trends. Non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

EBITDA is a non-GAAP financial measure, which is calculated by adding interest income and expense, net; provision for income taxes; and depreciation and amortization to net income. In calculating Adjusted EBITDA and Adjusted EBITDA per diluted share, the Company further adjusts for stock-based compensation expense. As stock-based compensation is a non-cash expense that can vary significantly based on the timing, size and nature of awards granted, the Company believes that the exclusion of stock-based compensation expense can assist investors in comparisons of Company operating results with other peer companies because (i) the amount of such expense in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expense can vary significantly between periods as a result of the timing of grants of new stock-based awards, including inducement grants in connection with hiring. Additionally, the Company believes that excluding stock-based compensation from Adjusted EBITDA and Adjusted EBITDA per diluted share assists management and investors in making meaningful comparisons between the Company’s operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

The Company also presents certain financial information on a constant currency basis, which is intended to exclude the effects of foreign currency fluctuations. 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.

In the tables provided below, the Company has included a reconciliation of Adjusted EBITDA and Adjusted EBITDA per diluted share to net income and net income per diluted share, the most directly comparable GAAP financial measure, as well as supplemental financial information with net sales expressed in constant currency. The Company has also provided a reconciliation of forward-looking Adjusted EBITDA and Adjusted EBITDA per diluted share to net income and net income per diluted share. This represents forward-looking information, and actual results may vary. Please see the risks and assumptions referred to in the Safe Harbor section of this press release.

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 3,000,000 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, anticipated financial results, estimates and outlook (including as to net sales, Adjusted EBITDA, and Adjusted EBITDA per diluted share), plans, strategies, and objectives of management for 2024 and beyond 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 upcoming quarter, fiscal year 2024 and beyond. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties related to global economic conditions, as well as the factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 29, 2023 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 COVID-19; the discretion of regulatory agencies to approve or reject existing, new or improved products, or to require additional actions before or after approval, or to take enforcement action; international conflicts, trade disputes and substantial dependence on demand from Asia; and the willingness of surgeons and patients to adopt a new or improved product and procedure.

We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website in the ‘Investor Relations’ sections. Accordingly, investors should monitor such portions of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.