ICL Unit Growth Up 33% Y/Y in Fiscal 2022
STAAR Reaffirms Outlook for Strong Trajectory of Growth in 2023
LAKE FOREST, Calif.–(BUSINESS WIRE)–STAAR Surgical Company (NASDAQ: STAA), a leading developer, manufacturer and marketer of implantable lenses for the eye, today reported financial results for the fourth quarter and fiscal year ended December 30, 2022.
Fourth Quarter 2022 Overview
Net Sales of $64.0 Million Up 9% and Constant Currency Net Sales of $67.9 Million Up 15% from Prior Year Quarter
ICL Sales of $61.2 Million Up 15% and Constant Currency ICL Sales of $64.3 Million Up 21% from Prior Year Quarter
ICL Units Up 20% from the Prior Year Quarter
Gross Margin at 77.7% vs. 76.3% in the Prior Year Quarter
Net Income of $0.12 per Share vs. $0.10 per Share in the Prior Year Quarter
Cash, Cash Equivalents and Investments Available for Sale Ended the Quarter at $225.5 Million
Fiscal Year 2022 Overview
Net Sales of $284.4 Million Up 23% and Constant Currency Net Sales of $297.3 Million Up 29% from Prior Year
ICL Sales of $269.7 Million Up 27% and Constant Currency Net Sales of $280.0 Million Up 32% from Prior Year
ICL Units Up 33% from the Prior Year
Gross Margin at 78.5% of Sales from 77.5% of Sales in the Prior Year
Full Year Net Income of $0.78 per Share vs. Prior Year Net Income of $0.50 per Share
“Our fourth quarter and fiscal 2022 results continue STAAR’s multi-quarter track record of industry leading growth with fiscal 2022 global ICL sales up 27% and in constant currency up 32% and units up 33% year over year. These levels of ICL growth exceed the ambitious goals we previously announced for 2022. Moreover, our growth significantly outpaced the roughly flat growth for refractive industry procedures over the same period1,” said Tom Frinzi, President and CEO of STAAR Surgical. “For the fourth quarter ICL unit growth was up 20% year over year, including U.S. units up 109% and China units up 18%. In China, transient COVID-related headwinds that impacted our results in the fourth quarter are subsiding as we move through the first quarter of 2023. Our outlook for fiscal 2023 total ICL sales is approximately $340 million, which represents 26% year over year growth. STAAR will move forward in 2023 with purpose and increased investment to further accelerate consumer awareness, surgeon confidence and adoption of our EVO ICL family of lenses, all while continuing our industry leading position as a high growth and profitable ophthalmic medical device company.”
1 STAAR Market Share Refractive Procedures and ICL Trends proprietary model as of January 12, 2023 estimates 4,322,688 global refractive procedures in 2022 and 4,345,812 refractive procedures in 2021, a 0.53% decline Y/Y.
Financial Overview – Q4 2022
Net sales were $64.0 million for the fourth quarter of 2022, up 9% compared to $59.0 million reported in the prior year quarter. Changes in currency, primarily the Japanese Yen as well as the Euro, negatively impacted reported net sales by $3.8 million for the fourth quarter of 2022. The sales increase in the fourth quarter was driven by ICL sales and unit growth of 15% and 20%, respectively, as compared to the prior year period. Other Product sales decreased 52% compared to the prior year quarter. ICL sales were 96% of total net sales for the fourth quarter of 2022.
Gross profit margin for the fourth quarter of 2022 was 77.7% compared to the prior year quarter of 76.3%. Factors impacting the favorability in gross margin in the fourth quarter of 2022, as compared to the prior year quarter, include product and geographic mix, partially offset by increased period costs associated with manufacturing projects.
Operating expenses for the fourth quarter of 2022 were $48.8 million compared to the prior year quarter of $37.6 million. General and administrative expenses were $14.8 million compared to the prior year quarter of $11.5 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 $24.2 million compared to the prior year quarter of $17.1 million. The increase in selling and marketing expenses is due to increased advertising and promotional activities, trade shows and sales meetings, travel expenses and compensation related expenses. Research and development expenses were $9.8 million compared to the prior year quarter of $9.1 million. The increase in research and development expenses is due to increased clinical trial expenses related to U.S. post-approval studies.
Net income for the fourth quarter of 2022 was $5.9 million or $0.12 per diluted share compared with net income of $4.9 million or $0.10 per diluted share for the prior year quarter. The year over year increase in net income is attributable to higher other income, gross profit and a lower provision for income taxes, offset by increased SG&A expenses. Adjusted Net Income for the fourth quarter of 2022 was $6.8 million or $0.14 per diluted share compared to $9.5 million or $0.19 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 – Fiscal Year 2022
Net sales were $284.4 million for fiscal year 2022, up 23% compared to $230.5 million reported in the prior year. The increase in Net sales was driven by ICL sales and unit growth of 27% and 33%, respectively. Other Products Sales decreased 16% compared to the prior year. ICL sales were 95% of total Net sales for fiscal 2022 and 92% of total Net sales for fiscal 2021. Changes in currency, primarily in the Japanese Yen as well as the Euro, negatively impacted reported total net sales by $12.9 million for fiscal year 2022.
Gross profit margin for fiscal year 2022 increased to 78.5% of total net sales compared to 77.5% of total net sales for fiscal year 2021. The increase in gross margin for the year is due to geographic sales mix and an increased mix of ICL sales which carry a higher margin, partially offset by increased period costs associated with the manufacturing expansion projects.
Operating expenses for fiscal year 2022 were $179.6 million compared to $145.3 million in the prior year. The 24% increase in operating expense is primarily due to higher marketing, promotion and advertising, compensation-related expenses, tradeshows and sales meetings and facilities costs.
Net income for fiscal year 2022 was $38.8 million or $0.78 per diluted share compared with net income of $24.5 million or $0.50 per diluted share for the prior year. The year over year increase in net income is due to higher gross profit and other income, primarily from changes in interest income and foreign currency transactions, partially offset by increased SG&A expenses. Adjusted Net Income for fiscal year 2022 was $60.0 million or $1.22 per diluted share, compared with an Adjusted Net Income of $42.9 million or $0.87 per diluted share for fiscal year 2021. The reconciliation between GAAP and non-GAAP financial information is provided in the financial tables included with this release.
Cash, cash equivalents, short-term and long-term investments available for sale at December 30, 2022 totaled $225.5 million, compared to $199.7 million at end of the fourth quarter of 2021. The Company generated $35.7 million in cash from operations for fiscal year 2022 and invested $18.1 million in property and equipment.
Conference Call
The Company will host a conference call and webcast today, Tuesday, February 21 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss its financial results and operational progress. To access the conference call (Access Code 268065), please dial 844-200-6205 for domestic participants and 929-526-1599 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 (Replay Code 120085) will be available beginning approximately one hour after the call’s conclusion for seven days. This replay can be accessed by dialing 866-813-9403 for domestic callers and 929-458-6194 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 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 stock-based compensation expenses and valuation allowance adjustments 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 provided in this press release 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 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 2,000,000 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 (including sales), plans, strategies, and objectives of management for 2023 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 first quarter and fiscal year 2023. 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 December 31, 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.
Consolidated Balance Sheets
(in 000’s)
Unaudited
ASSETS
December 30,
2022
December 31,
2021
Current assets:
Cash and cash equivalents
$
86,480
$
199,706
Investments available for sale
125,159
–
Accounts receivable trade, net
62,447
43,531
Inventories, net
24,161
17,274
Prepayments, deposits, and other current assets
13,476
10,900
Total current assets
311,723
271,411
Investments available for sale
13,902
–
Property, plant, and equipment, net
50,921
35,912
Finance lease right-of-use assets, net
342
506
Operating lease right-of-use assets, net
30,270
31,310
Intangible assets, net
173
218
Goodwill
1,786
1,786
Deferred income taxes
4,824
3,813
Other assets
957
822
Total assets
$
414,898
$
345,778
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
11,576
$
8,699
Obligations under finance leases
169
127
Obligations under operating leases
3,524
3,283
Allowance for sales returns
5,706
4,816
Other current liabilities
30,741
31,877
Total current liabilities
51,716
48,802
Obligations under finance leases
210
382
Obligations under operating leases
27,136
28,269
Deferred income taxes
1,489
811
Asset retirement obligations
220
198
Pension liability
1,935
8,758
Total liabilities
82,706
87,220
Stockholders’ equity:
Common stock
482
477
Additional paid-in capital
404,189
373,519
Accumulated other comprehensive income (loss)
156
(4,048
)
Accumulated deficit
(72,635
)
(111,390
)
Total stockholders’ equity
332,192
258,558
Total liabilities and stockholders’ equity
$
414,898
$
345,778
Consolidated Statements of Income
(In 000’s except for per share data)
Unaudited
Three Months Ended
Twelve Months Ended
% of
December 30,
2022
% of
December 31,
2021
Fav (Unfav)
% of
December 30,
2022
% of
December 31,
2021
Fav (Unfav)
Sales
Sales
Amount
%
Sales
Sales
Amount
%
Net sales
100.0%
$
64,044
100.0%
$
59,001
$
5,043
8.5%
100.0%
$
284,391
100.0%
$
230,472
$
53,919
23.4%
Cost of sales
22.3%
14,259
23.7%
14,010
(249
)
-1.8%
21.5%
61,008
22.5%
51,835
(9,173
)
-17.7%
Gross profit
77.7%
49,785
76.3%
44,991
4,794
10.7%
78.5%
223,383
77.5%
178,637
44,746
25.0%
Selling, general and administrative expenses:
General and administrative
23.1%
14,808
19.5%
11,471
(3,337
)
-29.1%
19.2%
54,742
19.1%
44,142
(10,600
)
-24.0%
Selling and marketing
37.8%
24,223
28.9%
17,065
(7,158
)
-41.9%
31.2%
88,856
29.2%
67,294
(21,562
)
-32.0%
Research and development
15.3%
9,790
15.4%
9,072
(718
)
-7.9%
12.7%
35,983
14.7%
33,862
(2,121
)
-6.3%
Total selling, general, and administrative expenses
76.2%
48,821
63.8%
37,608
(11,213
)
-29.8%
63.1%
179,581
63.0%
145,298
(34,283
)
-23.6%
Operating income
1.5%
964
12.5%
7,383
(6,419
)
-86.9%
15.4%
43,802
14.5%
33,339
10,463
31.4%
Other expense, net:
Interest income (expense), net
2.4%
1,514
0.0%
(3
)
1,517
50566.7%
0.9%
2,448
0.0%
(38
)
2,486
6542.1%
Gain (loss) on foreign currency transactions
5.0%
3,197
-1.6%
(924
)
4,121
446.0%
-0.6%
(1,707
)
-1.3%
(2,964
)
1,257
42.4%
Royalty income
0.4%
277
0.9%
519
(242
)
-46.6%
0.3%
804
0.4%
1,015
(211
)
-20.8%
Other income (expense), net
0.0%
27
0.0%
(1
)
28
2800.0%
0.0%
205
0.0%
(48
)
253
527.1%
Total other expense, net
7.8%
5,015
-0.7%
(409
)
5,424
1326.2%
0.6%
1,750
-0.9%
(2,035
)
3,785
186.0%
Income before provision for income taxes
9.3%
5,979
11.8%
6,974
(995
)
-14.3%
16.0%
45,552
13.6%
31,304
14,248
45.5%
Provision for income taxes
0.2%
126
3.5%
2,052
1,926
93.9%
2.4%
6,797
3.0%
6,803
6
0.1%
Net income
9.1%
$
5,853
8.3%
$
4,922
$
931
18.9%
13.6%
$
38,755
10.6%
$
24,501
$
14,254
58.2%
Net income per share – basic
$
0.12
$
0.10
$
0.81
$
0.52
Net income per share – diluted
$
0.12
$
0.10
$
0.78
$
0.50
Weighted average shares outstanding – basic
48,203
47,652
47,987
47,210
Weighted average shares outstanding – diluted
49,389
49,478
49,380
49,456
Consolidated Statements of Cash Flows
(in 000’s)
Unaudited
Three Months Ended
Twelve Months Ended
December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Cash flows from operating activities:
Net income
$
5,853
$
4,922
$
38,755
$
24,501
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment
1,380
937
4,481
3,608
Amortization of long-lived intangibles
6
8
28
34
Accretion/Amortization of investments available for sale
(891
)
–
(1,198
)
–
Deferred income taxes
(1,367
)
650
(1,344
)
1,495
Change in net pension liability
13
46
53
137
Stock-based compensation expense
4,996
3,620
20,371
14,605
Accretion of asset retirement obligation
47
–
47
–
Loss on disposal of property and equipment
65
–
65
2
Provision for sales returns and bad debts
552
(751
)
913
318
Inventory provision
403
557
2,423
1,654
Changes in working capital:
Accounts receivable
(6,493
)
(1,796
)
(19,601
)
(8,868
)
Inventories
(3,820
)
(1,235
)
(7,943
)
66
Prepayments, deposits and other current assets
(3,075
)
(1,999
)
(2,549
)
(711
)
Accounts payable
3,639
148
1,805
108
Other current liabilities
1,662
3,391
(591
)
7,013
Net cash provided by operating activities
2,970
8,498
35,715
43,962
Cash flows from investing activities:
Acquisition of property and equipment
(4,025
)
(4,689
)
(18,108
)
(13,645
)
Purchase of investments available for sale
(60,172
)
–
(155,748
)
–
Proceeds from sale or maturity of investments available for sale
17,480
–
17,480
–
Net cash used in investing activities
(46,717
)
(4,689
)
(156,376
)
(13,645
)
Cash flows from financing activities:
Repayment on line of credit
–
(1,297
)
–
(1,297
)
Repayment of finance lease obligations
(41
)
(34
)
(126
)
(348
)
Proceeds from vested restricted stock and exercise of stock options
243
1,115
8,423
19,438
Net cash provided by financing activities
202
(216
)
8,297
17,793
Effect of exchange rate changes on cash and cash equivalents
783
(133
)
(862
)
(857
)
Increase (decrease) in cash and cash equivalents
(42,762
)
3,460
(113,226
)
47,253
Cash and cash equivalents, at beginning of the period
129,242
196,246
199,706
152,453
Cash and cash equivalents, at end of the period
$
86,480
$
199,706
$
86,480
$
199,706
Reconciliation of Non-GAAP Financial Measure
Adjusted Net Income and Net Income Per Share
(in 000’s)
Unaudited
Three Months Ended
Twelve Months Ended
December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Net income (as reported)
$
5,853
$
4,922
$
38,755
$
24,501
Less:
Foreign currency impact
(3,197
)
924
1,707
2,964
Stock-based compensation expense
4,996
3,620
20,371
14,605
Valuation allowance adjustment
(829
)
–
(829
)
845
Net income (adjusted)
$
6,823
$
9,466
$
60,004
$
42,915
Net income per share, basic (as reported)
$
0.12
$
0.10
$
0.81
$
0.52
Foreign currency impact
(0.06
)
0.02
0.04
0.06
Stock-based compensation expense
0.10
0.08
0.42
0.31
Valuation allowance adjustment
(0.02
)
–
(0.02
)
0.02
Net income per share, basic (adjusted)
$
0.14
$
0.20
$
1.25
$
0.91
Net income per share, diluted (as reported)
$
0.12
$
0.10
$
0.78
$
0.50
Foreign currency impact
(0.06
)
0.02
0.04
0.06
Stock-based compensation expense
0.10
0.07
0.41
0.29
Valuation allowance adjustment
(0.02
)
–
(0.01
)
0.02
Net income per share, diluted (adjusted)
$
0.14
$
0.19
$
1.22
$
0.87
Weighted average shares outstanding – Basic
48,203
47,652
47,987
47,210
Weighted average shares outstanding – Diluted
49,389
49,478
49,380
49,456
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
December 30,
2022
Effect of
Constant
December 31,
2021
As Reported
Constant Currency
Sales
Currency
Currency
$ Change
% Change
$ Change
% Change
ICL
$
61,162
$
3,141
$
64,303
$
53,016
$
8,146
15.4%
$
11,287
21.3%
Cataract IOL
1,998
409
2,407
3,195
(1,197
)
-37.5%
(788
)
-24.7%
Other
884
298
1,182
2,790
(1,906
)
-68.3%
(1,608
)
-57.6%
Other Products
2,882
707
3,589
5,985
(3,103
)
-51.8%
(2,396
)
-40.0%
Total Sales
$
64,044
$
3,848
$
67,892
$
59,001
$
5,043
8.5%
$
8,891
15.1%
Twelve Months Ended
December 30,
2022
Effect of
Constant
December 31,
2021
As Reported
Constant Currency
Sales
Currency
Currency
$ Change
% Change
$ Change
% Change
ICL
$
269,712
$
10,307
$
280,019
$
212,905
$
56,807
26.7%
$
67,114
31.5%
Cataract IOL
9,638
1,546
11,184
12,519
(2,881
)
-23.0%
(1,335
)
-10.7%
Other
5,041
1,019
6,060
5,048
(7
)
-0.1%
1,012
20.0%
Other Products
14,679
2,565
17,244
17,567
(2,888
)
-16.4%
(323
)
-1.8%
Total Sales
$
284,391
$
12,872
$
297,263
$
230,472
$
53,919
23.4%
$
66,791
29.0%
Contacts
Investors
Brian Moore
Vice President, Investor, Media Relations and Corporate Development
(626) 303-7902, Ext. 3023
[email protected]