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
June 29, 2018.
Second Quarter 2018 Overview
“STAAR generated record quarterly sales of $33.9 Million, a 55% increase
from prior year, driven by the continuing expansive growth of our EVO
Visian ICL™ family of lenses,” said Caren Mason, President and CEO. “ICL
unit growth highlights for the quarter included Japan up 131%, China up
127%, Canada up 64% and India up 61% with solid 30% unit growth in
Germany and 20% growth from our European distributors. We continue to
see a high level of momentum in our key international markets and
therefore believe our second half sales growth may exceed 20% even
taking into account our strong finish to 2017. In addition, we believe
our full year fiscal 2018 sales growth may now exceed 25% compared with
our prior target for sales growth closer to 20% over 2017, based on
current market conditions.”
“Operating expense growth during the second quarter remained comfortably
below our rate of sales growth resulting in positive leverage and
earnings per share. For fiscal 2018 we now believe we can achieve at
least breakeven GAAP net income as we balance prudent growth spending
with targeted levels of profitability. We believe that the previously
announced lifting of the 2014 Warning Letter in the U.S. is a positive
step towards moving forward with the required regulatory approval
processes for our Toric and EVO family of lenses in the United States,”
concluded Ms. Mason.
Financial Overview – Q2 2018
Net sales were $33.9 million for the second quarter of 2018, up 55%
compared to $21.9 million reported in the prior year quarter. The sales
increase was driven by ICL revenue and unit growth of 67% and 66%,
respectively and strong injector part sales.
Gross profit margin for the second quarter of 2018, was 74.4% compared
to the prior year period of 70.5%. The improvement in gross margin
resulted from lower unit costs and lower inventory provisions.
Operating expenses for the second quarter of 2018 were $22.2 million
compared to the prior year quarter of $16.8 million. General and
administrative expenses were $6.2 million compared to the prior year
quarter of $4.7 million. The increase in general and administrative
expenses was due to an increase in salary-related expenses including
bonus and stock compensation as well as additional expense in finance
and information systems and increased facility costs versus prior year.
Marketing and selling expenses were $10.7 million compared to the prior
year quarter of $7.3 million. The increase in marketing and selling
expenses was due to increased investments in digital, consumer, and
strategic marketing and commercial infrastructure. Research and
development expenses were $5.3 million compared to the prior year
quarter of $4.8 million. The increase in research and development
expenses was due to an increase in Medical Affairs expense and initial
clinical expenses associated with our clinical trial for the next
generation ICL with EDOF optic, which is in the early stages.
Net income for the second quarter of 2018 was approximately $1.8 million
or $0.04 per share compared with a net loss of $1.0 million or $0.02 per
share for the prior year quarter. Adjusted Net Income for the second
quarter of 2018 was $3.9 million or $0.09 per share, compared to an
Adjusted Net Loss in the prior year quarter of $0.4 million or $0.01 per
share. The reconciliation between GAAP and non-GAAP financial
information is provided in the financial tables included with this
release.
Cash, cash equivalents and restricted cash at June 29, 2018 totaled
$21.4 million, compared to $18.6 million at the end of the fourth
quarter of 2017, and $20.9 at the end of the first quarter of 2018.
Conference Call
The Company will host a conference call and webcast today, Wednesday,
August 1, 2018 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 9764509), please dial 855-765-5684 for domestic
participants and 262-912-6252 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 9764509) will be
available beginning approximately one hour after the call’s conclusion
for seven days. This replay can be accessed by dialing 855-859-2056 for
domestic callers and 404-537-3406 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 (Loss),” “Adjusted Net
Income (Loss) Per Share” and “Non-GAAP Earnings per Share” exclude the
following items that are included in “Net Income (Loss)” as calculated
in accordance with U.S. generally accepted accounting principles
(“GAAP”): gain or loss on foreign currency transactions, stock-based
compensation expenses, and quality remediation expenses. Management
believes that “Adjusted Net Income (Loss),” “Adjusted Net Income (Loss)
Per Share” and “Non-GAAP Earnings 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 excluded quality
remediation expenses because their inclusion may mask underlying trends
in our business performance.
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. In calculating Adjusted Net
Income (Loss) and Adjusted Net Income (Loss) Per Share, STAAR excludes
these expenses because they are non-cash expenses and because of the
complexity and 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.
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 800,000 Visian ICLs have been implanted to date. To
learn more about the ICL go to: www.discovericl.com.
STAAR has approximately 400 full-time equivalent employees and markets
lenses in over 75 countries. Headquartered in Monrovia, CA, the company
operates manufacturing facilities in Aliso Viejo, CA and Monrovia, CA.
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, including those
relating to the plans, strategies, and objectives of management for
future operations or prospects for achieving such plans, expectations
for sales, revenue, earnings, marketing and clinical initiatives,
regulatory approvals, quality, operations and other expense, or expense
timing, success and timing of new or improved products, clinical trials,
research and development activities, investment imperatives, and any
statements of assumptions underlying any of the foregoing. Important
factors that could cause actual results to differ materially from those
indicated by such forward-looking statements are set forth in the
Company’s Annual Report on Form 10-K for the year ended December 29,
2017 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: our limited capital resources and
limited access to financing; global economic conditions; changes in
currency exchange rates; the discretion of regulatory agencies to
approve or reject existing, new or improved products, or to require
additional actions before approval (including but not limited to FDA
requirements regarding the Visian Toric ICL and EVO family of lenses),
or to take enforcement action; research and development efforts;
potential international trade disputes; the purchasing patterns of our
distributors carrying inventory in the market; and the willingness of
surgeons and patients to adopt a new or improved product and procedure.
The Visian Toric ICL and the Visian ICL with CentraFLOW, now known as
EVO Visian ICL, are not approved for sale in the United States.
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