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STAAR Surgical Reports First Quarter Results

  • 2019-05-01
  • Press release

ICL Units Up 39% Resulting in Seventh Consecutive Quarter of Significant Growth

Earnings per Share of $0.03

Announces U.S. Surgeons Summit

LAKE FOREST, Calif.--(BUSINESS WIRE)--May 1, 2019-- 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 first quarter endedMarch 29, 2019.

First Quarter 2019 Overview

  • Net Sales of $32.6 Million Up 20% from the Prior Year Quarter
  • ICL Sales Up 31% and Units Up 39% from the Prior Year Quarter
  • ICL Sales Up 34% and Net Sales Up 23% on a Constant Currency Basis from the Prior Year Quarter
  • Gross Margin at 74.2% Up 250 Basis Points from the Prior Year Quarter
  • First Quarter Net Income of $0.03 per Share vs. Prior Year Net Income of $0.01 per Share
  • Cash, Cash Equivalents and Restricted Cash Ended the Quarter at $102.2 Million

“Our ICL family of lenses continue to grow at rates significantly above reported growth for the Ophthalmic Refractive sector,” said 

Caren Mason, President and CEO of STAAR Surgical. “Total ICL units grew 39% globally in the first quarter including 86% growth in Japan, 62% in Korea, 56% in China, 27% in Germany and 23% in India as compared to the prior year quarter. As we recognize and appreciate seven quarters of strong double digit ICL sales and unit growth, we anticipate the strong future our product pipeline and market expansion should provide. The U.S. is one of many markets with significant potential for the ICL and we are pleased to announce our inaugural invitation only U.S. Surgeons Summit. This summer weekend summit will bring together key ophthalmic opinion leaders and executives for educational, podium and panel participation and a thoughtful exchange of ideas as we execute our path forward in the U.S. Joining the U.S. contingent will be top surgeons from China, Japan and Germany who will share their clinical pathways, learnings, and business models to a new ICL continuum of visual freedom care and economic expansion. We are delighted to report the initial response to our surgeon outreach has been very strong with U.S. refractive surgeon opinion leaders leading educational sessions and surgeons from the largest refractive markets in the U.S. participating.”

Financial Overview – Q1 2019

Net sales were $32.6 million for the first quarter of 2019, up 20% compared to $27.1 million reported in the prior year quarter. The sales increase was driven by ICL revenue and unit growth of 31% and 39%, respectively. Other Product Sales decreased 19% compared to the prior year quarter. Currency, primarily the Euro, negatively impacted Net Sales by approximately $0.7 million in the first quarter. Adjusting for the impact of Currency, Net sales in the first quarter of 2019 were $33.3 million, representing 23% growth over the prior year quarter.

Gross profit margin for the first quarter of 2019, was 74.2% compared to the prior year period of 71.7%. The 250 basis point increase in gross profit margin for the quarter is due to favorable product mix resulting from increased sales of ICLs and decreased sales of injector parts and lower unit costs, partially offset by the effect of lower average selling prices (ASPs) for lower diopter ICLs and large volume commitment strategic partners.

Operating expenses for the quarter were $22.6 million compared to the prior year quarter of $18.6 million. General and administrative expenses were $6.8 million compared to the prior year quarter of $5.8 million. The increase in general and administrative expenses was due to increased headcount and salary-related expenses including stock-based compensation and increased facility costs. Marketing and selling expenses were $10.1 million compared to the prior year quarter of $7.5 million. The increase in marketing and selling expenses was due to increased headcount and salary-related expenses including stock-based compensation, increased travel expenses and continued investments in digital, strategic, and consumer marketing. Research and development expenses were $5.6 million compared to the prior year quarter of $5.4 million.

Net income for the first quarter of 2019 was $1.4 million or approximately $0.03 per share compared with net income of $0.6 million or $0.01 per share for the prior year quarter. Non-GAAP Adjusted Net Income for the first quarter of 2019 was $4.3 million or $0.09 per share compared to $2.0 million or $0.05 per 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, cash equivalents and restricted cash at March 29, 2019 totaled $102.2 million, compared to $104.0 million at the end of the fourth quarter of 2018. The Company generated $0.7 million in cash from operations in the first quarter.

Conference Call

The Company will host a conference call and webcast today, Wednesday, May 1, 2019 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 2299537), 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 2299537) 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” 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 and stock-based compensation expenses. 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. 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 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 1,000,000 Visian ICLs have been implanted to date. To learn more about the ICL go to: www.discovericl.com. STAAR markets lenses in over 75 countries and had approximately 475 full-time equivalent employees at December 28, 2018. Headquartered in Lake Forest, 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 2019 or prospects for achieving such plans, expectations for sales, revenue, or earnings, product safety or effectiveness, 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 are set forth in the Company’s Annual Report on Form 10-K for the year ended December 28, 2018 under the caption “Risk Factors,” which is on file with theSecurities 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; potential 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
 

 

 

ASSETS

March 29,
2019

December 28,
2018

Current assets:
Cash and cash equivalents$102,111$103,877
Accounts receivable trade, net26,60125,946
Inventories, net16,43916,704
Prepayments, deposits, and other current assets 7,534  5,045 
Total current assets 152,685  151,572 
Property, plant, and equipment, net11,30011,451
Finance lease right-of-use assets, net2,445-
Operating lease right-of-use assets, net6,629-
Intangible assets, net263243
Goodwill1,7861,786
Deferred income taxes1,2751,278
Other assets 836  1,009 
Total assets$177,219 $167,339 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit$3,272$3,780
Accounts payable7,0186,524
Obligations under finance leases1,1581,098
Obligations under operating leases2,495-
Allowance for sales returns2,9712,895
Other current liabilities 11,317  13,431 
Total current liabilities 28,231  27,728 
Obligations under finance leases656459
Obligations under operating leases4,270-
Deferred income taxes1,1001,022
Asset retirement obligations206206
Deferred rent-188
Pension liability 5,418  5,310 
Total liabilities 39,881  34,913 
 
 
Stockholders' equity:
Common stock444442
Additional paid-in capital292,722289,584
Accumulated other comprehensive loss(1,343)(1,320)
Accumulated deficit (154,485) (156,280)
Total stockholders' equity 137,338  132,426 
Total liabilities and stockholders' equity$177,219 $167,339 
 

>td >>td ###>td ###>td ###>td >td ###Research and development>td ###Total selling, general, and administrative expenses>td ###>td ###>td ###Loss on foreign currency transactions>td ###Royalty income>td ###Other income, net>td ###Total other income, net>td ###>td ###>td ###>td ###

      
Consolidated Statements of Income
(In 000's except for per share data)
Unaudited
 
 
###p#< of
Sales
March 29, 2019###p#< of
Sales
March 30, 2018Fav (Unfav)
Amount>td ### 
Net sales100.0>td ###$32,583100.0>td ###$27,093$5,49020.3
 
Cost of sales25.8>td ### 8,403 28.3>td ### 7,662  (741)-9.7
 
Gross profit74.2>td ### 24,180 71.7>td ### 19,431  4,749 24.4
 
Selling, general and administrative expenses:
General and administrative21.0>td ###6,83721.3>td ###5,771(1,066)-18.5
31.1>td >10,14327.5>td ###7,454(2,689)-36.1
17.3>td ### 5,635 20.0>td ### 5,407  (228)-4.2
69.4>td ###22,61568.8>td ###18,632(3,983)-21.4
 
Operating income4.8>td ### 1,565 2.9>td ### 799  766 95.9
 
Other income (expense):
Interest Income (expense), net0.8>td ###2710.0>td ###(12)2832358.3
-0.7>td ###(248)-0.3>td ###(77)(171)-222.1
0.5>td ###1710.6>td ###157148.9
0.3>td ### 97 0.1>td ### 17  80 470.6
0.9>td ### 291 0.4>td ### 85  206 242.4
 
Income before provision for income taxes5.7>td ###1,8563.3>td ###884972110.0
 
Provision for income taxes1.5>td ### 489 1.1>td ### 301  (188)-62.5
 
Net income4.2>td ###$1,367 2.2>td ###$583 $784 134.5
 
 
Net income per share - basic$0.03 $0.01 
Net income per share - diluted$0.03 $0.01 
 
Weighted average shares outstanding - basic 44,235  41,410 
Weighted average shares outstanding - diluted 46,913  43,087 
 

>td >

   
Consolidated Statements of Cash Flows
(in 000's)
Unaudited

March 29,
2019

March 30,
2018

Cash flows from operating activities:
Net income$1,367$583
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment1,222549
Amortization of long-lived intangibles89
Deferred income taxes7992
Change in net pension liability11987
Stock-based compensation expense2,6411,301
Loss on disposal of property and equipment-6
Provision for sales returns and bad debts(34)514
Inventory provision455506
Changes in working capital:
Accounts receivable(554)(2,755)
Inventories(7)(396)
Prepayments, deposits and other current assets(2,317)(730)
Accounts payable(185)2,038
Other current liabilities (2,063) 726 
Net cash provided by operating activities 731  2,530 
 
Cash flows from investing activities:
Acquisition of property and equipment(2,203)(965)
Increase in patents and licenses (30) - 
Net cash used in investing activities (2,233) (965)
 
Cash flows from financing activities:
Repayment on line of credit(499)-
Repayment of finance lease obligations(365)(380)

Proceeds from vested restricted stock and exercise of stock options

 624  454 
Net cash provided by (used in) financing activities (240) 74 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash (24) 612 
 
(Decrease) increase in cash, cash equivalents and restricted cash(1,766)2,251
Cash, cash equivalents and restricted cash, at beginning of the period 103,999  18,641 
Cash, cash equivalents and restricted cash, at end of the period$102,233 $20,892 
 

>td >>td ###Europe>td ###Middle East, Africa, Latin America>td ###Asia Pacific>td ###Total Sales>td ###>td ###Other Product Sales>td >td ###Total Other Sales>td ###Total Sales>td ###

     
Global Sales
(in 000's)
Unaudited
 
 

 

 

>td ###
Sales by Region

March 29, 2019

March 30, 2018

Fav (Unfav)
North America6.7>td ###$2,1987.7>td ###$2,0795.7
21.6>td ###7,02725.8>td ###6,9900.5
3.8>td ###1,2385.6>td ###1,519-18.5
67.9>td ### 22,12060.9>td ### 16,50534.0
100.0>td ###$32,583100.0>td ###$27,09320.3
 
 
Core Product Sales
ICLs85.3>td ###$27,78678.1>td ###$21,15831.3
IOLs12.3>td ###4,01715.0>td ###4,058-1.0
2.4>td > 7806.9>td ### 1,877-58.4
14.7>td ### 4,79721.9>td ### 5,935-19.2
100.0>td ###$32,583100.0>td ###$27,09320.3
 

>td >

  
Reconciliation of Non-GAAP Financial Measure
(in 000's)
Unaudited
 
March 29, 2019 March 30, 2018
Net income (as reported)$1,367$583
Less:
Foreign currency impact24877
Stock-based compensation expense 2,641  1,301
Net income (adjusted)$4,256 $1,961
 
Net income per share, basic (as reported)$0.03$0.01
Foreign currency impact0.01-
Stock-based compensation expense 0.06  0.03
Net income per share, basic (adjusted)$0.10 $0.05
 
Net income per share, diluted (as reported)$0.03$0.01
Foreign currency impact0.01-
Stock-based compensation expense 0.06  0.03
Net income per share, diluted (adjusted)$0.09 $0.05
 
Weighted average shares outstanding - Basic44,23541,410
Weighted average shares outstanding - Diluted46,91343,087
 
Note: Net income per share (adjusted), basic and diluted, may not add due to rounding
 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190501005891/en/

Source: STAAR Surgical Company

Investors & Media
Brian Moore
Sr. Director, Investor, Media Relations and Corporate Development
(626) 303-7902, Ext. 3023
[email protected]