Full Press Release Details
STAAR Surgical ICL Sales Up 46%;
Company Raises Outlook for Full Year
MONROVIA, CA, October 31, 2018---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 third quarter ended September 28, 2018.
Third Quarter 2018 Overview
"STAAR's operating momentum continued during the
third quarter resulting in an increase in sales of 35% over the prior year driven by the growth of our EVO Visian ICL family
of lenses," said Caren Mason, President and CEO. "ICL unit growth highlights for the quarter included China up 100%,
Japan up 95%, India up 27% and Germany up 20%. We continue to see strengthening in our key international markets as we prepare
for Europe's and Korea's high implant season beginning this quarter and extending into Q1 2019 with strong trends continuing
in our Asian markets as well. In addition, we believe our full year fiscal 2018 sales growth should exceed 30% over 2017, based
on current market conditions, and we fully expect to maintain GAAP profitability for the year."
"We are also pleased to report that implants have begun
and the staged rollout of our Toric ICL lens in the U.S. with certified surgeons is in progress and ahead of schedule. Based upon
the enthusiastic reception from prominent surgeons to the Toric ICL, we anticipate that this product introduction represents a
positive re-entry point for STAAR in the U.S., the world's second largest market for refractive vision correction procedures.
Finally, outside the U.S. our multi-site EVO with Aspheric (EDOF) Optic clinical trial for presbyopia is ongoing. Our Principal
Investigator from the initial first-in-person clinical trial of the EVO with Aspheric (EDOF) Optic lens for presbyopia presented
his study data during our invitation only Experts Summit for surgeons held immediately ahead of the European Society of Cataract
and Refractive Surgeons (ESCRS) meeting in Vienna last month. We are very pleased with the enthusiastic reception his presentation
received," concluded Ms. Mason.
Financial Overview - Q3 2018
Net sales were $31.8 million for the third quarter of 2018,
up 35% compared to $23.5 million reported in the prior year quarter. The sales increase was driven by ICL revenue growth of 46%
and ICL unit growth of 56% reflecting the increasing contribution from lower diopter lenses and contracted pricing terms based
on customer volume achievements.
Gross profit margin for the third quarter of 2018, was 75.1%
compared to the prior year period of 71.8%. The 330 basis point improvement in gross margin resulted from lower unit costs, favorable
product and country mix, and lower freight and inventory provisions, partially offset by the effect of lower average selling prices.
Operating expenses for the third quarter of 2018 were $22.3
million compared to the prior year quarter of $15.8 million and flat sequentially. General and administrative expenses were $6.1
million compared to the prior year quarter of $4.7 million. The increase in general and administrative expenses was due to an increase
in compensation costs including stock-based compensation, facilities costs, travel, and investments in enhanced cybersecurity systems.
Marketing and selling expenses were $10.6 million compared to the prior year quarter of $6.5 million and flat sequentially. The
increase in marketing and selling expenses was due to a calendar shift in ESCRS from the prior year's fourth quarter and
increased investments in digital, consumer, and strategic marketing and commercial infrastructure. Research and development expenses
were $5.6 million compared to the prior year quarter of $4.6 million. The increase in research and development expenses was due
to an increase in clinical trial expenses, medical affairs, and regulatory expenses.
Net income for the third quarter of 2018 was approximately $1.5
million or $0.03 per share compared with net income of $1.2 million or $0.03 per share for the prior year quarter. Adjusted Net
Income for the third quarter of 2018 was $3.4 million or $0.07 per share, compared to Adjusted Net Income in the prior year quarter
of $1.5 million or $0.04 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 September 28,
2018 totaled $102.3 million, compared to $18.6 million at the end of the fourth quarter of 2017, and $21.4 million at the end of
the second quarter of 2018. The sequential increase in cash, cash equivalents and restricted cash includes $8.1 million in cash
generated from operations and approximately $72.2 million in net cash from financing activities reflecting primarily the proceeds
from the sale of common stock, which closed August 10, 2018.
The Company will host a conference call and webcast today,
Wednesday, October 31, 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 7281609), 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 7281609)
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
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)" and "Adjusted Net Income (Loss) 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 in 2017. Management
believes that "Adjusted Net Income (Loss)," "Adjusted Net Income (Loss) 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 in 2017 because their inclusion may mask underlying trends in our business
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
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 900,000 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.
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: 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 EVO Visian
ICL family of lenses and international regulatory requirements to obtain a presbyopia correction claim for the EVO Visian ICL with