Full Press Release Details
Reports Fourth Quarter and Full Year 2017 Results
MONROVIA, CA, February 28, 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 fourth quarter and full year ended December 29, 2017.
Fourth Quarter 2017 Overview
Full Year 2017 Overview
"We completed our three year,
2015 to 2017, transformational base business plan on target and finished 2017 with a solid foundation for growth for 2018 to 2020,"
said Caren Mason, President and CEO. "The 2017 investments in the clinical, quality, regulatory, research and development,
commercial and operations infrastructure have appreciably reinforced STAAR and contributed to our readiness for a stronger growth
trajectory in 2018 and beyond. We began to realize this emerging strength in our ICL sales results in Q3 and Q4 of 2017 which
combined accounted for 20% growth over the second half of 2016. We begin 2018 with several new products in development, a pivotal
clinical trial about to begin in Europe to validate the EVO Visian ICL EDOF lens for the treatment of Presbyopia, recent three
to five year compliance certifications from regulatory bodies representing Korea and Europe, additional and strengthened strategic
cooperation partnerships around the globe and myriad new programs for our Ophthalmic surgeons including upgraded certified training,
practice development and consumer outreach support. As disclosed in November, we expect to bolster our strategic imperatives for
2018 with additional investment in commercial infrastructure expansion, clinical studies, regulatory compliance and consumer outreach
which will require a low double digit increase in operating expenses over 2017 actual. We remain committed to double digit top
line growth fueled by anticipated mid-teens or greater ICL sales and unit growth. In 2018, we expect to continue strong positive
cash flow and cash generation. We plan to improve our earnings as compared to 2017 and to achieve good progress on our sustained
profitability promise which we believe is realizable, as we have indicated, later in the three year planning cycle," said
Financial Overview - Q4 2017
Net sales were $24.9 million for the fourth quarter of 2017,
up 12% compared to $22.1 million reported in the prior year quarter. The sales increase was driven by ICL revenue and unit growth
of 19% and 20%, respectively, and strong injector part sales. Sales of IOLs decreased 11% compared to the prior year quarter.
Gross profit margin for the fourth quarter of 2017, was 69.9%
compared to the prior year period of 71.7%. The decrease in gross margin for the quarter is due to unfavorable product mix
due to increased sales of low margin injector parts, increased freight and inventory provisions, and decreased ASPs, partially
offset by an increased sales mix of Toric ICLs.
Operating expenses for the quarter were $18.6 million compared
to the prior year quarter of $14.6 million. General and administrative expenses were $5.6 million compared to the prior year
quarter of $3.9 million. The increase in general and administrative expenses was due to increased total compensation and travel
costs. Marketing and selling expenses were $7.8 million compared to the prior year quarter of $6.5 million. The increase in marketing
and selling expenses was due to the timing of our Experts Meeting and the ESCRS, which were held and expensed in the third quarter
of 2016 versus being held and expensed in the fourth quarter of 2017 as well as increased commercial operations expense in China.
Research and development expenses were $5.2 million compared to the prior year quarter of $4.3 million. The increase in research
and development expenses was due to an increase in clinical expenses associated with our clinical trial for the next generation
ICL with EDOF optic and due to the write- off of certain capital equipment no longer in use. The equipment write-off was offset
by an income tax benefit recorded as a result of the 2017 Tax Cuts and Jobs Act.
Net loss for the fourth quarter of 2017 was $0.1 million or
approximately $0.00 per share compared with a net loss of $0.2 million or $0.00 per share for the prior year quarter. Adjusted
Net Income for the fourth quarter of 2017 and 2016 was $0.8 million or $0.02 per share. The reconciliation between GAAP and
non-GAAP financial information is provided in the financial tables included with this release.
Financial Overview - Full Year 2017
Net sales were $90.6 million for FY 2017, up 10% compared to
$82.4 million reported in the prior year. The sales increase was driven by ICL revenue and unit growth of 16% and 17%, respectively,
and strong injector part sales. Sales of IOLs decreased 12% compared to the prior year.
Gross profit margin for FY 2017 increased to 70.9% of revenue
compared to 70.8% of revenue for fiscal 2016. Gross margin for 2017 increased due to an increase in sales mix of Toric ICLs, improved
country mix, and lower unit costs largely offset by the increased mix of lower margin injector sales and lower ICL and IOL average
Operating expenses for FY 2017 were $67.9 million compared
to prior year of $71.0 million. The decrease in operating expense is due to the non-cash charges related to the immediate
vesting of all unvested equity awards as a result of the triggering of the "Change of Control" provisions of the Company's
equity incentive plan in 2016 which was not repeated in 2017 and decreased quality remediation consulting, partially offset by
increased headcount and overall compensation and increased commercial operations expense in China.
Net loss for full year 2017 was $2.1 million or approximately
$0.05 per share compared with a net loss of $12.1 million or $0.30 per share for the prior year. Adjusted Net Income for full year
2017 was $0.4 million or $0.01 per share, compared with an Adjusted Net Loss of $1.6 million or $0.04 per share for FY 2016. 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 December 29, 2017
totaled $18.6 million, compared to $14.1 million at the end of the fourth quarter of 2016. Continued focus on optimizing
the Company's cash position through revenue growth, expense mitigation, and working capital management enabled the Company to effectively
increase its cash balances.
The Company will host a conference call and webcast on Wednesday,
February 28, 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 6684729), 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 6684729) 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)" 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. Management believes
that "Adjusted Net Income (Loss)" and "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 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 750,000 Visian ICLs have been implanted to date. To learn more about the ICL go to: www.discovericl.com.
STAAR has approximately 350 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,