STAAR Surgical ICL Sales Up 67%; Company Raises Outlook for 2018
MONROVIA, Calif.--(BUSINESS WIRE)--Aug 1, 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 second quarter ended June 29, 2018.
Second Quarter 2018 OverviewNet Sales of $33.9 Million Up 55% from the Prior Year Quarter ICL Sales Up 67% and Units Up 66% from the Prior Year Quarter Other Sales Up 18% from the Prior Year Quarter Gross Margin at 74.4% of Sales from 70.5% of Sales in the Prior Year Quarter Earnings per Share of $0.04 versus a Loss per Share of ($0.02) in the Prior Year Quarter Non-GAAP Earnings per Share of $0.09 versus a Loss per Share of ($0.01) in the Prior Year Quarter Cash, Cash Equivalents and Restricted Cash of $21.4 Million at Quarter End.
“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.
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.
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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