STAAR Surgical Reports Fourth Quarter and Full Year 2020 Results

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 fiscal year ended January 1, 2021.

Fourth Quarter 2020 Overview

• Net Sales of $46.0 Million Up 18% from the Prior Year Quarter
• ICL Sales of $39.8 Million Up 20% from the Prior Year Quarter
• ICL Units Up 13% from the Prior Year Quarter
• Gross Margin at 74.6% vs. 74.1% in the Prior Year Quarter
• Net Income of $0.07 per Share vs. Prior Year Quarter Net Income of $0.14 per Share
• Net Income in Prior Year, Fourth Quarter 2019, included a $0.07 per Share tax benefit
• Cash and Cash Equivalents Ended the Quarter at $152.5 Million

Full Year 2020 Overview

• Record Net Sales of $163.5 Million Up 9% from Prior Year
• ICL Sales Up 9% and Units Up 11% from the Prior Year
• Gross Margin at 72.4% of Sales from 74.5% of Sales in the Prior Year
• Full Year Net Income of $0.12 per Share vs. Prior Year Net Income of $0.30 per Share
• Net Income in Prior Year, Full Year 2019, included a $0.07 per Share tax benefit

“Our 2020 performance reflects the continued momentum behind STAAR’s commercial growth and product innovation. Consequently, we achieved strong fourth quarter results and met our original sales targets for the second half of 2020, despite the unprecedented global pandemic. Our momentum has continued into the first weeks of 2021,” said Caren Mason, President and CEO of STAAR Surgical. “For the full year 2020 ICL unit growth was up 11% as compared to a 21% decline in industry-wide refractive procedures.¹ STAAR’s positive growth affirms the increasing adoption for our EVO ICL family of implantable lenses and illustrates that our lenses continue to capture refractive market share. We believe our lenses are likely to grow the overall market demand for refractive procedures. In 2021 we are confident that our strategies will continue to expand the ICL’s position as a transformational pathway to Visual Freedom for patients seeking a life independent of glasses and frequent replacement contact lenses as we support a lens-based future of refractive vision correction.”

Financial Overview – Q4 2020

Net sales were $46.0 million for the fourth quarter of 2020, up 18% compared to $38.9 million reported in the prior year quarter. The sales increase was driven by ICL revenue and unit growth of 20% and 13%, respectively, as compared to the prior year period. Other Product Sales increased 10% compared to the prior year quarter due to increased injector parts sales. ICL revenue was 87% of total Net sales for the fourth quarter of 2020.

Gross profit margin for the fourth quarter of 2020 was 74.6% compared to the prior year period of 74.1%. Factors impacting gross margin in the fourth quarter of 2020, as compared to the prior year period, include geographic sales mix partially offset by inventory reserves taken on certain lower margin IOL products which are being discontinued, and manufacturing projects.

Operating expenses for the fourth quarter were $30.2 million compared to the prior year quarter of $26.5 million. General and administrative expenses were $9.5 million compared to the prior year quarter of $7.9 million. The increase in general and administrative expenses was due to increased salary-related costs, variable compensation, corporate insurance and facilities costs. Selling and marketing expenses were $11.8 million compared to the prior year quarter of $11.2 million. The increase in selling and marketing expenses is due to increased salary-related costs and advertising and promotional expenses, partially offset by decreased travel, sales meetings and trade show expenses. Research and development expenses were $9.0 million compared to the prior year quarter of $7.4 million. The increase in research and development expenses is primarily due to increased clinical expenses associated with our EVO clinical trial in the U.S., and increased salary-related expenses and variable compensation.

Net income for the fourth quarter of 2020 was $3.3 million or $0.07 per diluted share compared with net income of $6.4 million or $0.14 per diluted share for the prior year quarter. The year over year decrease is attributable to higher provision for income taxes as the result of a $0.07 per diluted share tax benefit in 2019. Adjusted Net Income for the fourth quarter of 2020 was $6.8 million or $0.14 per diluted share compared to $5.5 million or $0.12 per diluted 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.

Financial Overview – Full Year 2020

Net sales were $163.5 million for full year (“FY”) 2020, up 9% compared to $150.2 million reported in the prior year. The sales increase was driven by ICL revenue and unit growth of 9% and 11%, respectively. Other Products Sales increased 6% compared to the prior year. ICL revenue was 87% of total net sales for FY 2020.

Gross profit margin for FY 2020 decreased to 72.4% of total net sales compared to 74.5% of total net sales for FY 2019. The decrease in gross margin for the year is due to geographic sales mix, a voluntary pause in manufacturing at the Company’s principal manufacturing facility commencing in March due to the pandemic, and period costs related to manufacturing projects.

Operating expenses for FY 2020 were $111.6 million compared to prior year of $100.1 million. The increase in operating expense is due to increased salary-related costs, variable compensation, corporate insurance and facilities costs, and increased clinical expenses associated with the Company’s EVO clinical trial in the U.S.

Net income for FY 2020 was $5.9 million or approximately $0.12 per share compared with net income of $14