
Macro Headwinds to Elective Procedures and Declining Profitability Weigh on STAAR in 3Q23
11-2-23 (by: Scott Gleason) STAAR Surgical Company has released its financial results for the third quarter ending September 29, 2023 with reported net sales of $80.3 million, marking a 6% year-over-year increase. The company saw implantable collagen lenses (ICL) units increase by 14% compared to the prior year. The results were in line with consensus forecasts. Management cited macroeconomic weakness as it lowered its outlook for the year, as well as the impact of sales to the Mideast ($2M in quarterly sales) due to the war in Israel. The company noted that the U.S. Refractive Surgery Counsel reported ICL procedures declined 15% in the quarter in the U.S. The company saw 6% U.S. growth in the quarter. Management also highlighted the recent FDA approval of its ACCUJECT single use injector for its EVO family of lenses which were approved by the FDA in 2022. The company noted that it did initiate a voluntary recall beginning on October 25 of approximately 300 EVO and EVO+ lenses distributed in the US due to measurement deficiencies. However, management noted they had identified and fixed the problem and did not expect any material operational costs related to this matter.
The company stated on its call that it is close to the divestiture of its lower margin, non-core cataract intraocular lens business.
Selling and marketing expenses increased in the quarter, with the higher cost attributed to increased advertising, promotional expenses, and compensation expenses, partially offset by reduced trade show expenses. STAAR Surgical reported net income of $4.8 million or $0.10 per diluted share, in contrast to a net income of $10.3 million or $0.21 per diluted share in the previous year’s third quarter. Street forecasts were looking for $0.18 per share.
The company stated that it expects expect fiscal 2023 ICL sales to be at the low end of our previously provided range of $320 million to $325 million.” The company stated that over the next three years, STAAR Surgical plans to focus on achieving a 15% to 20% compound annual growth rate in sales, addressing the global myopia epidemic, expanding its market share, and increasing the overall market for refractive procedures. Management noted on the call that this is based on sales in out years being higher than in the near term. Management has also guided to 2026 operating margins in the 12-16% range.
Tom Frinzi, President and CEO of STAAR Surgical stated, “Our global ICL sales growth of 13% in the third quarter significantly outperformed industry procedure growth, which was negative in many markets around the world with the exception of China. Further, we are mindful of the potential impact the uncertain economic environment globally and world events may have on our surgeon customers and patients.”