8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 5, 2021

STAAR Surgical Company

(Exact Name of Registrant as Specified in Charter)

Delaware	0-11634	95-3797439
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
25651 Atlantic Ocean Drive Lake Forest, California		92630
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: 626-303-7902

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	STAA	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1 933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On May 5, 2021, STAAR Surgical Company (the “Company”) published a press release reporting its financial results for the quarter ended April 2, 2021, a copy of which is furnished as Exhibit 99.1 to this report and is incorporated herein by this reference.

 This information and the information contained in the press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report, and Exhibit 99.1 are not incorporated by reference into any filings of STAAR made under the Securities Act of 1933, as amended, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing unless specifically stated so therein.

Item 9.01 Financial Statements and Exhibits

Exhibit No.	Description
99.1	Press release of the Company dated May 5, 2021.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

STAAR Surgical Company
May 5, 2021	By:	/s/ Caren Mason
		Caren Mason
		President and Chief Executive Officer

EX-99.1

Exhibit 99.1

STAAR Surgical Reports Record First Quarter 2021 Net Sales of $50.8 Million Up 44% Y/Y

First Quarter ICL Sales Up 58% Y/Y and Units Up 54% Y/Y

Announces Submission of Clinical Trial Data to U.S. FDA for EVO Family of Myopia Lenses

Introduces Net Sales Outlook of Approximately $215 Million to $217 Million for Full Year 2021

LAKE FOREST, CA, May 5, 2021 ---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 first quarter ended April 2, 2021.

First Quarter 2021 Overview

• Record Quarterly Net Sales of $50.8 Million Up 44% from the Prior Year Quarter

• Record Quarterly ICL Sales of $46.5 Million Up 58% from the Prior Year Quarter

• Record Quarterly ICL Units, Up 54% from the Prior Year Quarter

• Gross Margin at 77.1% vs. 70.4% in the Prior Year Quarter

• Net Income of $0.10 per Share vs. Prior Year Quarter Net Loss of Approximately Breakeven

• Cash and Cash Equivalents Ended the Quarter at $162.3 Million Up from $152.5 Million in Q4 2020

“Every major market delivered outstanding performance during the first quarter of 2021 providing a record breaking quarterly achievement of net sales of $50.8 million. First quarter ICL sales of $46.5 Million and unit growth of 54% continued the increasing momentum from second half 2020 results and represents a return to the strong demand for ICL lenses we experienced in January 2020 prior to the pandemic taking hold,” said Caren Mason, President and CEO of STAAR Surgical. “ICL unit growth in the first quarter, year over year, included China up 63%, Japan up 72%, Korea up 29%, Rest of Asia Pacific up 63%, Spain up 42%, Germany up 48%, Distributor Markets in Europe up 54%, and the U.S. up 46%.”

“The record results for the first quarter of 2021 demonstrate that the promise for a lens-based future of refractive vision correction is accelerating, led by STAAR’s EVO Visian family of implantable Collamer lenses. STAAR’s imperatives around surgeon training and partnership, clinical support and extraordinary consumer outreach such as our newest campaign in Japan, continue to be the underpinnings of our excellent results. In China, the largest market for refractive surgery in the world, we now turn our attention to preparing for and delivering excellence during the upcoming busy implant season which typically begins in June. In late April, the FDA received our clinical data for our EVO family of myopia lenses with the goal of bringing EVO to the U.S. market later this year.We also recently launched the third phase of our newest commercial initiative in the U.S., Refractive ReLook, a program focused on driving adoption of lower diopter lenses in the U.S. We have increasing visibility into market dynamics and expect the momentum in our ICL business to continue. Therefore, today, we are introducing a sales outlook for fiscal 2021 full year net sales of approximately $215 million to $217 million which represents an exciting level of growth, exceeding 30% year over year even taking into account the strong performance in the second half of 2020,” concluded Ms. Mason.

Financial Overview – Q1 2021

Net sales were $50.8 million for the first quarter of 2021, up 44% compared to $35.2 million reported in the prior year quarter. The sales increase was driven by ICL net sales and unit growth up 58% and 54%, respectively, as compared to the prior year period. Other Product Sales decreased 27% compared to the prior year quarter due primarily to lower

sales of injector parts related to a third party manufacturer’s product yield issue requiring rework. ICL net sales were92% of total Net sales for the first quarter of 2021.

Gross profit margin for the first quarter of 2021 was 77.1% compared to the prior year period of 70.4%. Factors positively impacting gross margin in the first quarter of 2021, as compared to the prior year period, include geographic sales mix and a decreased mix of injector part sales which carry a lower margin, and for the three months ended April 3, 2020 there were period costs recorded as a result of COVID-19 and the resulting manufacturing pause which began on March 17, 2020.

Operating expenses for the first quarter of 2021 were $31.7 million compared to the prior year quarter of $25.9 million. General and administrative expenses were $10.2 million compared to the prior year quarter of $8.0 million. The increase in general and administrative expenses was due to increased variable compensation, salary-related expenses, facility costs and corporate insurance, partially offset by decreased tax consulting costs. Selling and marketing expenses were $13.2 million compared to the prior year quarter of $11.0 million. The increase in selling and marketing expenses is due to increased salary-related expenses, variable compensation, advertising and promotional activities, slightly offset by travel expenses. Research and development expenses were $8.3 million compared to the prior year quarter of $6.9 million. The increase in research and development expenses is primarily due to increased variable compensation, clinical expenses associated with our EVO clinical trial in the U.S. and salary-related expenses.

Net income for the first quarter of 2021 was $5.0 million or $0.10 per diluted share compared with net loss of ($0.1) million or approximately ($0.00) per diluted share for the prior year quarter. Adjusted Net Income for the first quarter of 2021 was $9.6 million or $0.20 per diluted share compared to $1.9 million or $0.04 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.

Cash and cash equivalents at April 2, 2021 totaled $162.3 million compared to $152.5 million at January 1, 2021. 

Conference Call

The Company will host a conference call and webcast today, Wednesday, May 5 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 4495547), please dial 833-350-1429 for domestic participants and 647-689-6661 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 4495547) will be available beginning approximately one hour after the call’s conclusion for seven days. This replay can be accessed by dialing 800-585-8367 for domestic callers and 416-621-4642 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” excludes the following items that are included in “Net Income” as calculated in accordance with U.S. generally accepted accounting principles (“GAAP”): gain or loss on foreign currency transactions, stock-based compensation expenses, and valuation allowance adjustments.  Management believes that “Adjusted Net Income” is 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 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.  Valuation allowance adjustments can occur from time to time based on forecasted changes in operating results until all net operating loss carryforwards are fully utilized.  In calculating Adjusted Net Income, STAAR excludes these expenses because they are non-cash expenses and because of the

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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.

The Company also uses Constant Currency as a Non-GAAP financial measure to exclude the effects of currency fluctuations on net sales. The Company conducts a significant part of its activities outside the U.S. It receives sales revenue and pays expenses principally in U.S. dollars, Swiss francs, Japanese yen and euros. The exchange rates between dollars and non-U.S. currencies can fluctuate greatly and can have a significant effect on the Company’s results when reported in U.S. dollars. In order to compare the Company's performance from period to period without the effect of currency, the Company will apply the same average exchange rate applicable in the prior period, or the "constant currency" rate to sales or expenses in the current period as well. Because changes in currency are outside of the control of the Company and its managers, management finds this non-GAAP measure useful in determining the long-term progress of its initiatives and determining whether its managers are achieving their performance goals. The Company believes that the non-GAAP constant-currency sales results measures provided in this press release are similarly useful to investors to give insight on long term trends in the Company's performance without the external effect of changes in relative currency values. The table below shows sales results calculated in accordance with GAAP, the effect of currency, and the resulting non-GAAP measure expressed in constant currency.  

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 1,000,000 Visian^® ICLs have been implanted to date and STAAR markets these lenses in over 75 countries. To learn more about the ICL go to: www.discovericl.com.  Headquartered in Lake Forest, CA, the company operates manufacturing and packaging facilities in Aliso Viejo, CA, Monrovia, CA and Nidau, Switzerland. For more information, please visit the Company’s website at www.staar.com.

Safe Harbor

All statements that are not statements of historical fact are forward-looking statements, including statements about any of the following: any financial projections (including sales), plans, strategies, and objectives of management for 2021 or prospects for achieving such plans, expectations for sales, revenue, margin, expenses or earnings, the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to its impact on sales, operations or clinical trials globally), product safety or effectiveness, the status of our pipeline of ICL products with regulators, including our EVO family of lenses in the U.S., and any statements of assumptions underlying any of the foregoing, including those relating to our product pipeline and market expansion activities. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties related to the COVID-19 pandemic and related public health measures, as well as the factors set forth in the Company’s Annual Report on Form 10-K for the year ended January 1, 2021 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; the impact of the COVID-19 pandemic on markets; the discretion of regulatory agencies to approve or reject existing, new or improved products, or to require additional actions before approval, or to take enforcement action; international trade disputes; and the willingness of surgeons and patients to adopt a new or improved product and procedure. The EVO version of our ICL lens is not yet approved for sale in the United States.

CONTACT:Investors & Media

Brian Moore

Vice President, Investor, Media Relations and Corporate Development

(626) 303-7902, Ext. 3023

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bmoore@staar.com

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Consolidated Balance Sheets

(in 000's)

Unaudited

	April 2, 2021			January 1, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	162,344		$	152,453
Accounts receivable trade, net		33,733			35,229
Inventories, net		16,789			18,111
Prepayments, deposits, and other current assets		10,649			10,625
Total current assets		223,515			216,418
Property, plant, and equipment, net		26,314			24,030
Finance lease right-of-use assets, net		80			596
Operating lease right-of-use assets, net		8,666			8,764
Intangible assets, net		249			270
Goodwill		1,786			1,786
Deferred income taxes		4,536			4,944
Other assets		660			608
Total assets	$	265,806		$	257,416
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit	$	1,288		$	1,379
Accounts payable		7,834			7,874
Obligations under finance leases		124			360
Obligations under operating leases		2,373			2,485
Allowance for sales returns		4,595			4,532
Other current liabilities		19,915			24,606
Total current liabilities		36,129			41,236
Obligations under finance leases		28			38
Obligations under operating leases		6,316			6,537
Deferred income taxes		222			222
Asset retirement obligations		206			221
Pension liability		8,729			11,940
Total liabilities		51,630			60,194
Stockholders' equity:
Common stock		469			464
Additional paid-in capital		348,063			338,194
Accumulated other comprehensive loss		(3,457	)		(5,545	)
Accumulated deficit		(130,899	)		(135,891	)
Total stockholders' equity		214,176			197,222
Total liabilities and stockholders' equity	$	265,806		$	257,416

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Consolidated Statements of Operations

(In 000's except for per share data)

Unaudited

	Three Months Ended
	% of			April 2, 2021			% of			April 3, 2020			Fav (Unfav)
	Sales						Sales						Amount			%
Net sales		100.0	%	$	50,752			100.0	%	$	35,187		$	15,565			44.2	%
Cost of sales		22.9	%		11,610			29.6	%		10,427			(1,183	)		-11.3	%
Gross profit		77.1	%		39,142			70.4	%		24,760			14,382			58.1	%
Selling, general and administrative expenses:
General and administrative		20.1	%		10,212			22.6	%		7,969			(2,243	)		-28.1	%
Selling and marketing		26.0	%		13,201			31.4	%		11,028			(2,173	)		-19.7	%
Research and development		16.3	%		8,259			19.6	%		6,898			(1,361	)		-19.7	%
Total selling, general, and administrative expenses		62.4	%		31,672			73.6	%		25,895			(5,777	)		-22.3	%
Operating income (loss)		14.7	%		7,470			-3.2	%		(1,135	)		8,605			758.1	%
Other expense:
Interest income (expense), net		0.0	%		(7	)		0.6	%		216			(223	)		-103.2	%
Loss on foreign currency transactions		-2.5	%		(1,299	)		-1.3	%		(468	)		(831	)		-177.6	%
Royalty income		0.3	%		160			0.2	%		94			66			70.2	%
Other income (expense), net		-0.2	%		(85	)		0.0	%		1			(86	)		-8600.0	%
Total other expense, net		-2.4	%		(1,231	)		-0.5	%		(157	)		(1,074	)		-684.1	%
Income (loss) before provision (benefit) for income taxes		12.3	%		6,239			-3.7	%		(1,292	)		7,531			582.9	%
Provision (benefit) for income taxes		2.5	%		1,247			-3.3	%		(1,158	)		(2,405	)		-207.7	%
Net income (loss)		9.8	%	$	4,992			-0.4	%	$	(134	)	$	5,126			3825.4	%
Net income (loss) per share - basic				$	0.11					$	-
Net income (loss) per share - diluted				$	0.10					$	-
Weighted average shares outstanding - basic					46,617						44,953
Weighted average shares outstanding - diluted					49,213						44,953

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Consolidated Statements of Cash Flows

(in 000's)

Unaudited

		Three Months Ended
		April 2, 2021			April 3, 2020
Cash flows from operating activities:
Net income (loss)		$	4,992		$	(134	)
Adjustments to reconcile net income (loss) to net cash provided by (used in)    operating activities:
	Depreciation of property and equipment		865			766
	Amortization of long-lived intangibles		9			9
	Deferred income taxes		-			(1,369	)
	Change in net pension liability		127			173
	Stock-based compensation expense		3,330			2,921
	Loss on disposal of property and equipment		2			3
	Provision for sales returns and bad debts		103			80
	Inventory provision		384			336
Changes in working capital:
	Accounts receivable		1,138			(3,462	)
	Inventories		984			(491	)
	Prepayments, deposits and other current assets		(143	)		(2,446	)
	Accounts payable		(399	)		907
	Other current liabilities		(4,626	)		(5,464	)
	Net cash provided by (used in) operating activities		6,766			(8,171	)
Cash flows from investing activities:
	Acquisition of property and equipment		(2,159	)		(2,185	)
	Net cash used in investing activities		(2,159	)		(2,185	)
Cash flows from financing activities:
	Repayment on line of credit		-			(505	)
	Repayment of finance lease obligations		(235	)		(236	)
	Proceeds from vested resricted stock and exercise of stock options		6,235			2,005
	Net cash provided by financing activities		6,000			1,264
Effect of exchange rate changes on cash and cash equivalents			(716	)		(25	)
Increase (decrease) in cash and cash equivalents			9,891			(9,117	)
Cash, cash equivalents and restricted cash, at beginning of the period			152,453			119,968
Cash, cash equivalents and restricted cash, at end of the period		$	162,344		$	110,851

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Reconciliation of Non-GAAP Financial Measure

Adjusted Net Income (Loss) and Net Income (Loss) Per Share

(in 000's)

Unaudited

	Three Months Ended
	April 2, 2021		April 3, 2020
Net income (loss) (as reported)	$	4,992	$	(134	)
Less:
Foreign currency impact		1,299		468
Stock-based compensation expense		3,330		2,921
Valuation allowance adjustment		-		(1,369	)
Net income (adjusted)	$	9,621	$	1,886
Net income (loss) per share, basic (as reported)	$	0.11	$	-
Foreign currency impact		0.03		0.01
Stock-based compensation expense		0.07		0.06
Valuation allowance adjustment		-		(0.03	)
Net income per share, basic (adjusted)	$	0.21	$	0.04
Net income (loss) per share, diluted (as reported)	$	0.10	$	-
Foreign currency impact		0.03		0.01
Stock-based compensation expense		0.07		0.06
Valuation allowance adjustment		-		(0.03	)
Net income per share, diluted (adjusted)	$	0.20	$	0.04
Weighted average shares outstanding - Basic		46,617		44,953
Weighted average shares outstanding - Diluted		49,213		47,131

Note:  Net income per share (adjusted), basic and diluted, may not add due to rounding

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STAAR Surgical Company

Reconciliation of Non-GAAP Financial Measure

Constant Currency Sales

(in 000's)

Unaudited

	Three Months Ended
	April 2, 2021		Effect of			Constant		April 3, 2020		As Reported						Constant Currency
Sales			Currency			Currency				$ Change			% Change			$ Change			% Change
ICL	$	46,501	$	(984	)	$	45,517	$	29,340	$	17,161			58.5	%	$	16,177			55.1	%
IOL		3,725		(174	)		3,551		3,994		(269	)		-6.7	%		(443	)		-11.1	%
Other		526		(9	)		517		1,853		(1,327	)		-71.6	%		(1,336	)		-72.1	%
Other Products		4,251		(183	)		4,068		5,847		(1,596	)		-27.3	%		(1,779	)		-30.4	%
Total Sales	$	50,752	$	(1,167	)	$	49,585	$	35,187	$	15,565			44.2	%	$	14,398			40.9	%

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XML

Document And Entity Information	May 05, 2021
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 05, 2021
Entity Registrant Name	STAAR Surgical Co
Entity Central Index Key	0000718937
Entity Emerging Growth Company	false
Entity File Number	0-11634
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	95-3797439
Entity Address, Address Line One	25651 Atlantic Ocean Drive
Entity Address, City or Town	Lake Forest
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92630
City Area Code	626
Local Phone Number	303-7902
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of each class	Common
Trading Symbol(s)	STAA
Name of each exchange on which registered	NASDAQ