staa-ex991

LAKE FOREST, CA, February 23, 2022 --- 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 December 31, 2021.

“Our fiscal 2021 results reflect record levels of sales, profit and growth achievement for STAAR, driven by continued accelerating demand for our implantable Collamer® lenses,” said Caren Mason, President and CEO of STAAR Surgical. “For the full year, fiscal 2021, total company Net sales growth, up 41% year over year, accelerated from fiscal 2020 and the pre-pandemic level of 2019 driven by global ICL unit growth up 48%, which was almost three times the growth of global refractive industry procedures.1 During the fourth quarter, sales in Europe and our U.S. manufacturing operations were impacted by Covid-related staffing and throughput challenges which are now lessening. Global demand for our ICL continues unabated through the first seven weeks of the first quarter of 2022, including record orders from surgeons in China. In the U.S., our submission of clinical data for STAAR’s EVO family of myopia lenses remains under customary interactive FDA review. For fiscal 2022, we plan to invest more heavily in consumer awareness building programs designed to drive growth. The STAAR team will also continue to engage the ophthalmic community through clinical validation, education and strategic cooperation. We reaffirm our previously provided outlook for Net sales of approximately $295 million for fiscal 2022, subject to no unforeseen incremental impact from Covid on our business, which would represent 28% growth year over year and another record year of commercial and financial progress for STAAR.”

¹Market Scope Refractive Surgery Report, January 2022. Industry refractive procedures up 17%.

Net sales were $59.0 million for the fourth quarter of 2021, up 28% compared to $46.0 million reported in the prior year quarter. The sales increase was driven by ICL sales and unit growth of 33% and 36%, respectively, as compared to the prior year period. Other Product Sales decreased 3% compared to the prior year quarter. ICL sales was 90% of total Net sales for the fourth quarter of 2021.

Gross profit margin for the fourth quarter of 2021 was 76.3% compared to the prior year period of 74.6%. Factors impacting gross margin in the fourth quarter of 2021, as compared to the prior year period, include a higher mix of ICL sales and geographic sales mix, partially offset by an increase in expenses related to manufacturing projects.

Operating expenses for the fourth quarter of 2021 were $37.6 million compared to the prior year quarter of $30.2 million. General and administrative expenses were $11.5 million compared to the prior year quarter of $9.5 million. The increase in general and administrative expenses was due to increased compensation-related expenses, facilities costs and outside services. Selling and marketing expenses were $17.1 million compared to the prior year quarter of $11.8 million. The increase in selling and marketing expenses is due to increased advertising and promotional expenses, compensation-related expenses and trade show and meeting expenses. Research and development expenses were $9.1 million compared to the prior year quarter of $9.0 million as lower U.S. EVO clinical trial expenses offset the increase in compensation-related expenses related to additional hires.

Net income for the fourth quarter of 2021 was $4.9 million or $0.10 per diluted share compared with net income of $3.3 million or $0.07 per diluted share for the prior year quarter. The year over year increase is attributable to higher gross profit and operating income partially offset by other expense, primarily changes in foreign currency transactions. Adjusted Net Income for the fourth quarter of 2021 was $9.5 million or $0.19 per diluted share compared to $6.8 million or $0.14 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.

Net sales were $230.5 million for full year (“FY”) 2021, up 41% compared to $163.5 million reported in the prior year. The increase in Net sales was driven by ICL sales and unit growth of 51% and 48%, respectively. Other Products Sales decreased 20% compared to the prior year due to lower sales of injectors and injector parts and IOLs. ICL sales were 92% of total Net sales for FY 2021 as compared to 87% for FY 2020.

Gross profit margin for FY 2021 increased to 77.5% of total net sales compared to 72.4% of total net sales for FY 2020. The increase in gross margin for the year is due to a higher mix of ICL sales, geographic sales mix, a decreased mix of injector part sales which carry a lower margin offset by increased period costs associated with the manufacturing expansion projects. FY 2020 gross margin was impacted by a voluntary pause in manufacturing at the Company’s principal manufacturing facility due to the pandemic.

Operating expenses for FY 2021 were $145.3 million compared to prior year of $111.6 million. The 30% increase in operating expense is primarily due to increased compensation-related expenses, marketing, promotion and advertising costs. Increases in meetings and trade show expenses, outside services and facilities costs were partially offset by a decrease in clinical expenses associated with the Company’s EVO clinical trial in the U.S.

Net income for FY 2021 was $24.5 million or approximately $0.50 per diluted share compared with net income of $5.9 million or $0.12 per diluted share for the prior year. The year over year increase in net income is due to higher gross profit and operating income offset partially offset by other expense, primarily changes in foreign currency transactions. Adjusted Net Income for FY 2021 was $42.9 million or $0.87 per diluted share, compared with an

Adjusted Net Income of $16.7 million or $0.35 per diluted share for FY 2020. The reconciliation between GAAP and non-GAAP financial information is provided in the financial tables included with this release.

Cash and cash equivalents at December 31, 2021 totaled $199.7 million, compared to $152.5 million at end of the fourth quarter of 2020. The Company generated $44.0 million in cash from operations for FY 2021.

The Company will host a conference call and webcast today, Wednesday, February 23 at 4:30 p.m. Eastern / 1:30 p.m. Pacific to discuss its financial results and operational progress. To access the conference call (Access Code 142350), please dial 844-200-6205 for domestic participants and 929-526-1599 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 (Replay Code 610748) will be available beginning approximately one hour after the call’s conclusion for seven days. This replay can be accessed by dialing 866-813-9403 for domestic callers and 929-458-6194 for international callers. An archived webcast will also be available at www.staar.com.

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 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.

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.

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 2022 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 December 31, 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.

	December 31, 2021			January 1, 2021
ASSETS	December 31, 2021			January 1, 2021
Current assets:
Cash and cash equivalents	$	199,706		$	152,453
Accounts receivable trade, net		43,531			35,229
Inventories, net		17,274			18,111
Prepayments, deposits, and other current assets		10,900			10,625
Total current assets		271,411			216,418
Property, plant, and equipment, net		35,912			24,030
Finance lease right-of-use assets, net		506			596
Operating lease right-of-use assets, net		31,310			8,764
Intangible assets, net		218			270
Goodwill		1,786			1,786
Deferred income taxes		3,813			4,944
Other assets		822			608
Total assets	$	345,778		$	257,416

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit	$	-		$	1,379
Accounts payable		8,699			7,474
Obligations under finance leases		127			360
Obligations under operating leases		3,283			2,485
Allowance for sales returns		4,816			4,532
Other current liabilities		31,877			25,006
Total current liabilities		48,802			41,236
Obligations under finance leases		382			38
Obligations under operating leases		28,269			6,537
Deferred income taxes		811			222
Asset retirement obligations		198			221
Pension liability		8,758			11,940
Total liabilities		87,220			60,194



Stockholders' equity:
Common stock		477			464
Additional paid-in capital		373,519			338,194
Accumulated other comprehensive loss		(4,048	)		(5,545	)
Accumulated deficit		(111,390	)		(135,891	)
Total stockholders' equity		258,558			197,222
Total liabilities and stockholders' equity	$	345,778		$	257,416

	Three Months Ended																	Twelve Months Ended
	% of			December 31, 2021			% of			January 1, 2021		Fav (Unfav)						% of			December 31, 2021			% of			January 1, 2021			Fav (Unfav)
	Sales			December 31, 2021			Sales			January 1, 2021		Amount			%			Sales			December 31, 2021			Sales			January 1, 2021			Amount			%
Net sales		100.0	%	$	59,001			100.0	%	$	45,998	$	13,003			28.3	%		100.0	%	$	230,472			100.0	%	$	163,460		$	67,012			41.0	%

Cost of sales		23.7	%		14,010			25.4	%		11,697		(2,313	)		-19.8	%		22.5	%		51,835			27.6	%		45,098			(6,737	)		-14.9	%

Gross profit		76.3	%		44,991			74.6	%		34,301		10,690			31.2	%		77.5	%		178,637			72.4	%		118,362			60,275			50.9	%

Selling, general and administrative expenses:
General and administrative		19.5	%		11,471			20.7	%		9,505		(1,966	)		-20.7	%		19.1	%		44,142			20.7	%		33,911			(10,231	)		-30.2	%
Selling and marketing		28.9	%		17,065			25.6	%		11,761		(5,304	)		-45.1	%		29.2	%		67,294			28.0	%		45,764			(21,530	)		-47.0	%
Research and development		15.4	%		9,072			19.5	%		8,958		(114	)		-1.3	%		14.7	%		33,862			19.6	%		31,918			(1,944	)		-6.1	%
Total selling, general, and administrative expenses		63.8	%		37,608			65.8	%		30,224		(7,384	)		-24.4	%		63.0	%		145,298			68.3	%		111,593			(33,705	)		-30.2	%

Operating income		12.5	%		7,383			8.8	%		4,077		3,306			81.1	%		14.5	%		33,339			4.1	%		6,769			26,570			392.5	%

Other income (expense):
Interest income (expense), net		0.0	%		(3	)		0.0	%		1		(4	)		-400.0	%		0.0	%		(38	)		0.1	%		238			(276	)		-116.0	%
Gain (loss) on foreign currency transactions		-1.6	%		(924	)		1.0	%		476		(1,400	)		-294.1	%		-1.3	%		(2,964	)		0.5	%		864			(3,828	)		-443.1	%
Royalty income		0.9	%		519			0.5	%		201		318			158.2	%		0.4	%		1,015			0.3	%		440			575			130.7	%
Other income (expense), net		0.0	%		(1	)		0.1	%		39		(40	)		-102.6	%		0.0	%		(48	)		0.0	%		(44	)		(4	)		-9.1	%
Total other income (expense), net		-0.7	%		(409	)		1.6	%		717		(1,126	)		-157.0	%		-0.9	%		(2,035	)		0.9	%		1,498			(3,533	)		-235.8	%

Income before provision for income taxes		11.8	%		6,974			10.4	%		4,794		2,180			45.5	%		13.6	%		31,304			5.0	%		8,267			23,037			278.7	%

Provision for income taxes		3.5	%		2,052			3.2	%		1,467		(585	)		-39.9	%		3.0	%		6,803			1.4	%		2,354			(4,449	)		-189.0	%

Net income		8.3	%	$	4,922			7.2	%	$	3,327	$	1,595			47.9	%		10.6	%	$	24,501			3.6	%	$	5,913		$	18,588			314.4	%


Net income per share - basic				$	0.10					$	0.07										$	0.52					$	0.13
Net income per share - diluted				$	0.10					$	0.07										$	0.50					$	0.12

Weighted average shares outstanding - basic					47,652						46,264											47,210						45,605
Weighted average shares outstanding - diluted					49,478						48,808											49,456						47,953

	Three Months Ended						Twelve Months Ended
	December 31, 2021			January 1, 2021			December 31, 2021			January 1, 2021
	December 31, 2021			January 1, 2021			December 31, 2021			January 1, 2021
Cash flows from operating activities:
Net income	$	4,922		$	3,327		$	24,501		$	5,913
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		937			784			3,608			3,060
Amortization of long-lived intangibles		8			9			34			35
Deferred income taxes		650			366			1,495			(849	)
Change in net pension liability		46			134			137			656
Stock-based compensation expense		3,620			3,181			14,605			12,146
Loss on disposal of property and equipment		-			210			2			213
Provision for sales returns and bad debts		(751	)		20			318			835
Inventory provision		557			511			1,654			1,706
Changes in working capital:
Accounts receivable		(1,796	)		7,001			(8,868	)		(3,974	)
Inventories		(1,235	)		(37	)		66			(1,390	)
Prepayments, deposits and other current assets		(1,999	)		(3,117	)		(711	)		(3,753	)
Accounts payable		148			(542	)		108			(1,199	)
Other current liabilities		3,391			7,703			7,013			7,552
Net cash provided by operating activities		8,498			19,550			43,962			20,951

Cash flows from investing activities:
Acquisition of property and equipment		(4,689	)		(2,145	)		(13,645	)		(8,404	)
Net cash used in investing activities		(4,689	)		(2,145	)		(13,645	)		(8,404	)

Cash flows from financing activities:
Repayment on line of credit		(1,297	)		(4	)		(1,297	)		(515	)
Repayment of finance lease obligations		(34	)		(106	)		(348	)		(561	)
Proceeds from vested restricted stock and exercise of stock options		1,115			6,660			19,438			20,647
Net cash provided by (used in) financing activities		(216	)		6,550			17,793			19,571

Effect of exchange rate changes on cash and cash equivalents		(133	)		160			(857	)		367

Increase in cash and cash equivalents		3,460			24,115			47,253			32,485
Cash and cash equivalents, at beginning of the period		196,246			128,338			152,453			119,968
Cash and cash equivalents, at end of the period	$	199,706		$	152,453		$	199,706		$	152,453

	Three Months Ended					Twelve Months Ended
	December 31, 2021		January 1, 2021			December 31, 2021		January 1, 2021
	December 31, 2021		January 1, 2021			December 31, 2021		January 1, 2021
Net income (as reported)	$	4,922	$	3,327		$	24,501	$	5,913
Less:
Foreign currency impact		924		(476	)		2,964		(864	)
Stock-based compensation expense		3,620		3,181			14,605		12,146
Valuation allowance adjustment		-		720			845		(495	)
Net income (adjusted)	$	9,466	$	6,752		$	42,915	$	16,700

Net income per share, basic (as reported)	$	0.10	$	0.07		$	0.52	$	0.13
Foreign currency impact		0.02		(0.01	)		0.06		(0.02	)
Stock-based compensation expense		0.08		0.07			0.31		0.27
Valuation allowance adjustment		-		0.02			0.02		(0.01	)
Net income per share, basic (adjusted)	$	0.20	$	0.15		$	0.91	$	0.37

Net income per share, diluted (as reported)	$	0.10	$	0.07		$	0.50	$	0.12
Foreign currency impact		0.02		(0.01	)		0.06		(0.02	)
Stock-based compensation expense		0.07		0.07			0.29		0.25
Valuation allowance adjustment		-		0.01			0.02		-
Net income per share, diluted (adjusted)	$	0.19	$	0.14		$	0.87	$	0.35

Weighted average shares outstanding - Basic		47,652		46,264			47,210		45,605
Weighted average shares outstanding - Diluted		49,478		48,808			49,456		47,953

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

	Three Months Ended
	December 31, 2021		Effect of			Constant		January 1, 2021		As Reported						Constant Currency
Sales	December 31, 2021		Currency			Currency		January 1, 2021		$ Change			% Change			$ Change			% Change
ICL	$	53,016	$	846		$	53,862	$	39,846	$	13,170			33.1	%	$	14,016			35.2	%

Cataract IOL		3,195		201			3,396		3,694		(499	)		-13.5	%		(298	)		-8.1	%
Other		2,790		173			2,963		2,458		332			13.5	%		505			20.5	%
Other Products		5,985		374			6,359		6,152		(167	)		-2.7	%		207			3.4	%

Total Sales	$	59,001	$	1,220		$	60,221	$	45,998	$	13,003			28.3	%	$	14,223			30.9	%

	Twelve Months Ended
	December 31, 2021		Effect of			Constant		January 1, 2021		As Reported						Constant Currency
Sales	December 31, 2021		Currency			Currency		January 1, 2021		$ Change			% Change			$ Change			% Change
ICL	$	212,905	$	(759	)	$	212,146	$	141,407	$	71,498			50.6	%	$	70,739			50.0	%

Cataract IOL		12,519		19			12,538		13,574		(1,055	)		-7.8	%		(1,036	)		-7.6	%
Other		5,048		243			5,291		8,479		(3,431	)		-40.5	%		(3,188	)		-37.6	%
Other Products		17,567		262			17,829		22,053		(4,486	)		-20.3	%		(4,224	)		-19.2	%

Total Sales	$	230,472	$	(497	)	$	229,975	$	163,460	$	67,012			41.0	%	$	66,515			40.7	%