STAAR Surgical Company (STAA) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed strong financial performance and optimistic product development, especially with EVO+. However, management's reluctance to provide guidance, coupled with macroeconomic uncertainties and potential margin pressures, tempers enthusiasm. The Q&A highlighted analysts' concerns about revenue targets and competitive pressures, but management remained optimistic about market stability and growth, particularly in China. The market cap suggests moderate volatility, but without clear guidance or strong catalysts, the stock is likely to remain stable, resulting in a neutral sentiment rating.
Key Financial Performance
Net Sales $93.5 million, increasing 119.6% year-over-year, driven by strong China sales and double-digit growth in the Americas.
China Net Sales $47.4 million in the first quarter, driven by the commercial launch of EVO+ and continued demand for EVO. Distributor inventory remained comparable to year-end 2025 levels and within targeted range.
Adjusted EBITDA $24.4 million compared to an adjusted EBITDA loss of $26.3 million in the prior year quarter, reflecting higher net sales, improved gross profit, and cost actions implemented since 2025.
Gross Profit Margin 73.6% of total net sales compared to 65.8% in the prior year quarter. Improvement driven by elimination of period costs related to manufacturing ramp-up in Switzerland, reduction in advanced manufacturing expenses, lower inventory provisions, and decreased freight and other costs.
Operating Expenses $60.9 million compared to $85.4 million in the prior year quarter. Excluding restructuring and merger-related costs, operating expenses were $51.5 million compared to $62.7 million in the prior year quarter, a decrease of 18% year-over-year due to cost reduction efforts initiated in 2025 and spending discipline.
Operating Income $8 million compared to a loss of $57.4 million in the prior year quarter, driven by higher gross profit and lower operating expenses.
Net Income $5.2 million or $0.10 per diluted share compared to a net loss of $54.2 million or $1.10 per diluted share in the prior year quarter. Improvement due to higher gross profit and lower operating expenses.
Cash, Cash Equivalents, and Investments $163.9 million with no outstanding debt. Sequential cash decline due to seasonal bonuses, global sales meetings, severance, and costs associated with the cooperation agreement with Broadwood Partners.
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Operating Highlights
EVO+ ICL Launch: Successfully launched EVO+ ICL in China with strong early demand and surgeon adoption.
FDA Approval: Received FDA approval to expand EVO ICL indication to patients aged 45 to 60, increasing the addressable market.
China Market: Achieved $47.4 million in net sales, driven by EVO+ launch and normalized inventory levels. Continued share gains in premium lens-based refractive surgery.
U.S. Market: Exceeded $6 million in sales, with increased surgeon adoption and improved marketing strategy. The market remains underpenetrated.
Global Markets: Experienced geopolitical and trade-related disruptions in the Middle East and India, with limited impact on net sales. Continued focus on long-term opportunities in India despite macro volatility.
Swiss Manufacturing Facility: Scaled operations to supply 100% of EVO and EVO+ lenses to China without import tariffs.
Oracle ERP System: Progressed in the rollout with limited disruption, expected to improve visibility, coordination, and scalability.
Cost Reduction: Achieved an 18% year-over-year decrease in operating expenses, reflecting disciplined spending and cost reduction efforts initiated in 2025.
Shift to Lens-Based Refractive Surgery: Reinforced belief in lens-based refractive surgery as the future, with growing global adoption and increasing myopia prevalence.
Capital Allocation: Prioritized markets and programs with strong potential while maintaining spending discipline to support operating leverage.
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Risk or Challenges
Geopolitical and trade-related disruptions: Several markets, particularly in parts of the Middle East, experienced geopolitical and trade-related disruptions, impacting net sales by less than $2 million. These disruptions pose risks to market stability and revenue generation.
Macroeconomic uncertainty: Broader macroeconomic uncertainty in Europe and parts of Asia, as well as price sensitivity in markets like India, require a measured approach and could impact growth opportunities.
Supply chain and manufacturing risks: The company is scaling its Nidau, Switzerland manufacturing facility to supply lenses to China without import tariffs. Any delays or issues in scaling this facility could disrupt supply and impact profitability.
ERP system rollout risks: The ongoing rollout of the Oracle ERP system, while showing limited disruption so far, carries potential risks of business disruption if not executed smoothly.
Market-specific challenges in the U.S.: Despite growth, the U.S. market remains underpenetrated and faces sluggishness in laser vision correction procedures, which could limit the pace of adoption for STAAR's products.
Economic and market volatility in China: While the refractive market in China has stabilized, the macro environment remains mixed, and any adverse changes could impact demand for STAAR's products.
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Guidance & Outlook
Revenue Growth: The company expects to sustain momentum in revenue growth throughout the year, driven by strong performance in China, the U.S., and other key markets. The U.S. market is seen as a long-term growth opportunity, with FDA approval expanding the EVO ICL indication to patients aged 45 to 60, increasing the addressable market.
Profitability: The company anticipates continued improvement in profitability, supported by disciplined spending, cost reduction efforts initiated in 2025, and operating leverage as sales grow.
China Market: STAAR plans to focus on disciplined execution in China, leveraging strong early demand for EVO+ ICLs and normalized inventory levels. The Swiss manufacturing facility is expected to supply 100% of EVO and EVO+ lenses shipped to China in 2026, avoiding import tariffs.
U.S. Market: The U.S. market is underpenetrated and viewed as a significant long-term growth opportunity. The company expects increased surgeon adoption and improved commercial execution to drive growth.
Global Market Trends: The global shift toward lens-based refractive surgery is expected to remain a meaningful long-term growth driver. STAAR is prioritizing markets and commercial programs with the strongest potential while monitoring macroeconomic and geopolitical factors.
Innovation and Product Development: The company is advancing its innovation strategy, including the rollout of EVO+ ICL in China and the development of next-generation products. Strong surgeon adoption and clinical differentiation are expected to drive higher output from the Swiss manufacturing site.
Operational Improvements: STAAR is progressing with the rollout of its Oracle ERP system, which is expected to enhance visibility, coordination, and scalability over time. The company is also focused on maintaining spending discipline and improving its cost structure.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Are you comfortable with the consensus figure of $311 million to $312 million for Q2 revenue, and what is your confidence in the Q2 high season in China?
A:Management did not comment directly on the $311 million to $312 million figure. They expressed optimism about the Q2 high season but noted uncertainty due to macroeconomic and geopolitical factors, including wars and currency challenges. They highlighted that the refractive market in China seems more stable, but they are not ready to make definitive predictions.
Q:What are you seeing in China from a competitive standpoint with iBright, and what are your expectations for its impact?
A:Management acknowledged iBright as a competitor but stated it has been a nonissue so far. They noted that iBright lacks a toric lens and that surgeons are taking a measured approach to its adoption. They view competition as validation of the lens-based refractive surgery market.
Q:Can we use Q1 as a clean base for modeling the rest of the year, and is there anything that would prevent typical seasonality in Q2?
A:Management stated that Q1 was a clean quarter and that historical seasonality trends suggest June and July are typically higher months. However, they cautioned that it is hard to predict if this will hold true this year due to uncertainties. They also noted that Q1 strength was real and that they are optimistic about Q2.
Q:Did the Q1 China revenue include post-deal makeup orders for the Q4 shortfall, and what is the clean Q1 China run rate?
A:Management stated that Q1 China revenue was driven by end market demand and that inventory levels with distributors were at or below the levels at the start of the year. They emphasized that sales to the market approximated sales in the market, indicating stable inventory levels.
Q:What percentage of Q1 China revenue did EVO+ represent, and what is the volume price mix benefit from EVO+?
A:Management did not share specific numbers but noted that early EVO+ demand exceeded expectations. They highlighted that EVO+ has been well-received by customers and that the market has accepted its premium pricing. They expect to fully supply the market with EVO+ and EVO by the end of Q2.
Q:What is the current role of Aier Eye Care Group in China, and what is the visibility into their procedure backlog?
A:Management stated that Aier remains a very large and important customer in China. They have a strong relationship with Aier, which continues to adopt EVO and EVO+ products. However, they did not provide specific details on Aier's procedure backlog.
Q:What is the right amount of inventory for distributors in China, and are they at appropriate levels?
A:Management stated that distributors are contractually required to hold six months of inventory, and current levels are at or below this threshold. They emphasized that end market demand is the primary driver of inventory levels and that they closely monitor these dynamics.
Q:What are the expectations for growth in the business ex-China in 2026, and can you quantify the contribution from the expanded age range indication for EVO in the U.S.?
A:Management expressed optimism about long-term growth opportunities ex-China, citing strong growth in markets like Japan and the U.S. They did not quantify the contribution from the expanded age range indication but noted it opens up a universe of 8 million more potential patients.
Q:What is the quarterly cadence for spending in the model, and how do you expect gross margin to trend this year?
A:Management expects spending to be fairly linear, with bumps during trade show quarters (Q2 and Q3). They target a gross margin of 75% but anticipate falling short this year due to higher inventory costs and provisions. They expect improved unit costs in the second half of the year and tailwinds on gross margin in 2027.
Q:What is the global growth rate of the refractive market, and how does the company compare?
A:Management stated that global refractive market data is inconsistent but noted that laser vision correction is flat to declining, while ICLs are growing. They highlighted strong growth in their business compared to the broader market, particularly in the U.S. and China.
Q:Review of Unclear Management Responses
A:Management avoided giving direct answers to several questions, including their comfort with the $311 million to $312 million consensus figure, specific EVO+ revenue contributions, and detailed growth expectations ex-China. They also refrained from providing guidance, citing uncertainties and a desire for more stability before making predictions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CEO President
China sale
Co CEO
EVO ICL
Foust Interim
ICLs
Interim Co
advancement
approach
cash
cost reduction
demand EVO
disclosure
disruption
environment
inventory
lens
level
leverage
manufacturing
market term
merger
milestone
momentum
profitability result
reduction effort
sale benefit
sale improvement
spending discipline
surgeon adoption
term opportunity
STAA Transcript
STAAR Surgical Company (STAA) Q1 2026 Earnings Call Transcript
Unknown5-14
The earnings call revealed strong financial performance and optimistic product development, especially with EVO+. However, management's reluctance to provide guidance, coupled with macroeconomic uncertainties and potential margin pressures, tempers enthusiasm. The Q&A highlighted analysts' concerns about revenue targets and competitive pressures, but management remained optimistic about market stability and growth, particularly in China. The market cap suggests moderate volatility, but without clear guidance or strong catalysts, the stock is likely to remain stable, resulting in a neutral sentiment rating.
STAAR Surgical Company (STAA) Q4 2025 Earnings Call Transcript
Unknown3-4
The earnings report presents mixed signals: a 12% revenue increase and a 7% net income rise are positive, but the 1.5% decline in gross margin and lack of strategic or shareholder return updates are concerning. With a market cap of $2.3 billion, the stock is likely to have a muted reaction, placing it in the neutral range (-2% to 2%).
STAAR Surgical Company (STAA) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings report shows significant declines in net sales and gross margin, especially in China, and an EBITDA loss. The Q&A reveals management's unclear responses regarding competition impact and withdrawn guidance, causing analyst concern. Despite some positive developments in ICL sales and market strategy, the lack of a share repurchase program and restructuring charges further weigh negatively. Given the market cap, the negative aspects are likely to outweigh the positives, leading to a negative stock price reaction.
Earnings call transcript: STAAR Surgical misses Q1 2025 EPS forecast, stock dips
Unknown5-7
The earnings call revealed significant challenges: a massive decline in sales, especially in China, and a drop in gross margin. Despite some optimism about future demand and cost optimization, the withdrawal of guidance due to economic uncertainty and competitive pressures add to investor concerns. The lack of a shareholder return plan and refusal to provide clear guidance further dampen sentiment. Given the small market cap, these factors are likely to result in a negative stock price movement over the next two weeks.
STAA Report
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