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.

Fourth Quarter 2021 Overview

Net Sales of $59.0 Million Up 28% from the Prior Year Quarter
ICL Sales of $53.0 Million Up 33% from the Prior Year Quarter
ICL Units Up 36% from the Prior Year Quarter
Gross Margin at 76.3% vs. 74.6% in the Prior Year Quarter
Net Income of $0.10 per Share vs. Prior Year Quarter Net Income of $0.07 per Share
Cash and Cash Equivalents Ended the Quarter at $199.7 Million

Full Year 2021 Overview

Record Net Sales of $230.5 Million Up 41% from Prior Year
ICL Sales Up 51% and Units Up 48% from the Prior Year
Gross Margin at 77.5% of Sales from 72.4% of Sales in the Prior Year
Full Year Net Income of $0.50 per Share vs. Prior Year Net Income of $0.12 per Share

"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."

Financial Overview – Q4 2021

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.

Financial Overview – Full Year 2021

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.

Conference Call

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.

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 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.

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

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 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.

Consolidated Balance Sheets
(in 000's)
Unaudited
	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


Consolidated Statements of Income
(In 000's except for per share data)
Unaudited

	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


Consolidated Statements of Cash Flows
(in 000's)
Unaudited
		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


Reconciliation of Non-GAAP Financial Measure
Adjusted Net Income and Net Income Per Share
(in 000's)
Unaudited
	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

STAAR Surgical Company
Reconciliation of Non-GAAP Financial Measure
Constant Currency Sales
(in 000's)
Unaudited

	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	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220223006083/en/

STAAR Surgical Reports Fourth Quarter and Full Year 2021 Results