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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  September 30, 2022

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 0-11634

 

STAAR SURGICAL COMPANY

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

95-3797439

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

25651 Atlantic Ocean Drive
Lake Forest, California

 

92630

(Address of Principal Executive Offices)

(Zip Code)

 

(626303-7902

(Registrant’s Telephone Number, Including Area Code)

 

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No 

The registrant has 48,206,299 shares of common stock, par value $0.01 per share, issued and outstanding as of October 28, 2022.

 


 

STAAR SURGICAL COMPANY

 

INDEX

 

 

 

 

PAGE

NUMBER

 

 

 

 

PART I – FINANCIAL INFORMATION

 

1

 

 

 

 

ITEM 1

FINANCIAL STATEMENTS

 

1

 

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

18

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

24

 

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

 

24

 

 

 

 

PART II – OTHER INFORMATION

 

24

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

 

24

 

 

 

 

ITEM 1A.

RISK FACTORS

 

25

 

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

25

 

 

 

 

ITEM 5.

OTHER INFORMATION

 

25

 

 

 

 

ITEM 6.

EXHIBITS

 

25

 

 

 


 

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)

 

 

 

September 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

129,242

 

 

$

199,706

 

Investments available for sale

 

 

82,091

 

 

 

 

Accounts receivable trade, net of allowance for credit losses of

   $103 and $43, respectively

 

 

55,429

 

 

 

43,531

 

Inventories, net

 

 

19,930

 

 

 

17,274

 

Prepayments, deposits and other current assets

 

 

10,218

 

 

 

10,900

 

Total current assets

 

 

296,910

 

 

 

271,411

 

Investments available for sale

 

 

13,360

 

 

 

 

Property, plant and equipment, net

 

 

48,048

 

 

 

35,912

 

Finance lease right-of-use assets, net

 

 

380

 

 

 

506

 

Operating lease right-of-use assets, net

 

 

29,503

 

 

 

31,310

 

Intangible assets, net

 

 

171

 

 

 

218

 

Goodwill

 

 

1,786

 

 

 

1,786

 

Deferred income taxes

 

 

3,710

 

 

 

3,813

 

Other assets

 

 

808

 

 

 

822

 

Total assets

 

$

394,676

 

 

$

345,778

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,567

 

 

$

8,699

 

Obligations under finance leases

 

 

167

 

 

 

127

 

Obligations under operating leases

 

 

3,474

 

 

 

3,283

 

Allowance for sales returns

 

 

5,040

 

 

 

4,816

 

Other current liabilities

 

 

29,072

 

 

 

31,877

 

Total current liabilities

 

 

45,320

 

 

 

48,802

 

Obligations under finance leases

 

 

252

 

 

 

382

 

Obligations under operating leases

 

 

26,032

 

 

 

28,269

 

Deferred income taxes

 

 

1,554

 

 

 

811

 

Asset retirement obligations

 

 

158

 

 

 

198

 

Pension liability

 

 

1,228

 

 

 

8,758

 

Total liabilities

 

 

74,544

 

 

 

87,220

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; 60,000 shares authorized: 48,202 and

   47,716 shares issued and outstanding at September 30, 2022 and

   December 31, 2021, respectively

 

 

482

 

 

 

477

 

Additional paid-in capital

 

 

398,448

 

 

 

373,519

 

Accumulated other comprehensive loss

 

 

(310

)

 

 

(4,048

)

Accumulated deficit

 

 

(78,488

)

 

 

(111,390

)

Total stockholders’ equity

 

 

320,132

 

 

 

258,558

 

Total liabilities and stockholders’ equity

 

$

394,676

 

 

$

345,778

 

 

See accompanying notes to the condensed consolidated financial statements.

 

1


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2022

 

 

October 1, 2021

 

 

September 30, 2022

 

 

October 1, 2021

 

Net sales

 

$

76,046

 

 

$

58,352

 

 

$

220,347

 

 

$

171,471

 

Cost of sales

 

 

15,584

 

 

 

13,051

 

 

 

46,749

 

 

 

37,825

 

Gross profit

 

 

60,462

 

 

 

45,301

 

 

 

173,598

 

 

 

133,646

 

Selling, general and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

14,011

 

 

 

11,018

 

 

 

39,934

 

 

 

32,671

 

Selling and marketing

 

 

23,130

 

 

 

18,175

 

 

 

64,633

 

 

 

50,229

 

Research and development

 

 

9,616

 

 

 

8,271

 

 

 

26,193

 

 

 

24,790

 

Total selling, general and administrative expenses

 

 

46,757

 

 

 

37,464

 

 

 

130,760

 

 

 

107,690

 

Operating income

 

 

13,705

 

 

 

7,837

 

 

 

42,838

 

 

 

25,956

 

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

897

 

 

 

(23

)

 

 

934

 

 

 

(35

)

Loss on foreign currency transactions

 

 

(2,129

)

 

 

(610

)

 

 

(4,904

)

 

 

(2,040

)

Royalty income

 

 

77

 

 

 

185

 

 

 

527

 

 

 

496

 

Other income (expense), net

 

 

27

 

 

 

(13

)

 

 

178

 

 

 

(47

)

Total other expense, net

 

 

(1,128

)

 

 

(461

)

 

 

(3,265

)

 

 

(1,626

)

Income before income taxes

 

 

12,577

 

 

 

7,376

 

 

 

39,573

 

 

 

24,330

 

Provision for income taxes

 

 

2,315

 

 

 

1,356

 

 

 

6,671

 

 

 

4,751

 

Net income

 

$

10,262

 

 

$

6,020

 

 

$

32,902

 

 

$

19,579

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

 

$

0.13

 

 

$

0.69

 

 

$

0.42

 

Diluted

 

$

0.21

 

 

$

0.12

 

 

$

0.67

 

 

$

0.40

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

48,102

 

 

 

47,483

 

 

 

47,915

 

 

 

47,064

 

Diluted

 

 

49,549

 

 

 

49,592

 

 

 

49,371

 

 

 

49,448

 

 

See accompanying notes to the condensed consolidated financial statements.

2


STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2022

 

 

October 1, 2021

 

 

September 30, 2022

 

 

October 1, 2021

 

Net income

 

$

10,262

 

 

$

6,020

 

 

$

32,902

 

 

$

19,579

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in plan assets

 

 

465

 

 

 

90

 

 

 

7,126

 

 

 

2,717

 

Reclassification into other income (expense), net

 

 

54

 

 

 

121

 

 

 

139

 

 

 

361

 

Investments available for sale unrealized loss

 

 

(432

)

 

 

 

 

 

(432

)

 

 

 

Foreign currency translation gain (loss)

 

 

(958

)

 

 

29

 

 

 

(3,474

)

 

 

(1,198

)

Tax effect

 

 

312

 

 

 

(32

)

 

 

379

 

 

 

37

 

Other comprehensive income (loss), net of tax

 

 

(559

)

 

 

208

 

 

 

3,738

 

 

 

1,917

 

Comprehensive income

 

$

9,703

 

 

$

6,228

 

 

$

36,640

 

 

$

21,496

 

 

See accompanying notes to the condensed consolidated financial statements.

 

3


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

Common

Stock Shares

 

 

Common

Stock Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Compre-

hensive

Income

(Loss)

 

 

Accumulated

Deficit

 

 

Total

 

Balance, at July 1, 2022

 

 

48,024

 

 

$

480

 

 

$

387,328

 

 

$

249

 

 

$

(88,750

)

 

$

299,307

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,262

 

 

 

10,262

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(559

)

 

 

 

 

 

(559

)

Common stock issued upon exercise of options

 

 

166

 

 

 

2

 

 

 

5,032

 

 

 

 

 

 

 

 

 

5,034

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,088

 

 

 

 

 

 

 

 

 

6,088

 

Vested restricted and performance stock

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at September 30, 2022

 

 

48,202

 

 

$

482

 

 

$

398,448

 

 

$

(310

)

 

$

(78,488

)

 

$

320,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at July 2, 2021

 

 

47,391

 

 

$

474

 

 

$

360,316

 

 

$

(3,836

)

 

$

(122,332

)

 

$

234,622

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,020

 

 

 

6,020

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

208

 

 

 

 

 

 

208

 

Common stock issued upon exercise of options

 

 

183

 

 

 

2

 

 

 

4,210

 

 

 

 

 

 

 

 

 

4,212

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,046

 

 

 

 

 

 

 

 

 

4,046

 

Vested restricted and performance stock

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at October 1, 2021

 

 

47,599

 

 

$

476

 

 

$

368,572

 

 

$

(3,628

)

 

$

(116,312

)

 

$

249,108

 

 

See accompanying notes to the condensed consolidated financial statements.

4


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

Common

Stock Shares

 

 

Common

Stock Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Compre-

hensive

Income

(Loss)

 

 

Accumulated

Deficit

 

 

Total

 

Balance, at December 31, 2021

 

 

47,716

 

 

$

477

 

 

$

373,519

 

 

$

(4,048

)

 

$

(111,390

)

 

$

258,558

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,902

 

 

 

32,902

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

3,738

 

 

 

 

 

 

3,738

 

Common stock issued upon exercise of options

 

 

417

 

 

 

4

 

 

 

8,175

 

 

 

 

 

 

 

 

 

8,179

 

Stock-based compensation

 

 

 

 

 

 

 

 

16,754

 

 

 

 

 

 

 

 

 

16,754

 

Unvested restricted stock

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested restricted and performance stock

 

 

62

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Balance, at September 30, 2022

 

 

48,202

 

 

$

482

 

 

$

398,448

 

 

$

(310

)

 

$

(78,488

)

 

$

320,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at January 1, 2021

 

 

46,448

 

 

$

464

 

 

$

338,194

 

 

$

(5,545

)

 

$

(135,891

)

 

$

197,222

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,579

 

 

 

19,579

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,917

 

 

 

 

 

 

1,917

 

Common stock issued upon exercise of options

 

 

1,089

 

 

 

11

 

 

 

18,311

 

 

 

 

 

 

 

 

 

18,322

 

Stock-based compensation

 

 

 

 

 

 

 

 

12,067

 

 

 

 

 

 

 

 

 

12,067

 

Unvested restricted stock

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested restricted and performance stock

 

 

59

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Balance, at October 1, 2021

 

 

47,599

 

 

$

476

 

 

$

368,572

 

 

$

(3,628

)

 

$

(116,312

)

 

$

249,108

 

 

See accompanying notes to the condensed consolidated financial statements.

 

5


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30, 2022

 

 

October 1, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

32,902

 

 

$

19,579

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation of property, plant, and equipment

 

 

3,101

 

 

 

2,671

 

Amortization of intangibles

 

 

22

 

 

 

26

 

Accretion/Amortization of investments available for sale

 

 

(307

)

 

 

 

Deferred income taxes

 

 

23

 

 

 

845

 

Change in net pension liability

 

 

40