STAAR SURGICAL CO [STAA] Filings

10-Q 1 staa-10q_20220701.htm 10-Q staa-10q_20220701.htm

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: July 1, 2022

☐	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)

(626) 303-7902

(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 48,038,340 shares of common stock, par value $0.01 per share, issued and outstanding as of August 5, 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	16

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21

ITEM 4.	CONTROLS AND PROCEDURES	21

PART II – OTHER INFORMATION		21

ITEM 1.	LEGAL PROCEEDINGS	21

ITEM 1A.	RISK FACTORS	22

ITEM 4.	MINE SAFETY DISCLOSURES	22

ITEM 5.	OTHER INFORMATION	22

ITEM 6.	EXHIBITS	22

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)

	July 1, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	202,490		$	199,706
Accounts receivable trade, net of allowance for credit losses of $55 and $43, respectively		62,811			43,531
Inventories, net		18,089			17,274
Prepayments, deposits and other current assets		13,066			10,900
Total current assets		296,456			271,411
Property, plant and equipment, net		42,813			35,912
Finance lease right-of-use assets, net		420			506
Operating lease right-of-use assets, net		30,363			31,310
Intangible assets, net		184			218
Goodwill		1,786			1,786
Deferred income taxes		3,217			3,813
Other assets		786			822
Total assets	$	376,025		$	345,778
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,716		$	8,699
Obligations under finance leases		166			127
Obligations under operating leases		3,708			3,283
Allowance for sales returns		5,550			4,816
Other current liabilities		24,374			31,877
Total current liabilities		46,514			48,802
Obligations under finance leases		295			382
Obligations under operating leases		26,880			28,269
Deferred income taxes		1,037			811
Asset retirement obligations		169			198
Pension liability		1,823			8,758
Total liabilities		76,718			87,220
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 48,024 and 47,716 shares issued and outstanding at July 1, 2022 and December 31, 2021, respectively		480			477
Additional paid-in capital		387,328			373,519
Accumulated other comprehensive loss		249			(4,048	)
Accumulated deficit		(88,750	)		(111,390	)
Total stockholders’ equity		299,307			258,558
Total liabilities and stockholders’ equity	$	376,025		$	345,778

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	July 1, 2022			July 2, 2021			July 1, 2022			July 2, 2021
Net sales	$	81,101		$	62,367		$	144,301		$	113,119
Cost of sales		17,229			13,164			31,165			24,774
Gross profit		63,872			49,203			113,136			88,345
Selling, general and administrative expenses:
General and administrative		13,983			11,441			25,923			21,653
Selling and marketing		24,233			18,853			41,503			32,054
Research and development		8,636			8,260			16,577			16,519
Total selling, general and administrative expenses		46,852			38,554			84,003			70,226
Operating income		17,020			10,649			29,133			18,119
Other expense, net:
Interest income (expense), net		43			(5	)		37			(12	)
Loss on foreign currency transactions		(1,860	)		(131	)		(2,775	)		(1,430	)
Royalty income		177			151			450			311
Other income (expense), net		89			51			151			(34	)
Total other income (expense), net		(1,551	)		66			(2,137	)		(1,165	)
Income before income taxes		15,469			10,715			26,996			16,954
Provision for income taxes		2,431			2,148			4,356			3,395
Net income	$	13,038		$	8,567		$	22,640		$	13,559
Net income per share:
Basic	$	0.27		$	0.18		$	0.47		$	0.29
Diluted	$	0.26		$	0.17		$	0.46		$	0.27
Weighted average shares outstanding:
Basic		47,889			47,099			47,822			46,858
Diluted		49,223			49,491			49,264			49,373

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	July 1, 2022			July 2, 2021			July 1, 2022			July 2, 2021
Net income	$	13,038		$	8,567		$	22,640		$	13,559
Other comprehensive income:
Defined benefit plans:
Net change in plan assets		2,593			(457	)		6,661			2,627
Reclassification into other income (expense), net		33			120			85			240
Foreign currency translation loss		(1,502	)		(111	)		(2,516	)		(1,227	)
Tax effect		188			69			67			69
Other comprehensive income (loss), net of tax		1,312			(379	)		4,297			1,709
Comprehensive income	$	14,350		$	8,188		$	26,937		$	15,268

See accompanying notes to the condensed consolidated financial statements.

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 April 1, 2022		47,810	$	478	$	378,690	$	(1,063	)	$	(101,788	)	$	276,317
Net income		—		—		—		—			13,038			13,038
Other comprehensive income		—		—		—		1,312			—			1,312
Common stock issued upon exercise of options		202		2		2,232		—			—			2,234
Stock-based compensation		—		—		6,406		—			—			6,406
Unvested restricted stock		7		—		—		—			—			—
Vested restricted and performance stock		5		—		—		—			—			—
Balance, at July 1, 2022		48,024	$	480	$	387,328	$	249		$	(88,750	)	$	299,307

Balance, at April 2, 2021		46,857	$	469	$	348,063	$	(3,457	)	$	(130,899	)	$	214,176
Net income		—		—		—		—			8,567			8,567
Other comprehensive loss		—		—		—		(379	)		—			(379	)
Common stock issued upon exercise of options		530		5		7,871		—			—			7,876
Stock-based compensation		—		—		4,382		—			—			4,382
Unvested restricted stock		3		—		—		—			—			—
Vested restricted stock		1		—		—		—			—			—
Balance, at July 2, 2021		47,391	$	474	$	360,316	$	(3,836	)	$	(122,332	)	$	234,622

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Six 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		—		—		—		—			22,640			22,640
Other comprehensive income		—		—		—		4,297			—			4,297
Common stock issued upon exercise of options		251		3		3,143		—			—			3,146
Stock-based compensation		—		—		10,666		—			—			10,666
Unvested restricted stock		7		—		—		—			—			—
Vested restricted and performance stock		50		—		—		—			—			—
Balance, at July 1, 2022		48,024	$	480	$	387,328	$	249		$	(88,750	)	$	299,307

Balance, at January 1, 2021		46,448	$	464	$	338,194	$	(5,545	)	$	(135,891	)	$	197,222
Net income		—		—		—		—			13,559			13,559
Other comprehensive income		—		—		—		1,709			—			1,709
Common stock issued upon exercise of options		906		9		14,101		—			—			14,110
Stock-based compensation		—		—		8,021		—			—			8,021
Unvested restricted stock		3		—		—		—			—			—
Vested restricted stock		34		1		—		—			—			1
Balance, at July 2, 2021		47,391	$	474	$	360,316	$	(3,836	)	$	(122,332	)	$	234,622

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	July 1, 2022		July 2, 2021
Cash flows from operating activities:
Net income	$	22,640	$	13,559
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant, and equipment		2,024		1,754
Amortization of intangibles		15		17
Deferred income taxes		—		845
Change in net pension liability		52		(27	)
Loss on disposal of property and equipment		—		2
Stock-based compensation expense		9,648		7,322
Provision for sales returns and bad debts		800		932

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10-K	[2015-03-13]
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10-Q	[2014-07-31]
10-Q	[2014-05-13]
10-K	[2014-03-12]
10-Q	[2013-11-01]
10-Q	[2013-08-06]
10-Q	[2013-05-03]
10-K	[2013-03-12]
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