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1. Company Snapshot

1.a. Company Description

STAAR Surgical Company, together with its subsidiaries, designs, develops, manufactures, markets, and sells implantable lenses for the eye, and companion delivery systems to deliver the lenses into the eye.The company provides Visian implantable Collamer lens product family (ICLs) to treat visual disorders, such as myopia, hyperopia, astigmatism, and presbyopia; and Hyperopic ICL, which treats far-sightedness.It also offers preloaded silicone cataract intraocular lenses and injector systems for use in cataract surgery.


In addition, the company sells injector parts, and other related instruments and devices.It markets its products to health care providers, including ophthalmic surgeons, vision and surgical centers, hospitals, government facilities, and distributors, as well as products are primarily used by ophthalmologists.The company sells its products directly through its sales representatives in the United States, Japan, Germany, Spain, Canada, the United Kingdom, and Singapore, as well as through own representatives and independent distributors in China, Korea, India, France, Benelux, Italy, and internationally.


STAAR Surgical Company was incorporated in 1982 and is headquartered in Lake Forest, California.

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1.b. Last Insights on STAA

STAAR Surgical Company's recent performance was driven by its Q2 revenue growth of 9%, exceeding expectations. The company's sale to Alcon for $28 per share has sparked investigations into fairness to shareholders. Despite this, Q2 earnings showed a loss of $0.07 per share, beating estimates. Broadwood Partners, owning 27.5% of STAAR, opposes the sale, citing concerns over fairness. Proxy advisory firms, including ISS and Glass Lewis, have recommended voting against the acquisition.

1.c. Company Highlights

2. STAAR Surgical Posts Mixed Q1 Results Amid China Challenges and Cost Pressures

STAAR Surgical reported a mixed first quarter 2025, with net sales of $42.6 million, down 45% year-over-year, primarily due to minimal sales in China ($389,000 vs. $38.5 million). Excluding China, net sales grew 9%, driven by strength in APAC, Americas, and EMEA. Adjusted EBITDA came in at a loss of $26.4 million, compared to a profit of $5.3 million in Q1 2024, reflecting lower gross margins and higher operating costs. Gross margin declined to 65.8% from 78.9% a year ago, impacted by higher manufacturing costs, period costs, and inventory reserves. The company reported an EPS of -$0.52, slightly better than the consensus estimate of -$0.59. STAAR ended the quarter with $222.8 million in cash and expects temporary cash dips in Q2 and Q3 before improving cash flows in the second half.

Publication Date: May -08

📋 Highlights
  • Total Net Sales Decline:: Q1 2025 net sales of $42.6 million, down from $77.4 million YoY, primarily due to minimal China sales ($389,000 vs. $38.5 million).
  • Adjusted EBITDA Loss:: Q1 2025 adjusted EBITDA loss of $26.4 million, compared to a $5.3 million profit in Q1 2024.
  • Cost Reduction Target:: Aiming for an SG&A run rate of $225 million by year-end 2025 through cost discipline and efficiency initiatives.
  • EVO+ Lens Approval:: Expected approval of EVO+ lens in China later in 2025, anticipated to strengthen market position and drive growth.
  • Global Market Opportunity:: Estimated 5.2 million refractive surgical procedures by 2025, with EVO ICL lenses priced between $400 and $1,200.

Challenges in China and Tariff Mitigation

Despite improved ICL demand in China, reported sales were significantly lower due to distributor inventory consumption. Management highlighted progress in mitigating tariff risks through consignment agreements and forward-deploying inventory to China. The upcoming approval of the EVO+ lens in China, expected later in 2025, is anticipated to strengthen the company’s market position. STAAR is also expanding its Swiss manufacturing capacity, targeting 300,000 lenses annually by 2026, which should help reduce long-term tariff risks.

Cost-Saving Initiatives and Operational Improvements

STAAR is implementing cost reduction initiatives aiming to lower its SG&A run rate to $225 million by year-end. The company is streamlining operations and addressing channel inventory issues while maintaining its focus on growth initiatives in Asia Pacific. Management emphasized the importance of its proprietary Collamer material and the first-mover advantage in the lens-based vision correction market, positioning the company for long-term growth despite near-term challenges.

Valuation and Market Growth Potential

With a P/S ratio of 3.12 and an EV/EBITDA of -107.13, STAAR’s valuation reflects the market’s optimism about its growth prospects despite current profitability challenges. The global refractive surgical market is estimated to reach nearly 5.2 million procedures by 2025, with STAAR well-positioned to capitalize on this growth. The company’s EVO ICL lenses, priced between $400 and $1,200, offer unique advantages such as removability and UV protection, making them a preferred choice for refractive vision correction. While the stock may appear richly valued given the current profitability metrics, the company’s strategic initiatives and strong market position suggest upside potential.

3. NewsRoom

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Healthcare Investor Exits $13 Million Stake STAAR Surgical Stake as Alcon Deal Drama Looms

Dec -03

Source: fool.com

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Broadwood Partners Working to Call Special Meeting of STAAR Surgical Shareholders to Remove Three Directors

Dec -02

Source: businesswire.com

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Atika Capital Management LLC Takes $275,000 Position in STAAR Surgical Company $STAA

Nov -27

Source: defenseworld.net

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STAAR Surgical Company (NASDAQ:STAA) Receives Consensus Rating of “Reduce” from Analysts

Nov -27

Source: defenseworld.net

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Market Today: Stocks Rise on Fed Cut Bets; Alphabet, Apple Hit Records

Nov -25

Source: gurufocus.com

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Broadwood Partners Calls for the Appointment of New Directors at STAAR Surgical to Oversee Go-Shop Process

Nov -10

Source: businesswire.com

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Yunqi Capital Applauds STAAR Surgical's Strong Third Quarter Results and Reiterates That the Proposed Sale to Alcon Should Be Terminated

Nov -06

Source: businesswire.com

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Broadwood Partners Condemns Alcon's Fallacious Attacks on STAAR Surgical and Its Prospects

Nov -04

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.98%)

6. Segments

Implantable Collamer Lenses

Expected Growth: 12.0%

STAAR Surgical's Implantable Collamer Lenses' 12.0% growth driven by increasing demand for refractive surgery, rising prevalence of myopia and presbyopia, expanding adoption in emerging markets, and innovative product enhancements. Additionally, growing awareness of visual freedom and convenience, coupled with a strong distribution network, contribute to the segment's rapid growth.

Other Surgical Products

Expected Growth: 10.0%

STAAR Surgical's 10.0% growth in Other Surgical Products is driven by increasing adoption of minimally invasive surgeries, rising demand for ophthalmic procedures, and expansion into emerging markets. Additionally, the company's strategic partnerships and investments in R&D have enhanced its product portfolio, contributing to the segment's growth.

Cataract Intraocular Lenses

Expected Growth: 11.0%

STAAR Surgical's 11.0% growth in Cataract Intraocular Lenses is driven by increasing demand for premium lenses, expanding adoption in emerging markets, and a growing elderly population. Additionally, advancements in lens technology, such as toric and multifocal lenses, are driving sales. The company's strategic partnerships and expanded distribution channels also contribute to its growth.

7. Detailed Products

Visian Implantable Collamer Lenses (ICLs)

A type of refractive implant designed to correct nearsightedness, farsightedness, and astigmatism.

EVO/EVO+ Visian Implantable Collamer Lenses (ICLs)

Advanced versions of ICLs with improved design and materials for better visual outcomes.

KS-Aquport

A micro-incisional device used in cataract surgery to create a precise and stable incision.

NanoFlex

A range of intraocular lenses (IOLs) designed for cataract surgery and refractive lens exchange.

TORIC IOLs

Intraocular lenses designed to correct astigmatism in cataract surgery.

8. STAAR Surgical Company's Porter Forces

Forces Ranking

Threat Of Substitutes

STAAR Surgical Company's Visian ICL and EVO/EVO+ lenses are unique products with no direct substitutes, but patients may opt for alternative treatments such as LASIK or PRK, which could impact sales.

Bargaining Power Of Customers

STAAR Surgical Company's customers, primarily ophthalmologists and optometrists, have limited bargaining power due to the company's strong brand reputation and limited alternative suppliers.

Bargaining Power Of Suppliers

STAAR Surgical Company's suppliers, primarily manufacturers of raw materials, have limited bargaining power due to the company's large scale of operations and diversified supply chain.

Threat Of New Entrants

The ophthalmic industry has high barriers to entry, including significant R&D investments, regulatory approvals, and established distribution networks, making it difficult for new entrants to compete with STAAR Surgical Company.

Intensity Of Rivalry

The ophthalmic industry is highly competitive, with established players such as Alcon, Johnson & Johnson, and Bausch + Lomb, leading to intense rivalry and competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 8.50%
Debt Cost 3.95%
Equity Weight 91.50%
Equity Cost 7.95%
WACC 7.61%
Leverage 9.28%

11. Quality Control: STAAR Surgical Company passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
AngioDynamics

A-Score: 4.6/10

Value: 7.8

Growth: 2.7

Quality: 4.5

Yield: 0.0

Momentum: 10.0

Volatility: 2.7

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InfuSystem Holdings

A-Score: 4.6/10

Value: 4.6

Growth: 5.7

Quality: 5.7

Yield: 0.0

Momentum: 8.5

Volatility: 3.0

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Atrion

A-Score: 3.5/10

Value: 3.5

Growth: 3.0

Quality: 6.2

Yield: 1.0

Momentum: 5.0

Volatility: 2.0

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NEXGEL

A-Score: 3.3/10

Value: 7.4

Growth: 4.9

Quality: 4.2

Yield: 0.0

Momentum: 1.5

Volatility: 1.7

1-Year Total Return ->

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Stock-Card
STAAR Surgical

A-Score: 3.2/10

Value: 8.0

Growth: 4.1

Quality: 3.8

Yield: 0.0

Momentum: 1.5

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Femasys

A-Score: 2.7/10

Value: 6.0

Growth: 2.8

Quality: 3.1

Yield: 0.0

Momentum: 4.0

Volatility: 0.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

25.38$

Current Price

25.38$

Potential

-0.00%

Expected Cash-Flows