STAA Staar Surgical

Brian Moore Senior Director, Investor, Media Relations & Corporate Development
Caren Mason President & CEO
Deborah Andrews CFO
Jason Mills Canaccord Genuity
Ryan Zimmerman BTIG
Anthony Petrone Jefferies
Jim Sidoti Sidoti & Company
Andrew Brackmann William Blair
Bruce Jackson Benchmark Company
Call transcript
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Thank you for standing by and welcome to the STAAR Surgical 4Q '19 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to Moore, conference Relations Senior Development. like speaker to and now Brian today, Director, would hand over the your Corporate I Investor, Media you. Thank Please go ahead.

Brian Moore

us everyone. Thank afternoon this X, and the for you good fiscal Jessie, results review STAAR afternoon financial fourth you, for conference and to joining XXXX. the on Company's call year the Surgical January Thank quarter ended

fourth are Deborah press now today at call Time Caren results our Andrews, release Financial the and Eastern and Mason, just On CEO available issued The Chief Officer. of PM website after quarter was President on X:XX STAAR's is and

so. as forward-looking actual STAAR do required well from as today's statements risks press in conference expectations, we call, conference law, the release Except that statements that or as the of as in remarks those is differ forward-looking this about not future are This STAAR's Before statements. update during public conference webcast and the reflect events that important Company the historical you are The not are uncertainties a that will on and any statement call statement to risks does Company's results outcomes statements. quickly intend by of statements is SEC. judgment filings let periodic you made no the based actual to statement. Safe begin, of a These make the and could statement includes Harbor beliefs, materially with obligation forward-looking analysis remind caution cause other associated this call uncertainties to this subject and the described assumes forward-looking and course fact in projections, and of numerous with prospects. forward-looking to me date and to these described the in plans, We

constant assessing historical currency. the provide reconciling information net earnings non-GAAP these share We adjusted non-GAAP performance. included in release. today's numbers supplement are future income A we believe in have meaningful addition, per our In helpful and and GAAP to adjusted table and information sales that is to numbers, supplemental press the provided information GAAP non-GAAP the and

line remarks, ask analysts. publishing we analysts process. two will their limit to Following from any thank advance open then initial re-queue the cooperation our everyone this to for themselves questions prepared with We follow-ups. We in with questions,

STAAR. Now, I'd turn like call President over to Caren of and to the Mason, CEO

Caren Mason

market and we XXXX. in STAAR in earnings of The year refractive quarter. of consistent and quarter consecutive XX% you, January of on achieved share double-digit continued Brian, today XX quarter afternoon XX% ICL units, growth gross take fourth everyone. issued reported we in breakout levels Thank calendar results. ICL XXXX, grew represented and market. growth QX as the the our and units represent to unit results sales, for prior-year hurdling growth preliminary ICL lenses the financial, fourth continued all successfully unit grew operational, Global cash, XXth good sales significantly the results over are margin, STAAR. with and ICL share, ICL momentum per share

is lens-based. is we and the growing now. industry our growing of reality believe above be this family the many of time ICL that at vision The lenses digits for EVO of significantly refractive Our single low-to-mid peers will correction of demonstrates the rates future STAAR

and new driven and visual by XXXX up solution fourth units of expanding freedom XX%, agreements. new XX%, units in performance by customers, existing during growth Japan was quarter and the On including the Spain was units units Growth of units strategic several up XX%, period. fiscal standout programs, basis, quarter Germany prior-year driven cooperation to ICL in and XX%, units up the a XX%, markets, by new China and the in our surgeon India to regional compared as adoption XX% and alliance up increased up unit fourth lens-based ICL US marketing

visits of Finder. in our recorded million marketing ICL example of increase our Finder website our One Doc success in X to We XXXX. during a more was than XXXX Doc visits number the fiscal to in fourfold

they As of significant ICL on leading Finder learn no on freedom. visual long-term potential exited patients, our indicator cash a XXXX resonating that and our illustrate the to patients more of our to increasing potential achieve journey ICL debt. their with $XXX the future visits million Doc sheet with balance is marketing to We as seek

Let's turn now to the of coronavirus. the impact potential

or swift become and all those virus. heartfelt have of concern. safe the by We with globally who extend health may our this resolution are thoughts impacted our for been First, hope global

predominant you know at in the of time, impact the China. is this virus As

been in touch our have with We and customers these with few weeks. last directly working

to of customers implantation and from physically they types separate resume facilities. activities, will clinical to March. generally such, ophthalmic of Our dedicated family in work healthcare are universities the Chinese other and by New hospitals hopeful since the hospitals, We do working understand clinics, including in-office the usually robust are as or return ICL February STAAR's to Year, employees EVO are have to Lunar so China continue and following they until been X, remotely lenses government. are permitted of

in and STAAR offering other remain been services China meetings reopened, this time. the courses. has half China online has extensive emergency been that customer our half digital Currently, The approximately of training high. but only closed outreach Engagement includes an program, engaged team remote customers with in at

well ophthalmic and ICL week roughly the more than surgeons STAAR Attendees For during had as example, X,XXX China in participate examiners, specialists. February XX, nurses, professionals included healthcare training. as of XXX online

customers takeaway efforts ophthalmic Our and and outreach patient begin education, implanting as in Many soon so. that partners they patient themselves include key do and larger ready surgeon engaged marketing, that as have been permitted online programs have to scheduling. are of our actively procedure The continued. are our online customers engaged is to

fiscal our QX respect China each in business mind A with few to things of to keep in and year.

other risk any or chain First, no in Asian China or geographies. manufacturing STAAR has supply

tangible generally two third, an And QX with lowest not quarter can pause the visual Many for is an STAAR's revenue procedure therefore, short-term defer the delayed be with glasses patients even representing decision their The commitment telling decision very life or believe is have in procedure lifetime months a comes ICL us ICL year, contacts. emotional is a freedom after simply disposable choice patients sales procedure or many changing. often sales. for to also about to likely years. ICL of advance. patient's planned of the is a personal XX% the that We, The planning fiscal a current our the is months in financial lost. to in ICL most years total annual have Second, spend past procedures and is

At experienced reduction expected this a the have clearly time, for quarter. in orders we

million As to orders. such, in we in $X potential currently $X delay expect sales million QX, a

facts given we time. the current as know of forecast making our assessment XXXX we to at are However, no this change our sales them, for full-year

important remains proprietary, I I [indiscernible] momentum coronavirus would to STAAR's reaffirm STAAR think first leader like refractive, into of clear business that reiterate was XXXX. and lens-based in the month the and solutions. it's to continued very strong

double in X.X billion addressable market are that of billion EDOF approval lens. the globally. large with our Presbyopia nearly today a presbyopes the expected and to approximately have near myopes anticipated X.X Today, future, is We includes there

in focused further market a in presbyopia refractive stated EVO in clinical service patients, Dr. to lenses. to cataract forward Price correction with Group XXXX our at dissatisfied most and evaluate large error our on In approval execution, kicked glasses. lens, first In up for or of additional vision the practice patient on off the piggyback for January milestone we the announced lenses participation the piggyback and solution sought clinical of horizon end was realizing a our correct approved growing lens post-cataract Indianapolis. regulatory and mid-January, our opportunities very CE our approval promising supplemental US opportunity. the EVO On investigational We has patients. EVO Vision use that continued XX, for residual to as annually terms we of we trial of this back Price Mark ICL achievements growing in correct currently millions the ICL after as believe in study expected and especially, use EVO to treatments look the of the surgery our routinely out implanted

in study. The underway EVO fully dozen trial than surgery centers nine is more part we of refractive of US US the anticipate will that now prominent a clinical across be this

US three For yesterday Number clinical the Number will distinct of will phases, track, our updated trial Visian of entitled potential three, XXX lens to to include clinical leading for two, Details to US all were market. six-month preparation package the multi-center EVO submission to follow-up the review. up collamer marketing and commercial you clinical Number primary of eyes. on the the one, introduction a for those required. of implanting of patients. FDA data keeping trials and as clinical a approval EVO+ as of implantable posted be evaluation trial US

outside EDOF look through our be body countries, ICL. Presbyopia remains of EVO open XXXX, XX-year the rollout will XX, the the age As by a to to second the remainder introduced market to opportunity by lens presbyopes this a EVO to in for will old quarter phased our XX-year notified targeting approved our continue review of of large for we EDOF Mark we early market patients lens older CE XXXX DEKRA, XX the range under our to and ages anticipate historically end product for

of a of will building family awareness, sense a investment EVO also year community understanding creativity in be and around our marketing XXXX ICL and lenses. of greater

YouTube, consumers. suggests highlighting have ads more with resonates and messaging We our will most that mobile interactive research the

the provide campaigns For of eye in of potential K-pop is the signed broadens that cities, clinics, syndrome does we Instagram. includes where social cities and Spain, media advertising both dry example, that have campaign and we additional committed we've in of postings excellent cities unit and have removable, levels We'll market expand on week, and an ICL induce alliance while which that to strengthened as patients. night lens star with and agreements also where Korea, number key EVO key growth. in not and vision. In ICL the our our launched signed also other campaign new that the [indiscernible] of US ICL Last community geographies it organic Facebook lenses influencer our paid have a China our lens-based Germany top in existing sense plan doctors recently with among influencer. we US, in that We'll support growth new

Finally, STAAR for search CFO. next has its initiated a

has appoint As December, and retire to transition previously XXXX in new Deborah CFO. a in decided announced after we we

entire the over like almost to for to more team of would STAAR. most financial I a would Surgical. Before to service the On Deborah Deborah behalf to detailed for of service for like acknowledge I thank performance, call years of turn her STAAR our of Deborah's review XX and I personally, STAAR quarter-century


Deborah Andrews

quarter overview will quarter you, sales of currency fourth Thank compared of full for year Caren, the STAAR million ICL financial of line afternoon and Company headwinds, XX% and fourth growth XXXX. results Strong primarily good more of period. in in the for fiscal detail the The of million I an and of line start and approximately by statement. the the year down summary revenue XX%. $XX.X euro both sales top driven income the fourth fiscal the XX% in total year-ago over with was a was then XXXX. quarter ICL increase million to $X.X sales unit the of foreign just net top for $XX,XXX everyone. XXXX, $XX.X provide reported the represented reported growth as

fourth Gross in the XX.X% the as for our Moving profit was Gross improved ICL quarter project our increased unit with income to to margin anticipated gross to points the from end shift ICL margin three-year and quarter of Company the operating Approximately XXXX margin to to the of quarter manufacturing higher for prior-year the to period. total an gross XX% compared costs the range lines product to Switzerland. million. continued XX% our the were the Total XXXX anticipate manufacturing margin quarter $XX.X in compared mix $XX.X up remains expenses offset fourth to margin XX% above margin half by down basis from in of by in XX% partially due improvement fourth million, continue half to planning increase cost XX associated period prior-year and business. XX.X%, resume costs, reductions quarter. statement, come on the of the we

headcount G&A of closer and compensation, to the consulting million compensation increased headcount costs. due a of salary operating to promotions expense Taking million. components in audit the expense the was stock-based and insurance $X.X due compared including selling increased and prior-year including was look quarter travel increase selling expenses, The digital $XX.X expense, fourth in and expenses, expense G&A marketing, at The stock-based $X.X to marketing trade million, expenses quarter increase were was quarter and salary-related increased of in $X.X the expenses, to increased compared million. and and Marketing and in tax and shows. increased expenses, and related investments prior-year advertising

expenses compared Fourth Research period. and operating as stock-based The compared X.X% the to approximately million, in operating generated year-ago and and compensation clinical with the operating income was expenses of million. in to to increase including in fourth prior-year year-ago quarter during to million quarter. expenses, income salary-related $X.X We of trial increased US. $X.X were was the in million and margin quarter increase due our clinical compared $X.X expenses development X% associated of research as for the an quarter EVO development headcount $X.X the

operating was per approximately diluted the million prior year Net For the over X.X%, per income share. compared net diluted million up year. $X.XX $X.X as $X.XX basis $X.X full of share ago year quarter XXXX, margin was or or points income the XXX to fourth the for

or included fourth the adjusted compared quarter basis, table $X.X $X.XX financial non-GAAP of included year-ago The in income $X.X for million GAAP non-GAAP an net XXXX or or adjusted quarter for of On is release. benefit. to to $X.XX quarter share share tax today's fourth the $X.X income $X.XX income approximate a as net diluted per million per the diluted the share. information information per A reconciling was million

year compared at Company record for our cash in the $XXX activities million January our year-ago The restricted balance cash, a of million the sheet, with fourth cash X, generated and end to now Turning operating equivalents XXXX. cash quarter. full totaled from million the at XXXX, $XX.X $XXX

This ready remarks. take prepared concludes we're our Operator, questions. to


from Thank with you. [Operator Instructions] Genuity. Canaccord Jason Your Mills question comes first

open. is line Your

Jason Mills

Caren, me thanks. okay? great, Hi, can you hear

Caren Mason

can I hear you, Yes, Jason.

Jason Mills

great. Again, on a great congratulations Okay, year.

Caren Mason

Thank you.

Jason Mills

I what First, given so for expect you color. wanted them. coronavirus. I time to be is million with us, done Thank guess you makes to to this and how at guess the the sense million procedures you sales period point these $X question to account the over but start for uncertainty $X or these much the will do

time crisis? felt offset mostly over that perhaps So, the they call first be during revenue let's -- say frame. able the that back you revenue Will quarter the it's out to incremental to and that in this come upside QX, QX incremental saw you downside

Caren Mason

contributions believe each Bottom know, line And basis. as you had planned split always markets is, and XX%, we XX%, already XX%, been of major XX%. quarterly a then I it's our from on

shipment from that now we're realize we're for already the is doing distributor of didn't as and as soon February, in we taking what look units received a we've actually orders So, at reopen. to number they our customers

interest in held call big So, back robust way. seeing getting of work in that a we back already kind what we're to

talking they on are will to expectation very, to of or call and have about on we had and or get we'll a get to statements team, we the is answer they smallest our from get right back the way need want to My important back income going have in own your to have hard, to largest -- practice talk very when planned I and a mindset to They their the they everyone very time just They need to what budgets to share, track based hospital. to employees are the to meet. work lot for they customer over they very, let's on back aggressively it's the year. be. recovery on in feel next visibility work remind their question in when we the pay. that how to spread that So, say,

Jason Mills

and is You your Great, mentioned approval My talk your the for guess, let's planned timing? maybe Could more if -- that's the color and you DEKRA Is on clear. in second with clinical, Caren, expectations, loud you this about bit little talk evaluating. about line I can talk a second. the yesterday still on enrollment. -- so an you roll-out. on on the could is then forth, United update an give guess I you sort can it of how than the day that's give roll-out, And update phased of pace more so and before, States, you. probably us in but Thank question, us going? it's

Caren Mason


phased and bringing the about and have where the product. roll-out those our through who already their very about be sure first and So out roll with other enthusiastic who we'll designed practice trying make is investigators, familiar who are to presbyopia us will as presbyopia strong that excited principal deep those are practices into product participated

have hundreds the starting XX, a on off time out a frame then a with strong XX, one-year dozen plan sites, time detailed in a We our and to October roll in plan We to thereafter. do for frame. ESCRS terms meeting experts moving then of major at

Our programs, earliest the materials, to the patient be everything benefit of will go. the of training will surgeon and all surgeons have ready

it's in ready is for quality a our and want learning we sure surgeons lens environment. fact, we roll initially is But just in far as which, near, now. well-characterized, In who as is of to know, a outstanding what experience clinical daily to characteristics make you intermediate, that out, practice have and trial that vision been that involved the go

us surgeons this for on So, it's new in good all the lens. guiding bring we to practices it's with for the and good plan

the a not had to rollout, clinical the excited I'm of people my the are we extremely me don't getting, number In we're of want surgeons talk. terms -- -- feedback US both of pace about the

patients of it lot I'll a in have we is line bottom the there. the think leave I queue. So,

Jason Mills

Caren. Thank Thank you. you,

Caren Mason

You're welcome, Jason.


from Ryan comes BTIG. with question next Your Zimmerman

open. is line Your

Ryan Zimmerman

you. Thank Great.

right a you Korea Caren in coronavirus... the and to Jason's impact Japan what assuming just question. with follow-up are now So,

Caren Mason

at we of routinely, and up they told a there surgeries. the has been tell cataract world So, this Japan is that to no on moment have and point teams some sales the refractive surgery. you but call Korea, leads normally as it's fully to in weekly especially today the I operating our all course, in It's speak in what give in day been, aggressively basis change. can And not is, is and over with that being our concern, time, we're detail

our So at teams. are feedback from getting point in not this time, negative we any

Ryan Zimmerman

a can about the of then US. Okay, submission and that's to kind in US. you what you're through of just Thank clinical you that would can helpful. of some frame just about timing of trial in kind talked the steps potential then the going estimates clinical very for go things, And side the to or the follow-up and preparation on That for assumed data period, be make our talk approval around the you. guesses time EVO we

Caren Mason

regulatory compile typically all data to three the of accurate complete side possible, we to Yes, Obviously, approximately but are the be will give accelerate sure our that and the six to themselves companies balances make to checks to to that complete associated on with be making effectiveness and and months data. by the goal and body. months sure present reviewed safety if do information and effective we

Ryan Zimmerman

taking for question. the Thanks

Caren Mason

We it. asking you us very coverage much Thank you. Thank and initiating appreciate today, questions for Ryan.


question next Jefferies. Anthony comes Petrone Your from with

Your is open. line

Anthony Petrone

reconcile call. specifically, XX% They some on comments Hi, pretty China, internal versus called coronavirus, that of just a a Alcon significant a on estimates. in impact and to their thank have question. their seen for just trying the February maybe morning reduction made the follow-up procedures Maybe you, they in in this thanks taking

follow-up So, to trends a and have clinical made then on the sense study. comments to that Alcon I'll Thanks. of the trying US get February relative a just the

Caren Mason

reopen. number Anthony. extraordinary and first hospitals the no for off weeks scheduled hospitals an you, to February Sure. the closed closed, remain of where and performed. had and remain end by when Certainly, of January, of were procedures procedures into clinics these and year the were clinics January Thank and In three a we kick

cataract in sales and what think the from throughout relative all impacted in set negative line remarks, what occurred that to go. as it business a is, in many has my hearing follows So, expected already I from them deeply it lens think, our seems are explained prepaid of what refractive of team terms prepared procedures but have been I XXX% is of terms been that either is the bottom or we've I recovery, these

seeing So, time. difference this refractive play the how we in a at We'll out. are things response see

Anthony Petrone

for there just great. the that procedures. be That's would chance Maybe these to to topic the follow-up a a this stay on good is idea recapture moment,

again, Thanks. are talked you final the just at lost. a the those being but then one just procedures have Alcon of side, potentially possibly because, they so, on I'll about And point rescheduling seeing recapturing this some, on US And some study. one

Caren Mason

comment can't I Alcon's Well, opinion. on

have Our patient other all outlook enthusiastic customer. has to benefits is vision has refractive who an really that committed laser that ICL over a procedures the a correction

during And that so, our tumor there we energized fact that I practitioners, of are the believe the has patients, customers, contact. X,XXX surgeons the full by online process, scheduling over we in been XXX this fact have

So, we in work situation and us. we're confident it Thank to done, with you, the quite done of will Anthony. pretty get terms close gets if feel

Anthony Petrone

pretty thank That's you. --


Your Sidoti Company. from Sidoti next question with Jim comes &

open. is line Your

Jim Sidoti

else... guess, afternoon. Good everybody I like

Caren Mason

Hi, Jim.

Jim Sidoti

the these are I to in demand? is, the way going QX, focused had late capacity The capacity question more QX, you you have rescheduled, Do meet will, possibly to if We're the because the how QX. think out but set it be you it on coronavirus. as all plays procedures likely

Caren Mason


end We and we markets, inventory are for in both at in all especially busy into ability QX bring the most place [ph] Toric the to QX. and went again, season, the most-requested this China's -- will of likely Spheric sizes take lenses, morning the through Toric

well We very prepared. are

Jim Sidoti

until to and but my you the get start question Obviously, the approval you to surgeons have are approval, before US you can't able the related customers the you EVO launch. then is to training second started? the And do market to procedure

Caren Mason

related of commercial We US. is can until the approval EVO training nothing side, lens have the if even it we no. the in do on No,

extraordinary Surgeons a We managing about the amongst know clinical information organization partner, a contract trial. talk they ability terms requirements trial our really with are but share the surgeons are and bit, in of patient. to purely the for will little experience the what research each their really other

Jim Sidoti

you. thank I

Caren Mason

Thank you, Jim.


from Your next with Brian William question comes Weinstein Blair.

line is Your open.

Andrew Brackmann

Andrew similar follow Hi, question Brackmann line for here. the on I'll actually of Brian. good afternoon. This is

So, I talked -- out guess, $X context of just it's of play for delay guess, how in these expand a are strategic expected quarterly cooperation of with gaining you've call and in $X in that on just that about can allow contracts am that curious talking the million your as that and minimum required agreements, that to of is levels million sort I million that what $X the delay to $X these on stipulations purchase that just agreement my you a because the we're strategy maybe Thanks. back. about, million some the is confidence to here. reason understanding ask on for basis I that you have, I

Caren Mason

remember important our facilities on it's think have predetermined an terms to getting distributor of basis. the that of I each we Well, a Okay. lenses with to in setup appropriate

have terms so, well of to lenses. delivery as of really the wants selection the And meet we will time as in ability partner whatever

sure in but the of you reason to anyone's lenses some commitment. the frame no total their be not from have February is that not to using the way we going would commitment, really to any the or cannot and for assured hold If I'm intention annual the in get quarter, their concerned back but missing and as the when we're timing yes, will of annual to So, not opposite year, commitment. whether been quarter there'll be move of that that anything, answer we've ask quarterly meet they time flexibility terms wait their they to them a

Andrew Brackmann

primary US you. the then it estimated website, That's helpful. on just very the on completion date thank clinical trial trial, X, clinical as January And has XXXX. Okay,

you? So, to the that Thank as final patient completed take or enrolled. expect when is follow-up when you be we the

Caren Mason


the So, months. we XXXX three frame preparation then time there the the can as and achieve, the is given of a be January FDA six data end is to as quick of trial to to the on months the

Andrew Brackmann

you. Thank it. Got

Caren Mason

You're welcome.


from next Benchmark comes Your question with Company. Bruce Jackson The

Your is line open.

Bruce Jackson

you an on question. to thank Hi, manufacturing could know build the wanted we I in update Switzerland. if taking out for my get site

Caren Mason


need two was move Swiss we back trade process the or continued a have and are expectation a the we So, the is not for American manufactured frame we'll intensity the we product for time is was but other a product. to by we appreciate facility quicker have as challenge believe shipments return customers, label, We that the term is the Swiss-manufactured we Swiss quarter spending reason felt that manufactured concerning, the are little outside, probably a who Asian for especially answer still and accelerating when the what of is had we candidly, it the our that approximately less from that near preparing that done in potential for right are the Company. we'll believe manufactured but a product China, terms of with getting as

Bruce Jackson

program. do Toric When you study? pilot EDOF And Thank EDOF the follow-up great. you. anticipate the starting a Okay, on just then

Caren Mason

study in The definitely XXXX. in at Toric this pilot -- is point EDOF scheduled will time

everything have We finalized we to the not date, but ready go. have

Bruce Jackson

Okay, super. Thank you very much.

Caren Mason

you, Bruce. Thank


have And closing call turn any I that's remarks. all Mason that to the Caren the time for we questions. for back

Caren Mason

to today for you. seeing forward our with community thank participation in the where call. the the speaking of we many to be road everyone look and their I'd on on meeting coming investment weeks, with like We'll

we investment always, best All interest the your all and to appreciate in of As STAAR. you. you. Thank


This concludes call. today's conference

now disconnect. You may