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STAA Staar Surgical

Participants
Brian Moore VP, Investor, Media Relations & Corporate Development
Caren Mason CEO, President & Director
Deborah Andrews CFO
Cecilia Furlong Canaccord Genuity
Christopher Cooley Stephens Inc.
Ryan Zimmerman BTIG
James Sidoti Sidoti & Company
Call transcript
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Operator

Thank you standing by, and welcome to the STAAR Surgical 1Q 2020 Financial Results Conference Call and Webcast. [Operator Instructions].

I'd now like to hand the conference over to your speaker today, Brian Moore, Vice President, Investor and Media Relations and Corporate Development. Thank you. Please go ahead.

Brian Moore

good and Jesse, you, afternoon, everyone. Thank for call this you for first X, joining company's us conference Surgical the XXXX. April ended STAAR the quarter afternoon results on financial Thank to the discuss

Caren are Andrews, on Time first and p.m. Deborah Officer. quarter today call was Financial website the Mason, and at just Officer; Chief of Chief release press available Eastern issued is STAAR's President www.staar.com. The results now and Executive our X:XX On after

belief, you judgment that actual forward-looking prospects. differ we the based subject date let forward-looking you and begin, fact those of the to quickly are statements remind uncertainties described and forward-looking This the not cause make Before this in is results of will and this that is risks statement. as call that historical plans, includes statements. conference during conference and on statement of These that could me numerous course caution to of remarks a projections, call a company's are any from about company statements. statement analysis expectations, We materially the the important

The risks to made webcast this harbor statements described the statements and with and intend well safe filings press call statement public associated reflect in not the future today's required Except no release actual so. periodic by forward-looking are in forward-looking conference and as in STAAR's uncertainties as update with does as these to SEC. obligation events the law, STAAR to assumes outcomes or do

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

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

And and turn CEO to like with call Mason, STAAR. President Caren that, I over would to now of the

Caren Mason

Good call. Brian. everyone, you on you, afternoon, for and today's us joining Thank thank

by the paramount me we by of countries continue public health everyone globe Let the national governments that and the health saying around and and safety and served start directives from officials. remains local practicing

We difficult STAAR have most that team global fared of at fortunate our employee has well through times. been this

and care wish for partners, our and shareholders continue analysts the staffs workers, best of all their surgeon frontline patients, their We teams. health to and

the STAAR results first we positioning admirable markets today at in pause The in over business a reported company achieved XX illustrate durations. various quarter as across headwinds COVID-XX countries. causing and a despite advantages global elective procedures growth of different STAAR's with

X% growth quarter China distributor unit more in European Global X to up ICL weeks of momentum quarter, the be and our rest terrific late quarter, X to for January X in really the quarter shutdown last of was performing for of the heavily compared of significant. mostly weeks the business usually the the to XXXX the or year the as the the Asia and the in prior month start first proved markets implants of quarter, With third ICL not in weighted quarter.

units Consistent strongly grew key we on XX, with business update ICL the April provided in geographies. Asian

Korea unit up as of Korea China XX%. Asia-Pacific up was follows: unit growth up is XX%, the unit China unit ICL year-over-year XX%, excluding and is X%, rest and up Japan is Japan, quarter First

X% unit and the commencing the was of week in in growth Germany growth unit outside solid procedures of first up achieved even unit ICL Canada, Asia. also XX% in in the March. markets In growth discontinuation up second ICL with STAAR was of quarter

at our Aliso XX, report that to Viejo, pleased manufacturing facilities. California am I Monrovia resumed Monday, and April we last production

implemented facilities. both have ranging safety We at COVID-XX protocols and enhancements wide

to Several implementation trial, elective to a principal with by respect support pause to or recommendations clinical have procedures recruiting, our patient is this principal from states associated organization respect medical including with and At trials. investigator sites research of the implantation. study of following and all reopened our EVO our and screening XX. reopen clinical of to providing clinical investigator our sites the contract U.S. societies resumed enrollment and restart already EVO patient -- With principal investigators, May time, plan

EVO quarter either early who want countries to or third for for eyes EVO XX for Mark our EDOF year. targets opportunity Still, will presbyopia, and of millions DEKRA's by our to notified those submission. presbyopia a in to cause we lens STAAR in the staged body. rollout with delay XX, pandemic our of remain review Designed optimistic second lens approved lens EDOF this in DEKRA, remains response EDOF to a introduced reading Our for of The glasses. our their under may ages be CE dispense

a an am that I Anvisa, procedures the largest and in promotion approval cycle. regulatory aesthetic lenses Latin affinity renewed of health for recently to agency, review for Brazil the protracted market after EVO a is Brazil's STAAR's announce pleased refractive America. country surgery with

of the impact of the patients. We to second on excited to sales potential or this are XXXX resume quarter in COVID-XX surgeons during market subject

stay-at-home, geographies. work public hotspot health many lift to restrictions and beginning in other and globally Governments officials are

For market EVO is implant for well peak surgeons patient China, the ophthalmic performing once upcoming Preparation with across example, in country. underway are ICL events. largest planned and again procedures season the the the in procedure advertising world, marketing refractive

lens-based is ICL around EVO have been as the last business, we begin customers to to lens and reporting of in significant November year. surgery The since interest move As their growing our work there world, key continues. resume

The eye education recommendations. reasons development, or routinely During scheduled numerous cited virtual the emerging hour and we younger profiling, is profit profile that well procedures. globe, than include less an with around by question-and-answer sessions as and often EVO ICL STAAR their procedure than most per patient societies other and surveyed the would and patient concerned by and well EVO customers older webinars an demographic perhaps attended go an events COVID-XX as technique than our longer regarding sponsored refractive surgical a them select about practice an interest for many higher as

utility lenses, lenses, workers not that touching and challenges have face media been fog prevalent or up most our as recent is care COVID-XX concerns acutely. of not perhaps but stories wearing EVO highlighting family experiencing running of patients of in on The only a glasses Patients of about the while their contact well. these lenses, pandemic of for out health lost surgeons, more one's months. are disposable for contact fears Frontline eyes social mask

so touching to U.S. requesting note one surgeon be unsafe at the of ICLs: a the feels treats Taking our now." care X contact of OR, today, a lenses back. great Recently, patients weeks and regarding posted online to own a who hospital her following manipulate frontline the her "After of it feels nurse eyes worker out right

comment In see closing, I'd on to months how ahead. we the like

noted by health our that desire to surgeon in is there allowed clear once and with authorities. surgery procedures government discussions As partners, resume are public is elective quickly local it previously refractive a strong

returning be negatively to are May impacted by However, that we will the into late that expect just in and reopen June. practices QX their clinics markets

originally middle ICL The in that every a trend Asian for XXXX now. double March. the are open started challenging targeted growth January a closure is growing the digit years markets sales resume another in market, highest X with and timeframe. into fully continued QX, outlook of unit off and Unless surgeons last well for QX there beyond growth In COVID-XX We large forced the experienced we the or patients to scenario QX. and expect

now results. Those are prepared our over the my to turn review to remarks. call further quarter first I'll financial Deborah? Deborah

Deborah Andrews

or primarily and reported injector injectors sales by $X.X was increase in first with financial of of quarter line top afternoon, line sales XX% the STAAR quarter the ICL net and million review with for and I'll in and period. everyone. million $X $XX.X statement. increase Caren, of the increase $XX.X you, results parts. other provide company of growth driven of in the year million an the more sales for the over X% sales, reported products total ago income sales detail start million Thank XXXX, Top a X% good then first represented ICLs the XXXX. down summary

for year other due gross quarter. prior income Moving gross quarter first quarter our our the basis Gross to than at our associated ICLs. margin The which be the expects a the to the down the of of with lower expansion margin was have facilities manufacturing to points would decreased profit the margin first capitalized higher XXX XX.X% statement, change mix sales to week that XXX quarter, product in with manufacturing the inventory. in remaining was X as period XX.X% compared approximately due In company million costs charges primarily production second of in associated pause the capacity. $X.X basis normally record California point the

for Total of million, the February. year million. the quarter prior $XX.X compared did quarter $XX.X to operating expenses spending begin in increase company an nonessential of The were first variable moderating XX%

in was of quarter salary the look general of expenses compared tax was increase related administrative expense increased due marketing first components partially closer to of and $X.X to selling million $X the $XX and a costs increased quarter consulting year expenses, related and The expenses increased the Taking expense. increase were due travel offset at G&A count increased The expenses, operating head decreased million. to to million activities prior in quarter salary expenses, cost. and compared head advertising increased by and expenses and promotional count in and was Marketing selling prior facilities the million. $XX.X year and

refractive to was invest have in were reduced and our workforce increase clinical the expenses Because head and our research expenses, while compared future, the with expenses we and spending development to we the The increased associated prudently count can. clinical we increased and and optimistic variable of our expenses. $X.X and Research increase expenses development prior related of quarter in continue future in million. trial million U.S., to customers in EVO surgery, for year managing where salary validation an due the remain quality $X.X not

our released the thereby more the be years, of a in of domestic we to allowance another quarter, due in NOLs shift profitable million valuation against VA foreign the increasing which offset the assets income the benefit During of forecasted caused used tax to and $X.X to deferred release. income, the NOL

approximately as the was operating was the first an in a $X.X XXXX of the year basis diluted of of million breakeven million operating net loss The $X.XX or the to or in per in quarter. income on The profit loss per $X.X compared $X.X ago ago share year as quarter first million quarter for quarter. share compared to diluted net approximately million $X.X

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

Turning now our balance to sheet.

equivalents cash in at are and receivable Our an company April bonuses, X, typical due increase cash cash quarter. first primarily which the of $XXX.X XXXX million accounts and due for both operations to the $X.X payment of million. totaled in to used in The

to we In also payments. experienced increase due with more customers, end to discussions delayed COVID-XX related on QX Based additional QX. than XXXX, an cash our we largest expect in with QX AR

all-time receivables surgeries practices. quarter the collections as are the Fortunately, resume to customers at elective low of committed and an at beginning and expects our to past-due company were their return the

quarter. property in $X.X These offset stock million $X.X equipment cash activities, and invested the from uses primarily of financing in also partially by cash exercises. during option company million were The

XX the beyond. reminder, operating cash. We will containment year-over-year a flows, year believe company provide of a the half the including As its cost most increase anticipated the and balances measures the our liquidity in next for cash of cash and and typically company in generates sufficient does anticipate second cash months

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

Operator

[Operator Instructions].

comes Your first from Cecilia with question Canaccord Genuity. Furlong

Cecilia Furlong

started relative practices, what to capacity pre-COVID today ramp sanitation going kind goes seen to to wanted relative just volume how ask it China as given that and after just seeing that forward where of I trend in in standard about of you're slowly you've level? enhanced terms coming back

Caren Mason

transmission substantially when or sterile hours procedures the were sure what China, that would first be patients was for be reopen, of possible call procedures, application pace an Regarding very I extraordinary that started safety of there would hour China there virus. patient to strong measures between would limit X to normal in there no that of

went more on April, exceptional still in time confidence through safety security to being for able As capacity there maintain and increase patients. was and

of patients level clinics, aggressive promotions are special receive terms that ramping team our at China number an what are amount So practices who of of the up of seeing the of happily we're in effect. is putting in which we in in China terms the hospitals and rooms, a from into videos waiting largest

X, promotions much and our during fact, Asia major and are timeframe excited the an X special surgeries. May China number of of there recent a Week Japan were providing and about Golden there their Korea holidays, In ICL young very through like and May scheduling markets were people in and retailers and is

that believe of China, I lead, obviously the safety. some we're our patient concern seeing at So in Asian about markets, really we're in seeing exciting seeing right large the back we're productivity, fundamentals course, and place,

Cecilia Furlong

just to maybe centers guess that interim, are in Great. Thank some start yet to just then And you opened, funnels, back the Can build to their talk positioning do how trial. again. and procedures about to haven't for centers just when open starting the engage I able and enroll turning were U.S. recognize all they really I the color. what up? those will centers with patient ramp patients be you

Caren Mason

Sure.

in contact research each of up, our as sites of follow different So sites. the of of trial screening with to of contract regard according our I maintained Report, patients, implantation results all And constant April with protocol the phase those study. XX in to the implantations each screenings, actual State a my mentioned Business patients, has scheduling were clinical FDA evaluating our and the organization,

not that in clinical any timeframe the were everything absolutely from these requirements to sure during making clinics open, and So deviating protocol we were way continued. when not related trial

a And we're -- off. as left what just is where so we we're now picking result, seeing up

or And whether determined of in really work qualify in to implant appropriately. so unencumbered continued depending the terms for were upon where a be you patient, queue you and waiting an of as that waiting all

site that be excited month and really the up we're to and now of so every open. middle we running the And by expect

Operator

Your next comes question from with Chris Stephens. Cooley

Christopher Cooley

a here in just me on States. in follow results on the challenging could very if guess period. I question trial on last maybe that Congrats I EVO first from to the the

time by Do it's little give I the think But to press a terms a there's color think have you there of many quarters? essentially better you some to you -- in follow guess how far puts I'm on sorts are more of a terms us your of bit couple I along original for could assuming total Then been as to out a enrollment? have you more maybe this of Do trying maybe back get obviously us completion think been quarter? timing. you push in up. a I expectations versus just read EVO trial? a here,

Caren Mason

dates which have just not protocol, our we trial changed clinicaltrial.gov. we clinical Well, the updated on on

no months, over in on up trial adjustment protocol to run we X continuing on timeframes. are made commitments. we to -- so. to we'll adjust do if need clinical we've we to this original end things our based how go So point completion time, at next Where But X the our

Christopher Cooley

the me the that lastly then course in when guess I'll just back can prepared basis? here and appreciate for run XQ saw digit then exited I regional better the had press And resume to lesser comprise the just region you comments. growth a kind the that -- countries in and we the release kind of differences and I the before rate where that. quarter about in maybe referenced bit some and see in the contrast of various just you get you that baseline In you a particular little on should from your queue. then throughout that way theater, get extent calendar Could of European decline the the think you expectation you we us the quarter from about Asia-Pac maybe Understood. a of double

Caren Mason

Sure.

media our country we got team what So one been hybrid also, or on global from course, we national we would both week. coverage full or sure managers point little in of that serve have time, our most direct, the of we the you distributor than and made several have our information executive different a and every and of might of a reading local team media. times view And markets

and we Italy shutdown greatly were When impacted definitely permanently. look Spain, those at Europe, markets

However, Italian education best Belgium. of was some times, even and in virtual our surgeons, France, the as happening et training, worst other for connection as Netherlands, the example, the of Spanish in and with well cetera, parts of

were Germany, found When one time them and work open the ICLs. of other obviously remained the that in in some others at parts that appropriate shutdown we Germany, we contributed Germany growth, provide surgeons that to Europe. course, of which were patients, to their look continuing still, of clinics home. Germany guidelines But at of had practiced probably most but

We've so had top because One progress she the changed. completed of of her them. shutdown. interesting life them patients tattooed social ICLs her had life taken had our with showing very some the her because have and I'm she unable the media to bottom parlor share tattoo from on so how to experience going COVID was on and to was that is tattoo quickly that But during change X was should everybody European dramatically one in shutdown arm get stories. was her actually has ICL

the bachelorette shutdown show trade a We for also publications. enthusiasm in also magazines covered who a German had from her bachelor was during and multiple ICL

and the we times would needed what So would the we to emerging open, those between multiple are determine do in closed, that to Europe, call categories what had really we we check when. gamut X and and week a

shared library a of We then running the our educational also et of excellence webinars, of tab kept all a we that globe. created we around also And cetera.

surgeons Same be aggressively challenge. their to the down. to at Korea to through to be Asia, open slowed do of thing, but patients want never with free with Korea visual continued recently right When Even visual help who continues the really you height shutdown, Japan. in the managed look Japan really safety.

And then the of from the shutdown a April. into of last we also in we weeks China, then the really March, saw little bit the January pickup end March, obviously were end through in and few

Operator

question from next Ryan Zimmer BTIG. with Your comes

Ryan Zimmerman

the the just little your you and of that. a outlook that wonder that that respective a QX, is in put year? indicative into Caren, finer on point could is remaining wondering digit digit of Is that intact -- your heading -- double more. I could XX% if if just broadly? about double commentary XX% frame you Or guidance original to I'm double QX

And then -- my in quarter, noticeably saw higher the by Toric second question. last quarter the U.S. In uptake pricing we driven

here your a lower And pricing you expectations on the so kind the pricing through year. of little just is the of I'm this balance wondering comment quarter. if implied bit can for

Caren Mason

With our on public -- better each we is regarding expectation operating our serve digit we in we achieve Sure, to be that basis -- a units to do That's regard at have QX able we especially fact we a if growth, we able highest to and should we allowed, on we the based and in be are possible. where should environment, think XX%. practices all growth and can that are be and above growth QX elective surgeries COVID-XX health more relative in markets, our in Ryan. if markets But double to directives. hope certainly achieve normal able in of any

that providing digit them point, right we But is we the I'm double this in for they're seeing what hard classify at am real now. those business no are an for seeing where open for us reasons. O, I there's growth But outlook where that and it's markets and

Caren Mason

Yes. regards pricing. With to

as how be depends you're mix point, doing on the there, ASPs, not out Torics there's in as really our we this pressure Spheric at we're So looking well what ASPs. at believe it are And to many world. when do on our going

becoming I quite think we're going that to us. end having for up positive

all, are special we want back support to during promotions maybe time lenses patients second be opening, X, to And encourage world help soon is surgeons around advancing for of to tools of and that will that can or help as help. surgeons possible. ways. really One to we their periods where We want we to to going think provide some there the month a advantage X in in give for as we we bring here

to surgeons, the also got great it's get overall demand of supporting be and think faster. the I pricing So to managing a higher combination to market

Operator

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

James Sidoti

missed comments can you the Deborah, about going that. take the I repeat you the you're to made just in charge second quarter?

Deborah Andrews

Yes. we will to that down equates X was plant manufacturing Well, a as didn't of because product because be for recorded didn't charge manufacture have X-week on P&L facility, the lay the the about basically and month, off and the operating weeks, employees, the any for course period to any $X.X shut million. that your we a expense expense,

James Sidoti

And that gross go margin? Okay. will into

Deborah Andrews

Yes.

James Sidoti

you right. on Do All receivable those you something with in your think up accounts obviously is goodwill leverage in quarter. you the Okay. And can some year? brought it's the this and later accounts

Deborah Andrews

definitely responsive. mentioned, of tough calls with Well, -- like interaction, this good sales customers our And understanding circumstances close to of touch. in very It's really very up of had lot close them. during not in that of a or and stayed in as we've They've very, is stay phone we answering news that with very the have all things been very But contact been our the we've Caren training or time. our they're not the whatever. like picking meetings been appreciative

a now -- it normal today e-mail hopefully great internationally. we'll second summarizing return in third situation get to in on the right like here got quarter. in and to I the track our then start And fact, quarter back So looks

James Sidoti

the increase Okay. was which in plant in And the PP&E quarter, that?

Caren Mason

a We number Swiss and Nidau. everything. in in in of our of Monrovia, manufacturing Forest facility bit improvements A Lake little made

James Sidoti

you QX think have you in do if you for and So capacity that? have a pickup big X,

Caren Mason

its highest employees production was is Absolutely, and out for absolutely. And greatest. at our to the decision caution we was the did discontinue we when made its an of at of concern What fear abundance of told at, all communicated them basis, looking we over employees, were time, all that changes, all the we the would have. that weekly all protocol policies we enhancements with safety a those the on

you employees beyond our inventory the double can came for see digits. back, a as necessary it know immediate productivity. was we And when It have wasn't So to it we demand path long forward we tell will productivity. going I

good So we're shape. in

Operator

no Seeing the turn questions, Mason to I remarks. further any call back there are closing Caren for

Caren Mason

Thanks, everyone, for our call many you your to look today. in speaking on days weeks We participation forward with the ahead. of and

will conferences. participating We excited care. investment All all good appreciate to speak I'm to the in investor with more of Please be interest your virtual take STAAR. you then. We and always you. best in

Operator

conference today's concludes This call.

disconnect. now may You