Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Staar Surgical Co (STAA, Financial) has streamlined its management structure to enhance efficiency, including promoting Warren Faust to President and COO.
- The company has taken proactive steps to mitigate the impact of tariffs by negotiating consignment agreements and shipping inventory to China.
- Staar Surgical Co (STAA) is focusing on cost optimization, aiming to reduce SG&A expenses to approximately $225 million by the end of 2025.
- The company is expanding its manufacturing capabilities in Switzerland, which will help mitigate tariff impacts and support future growth.
- Staar Surgical Co (STAA) is optimistic about the growing demand for its Evo ICL technology, particularly in China, where in-market demand is strengthening.
Negative Points
- Staar Surgical Co (STAA) reported a significant decline in total net sales for Q1 2025, primarily due to minimal purchases by China distributors.
- The company's profitability was impacted by lower sales and restructuring charges, resulting in an adjusted EBITDA loss of $26.4 million for Q1 2025.
- Gross margin declined to 65.8% in Q1 2025 from 78.9% in the year-ago quarter, due to higher manufacturing costs and inventory reserves.
- The company withdrew its financial outlook due to economic uncertainties and evolving tariff situations, creating uncertainty for investors.
- Staar Surgical Co (STAA) faces challenges in overcoming obstacles such as patient awareness and surgeon reluctance to expand its market share.
Q & A Highlights
Q: Can you elaborate on how ICL sell-out tracked in Q1 2025, and provide any insights into the summer high season as we approach it?
A: Warren Faust, President and COO: We are pleased with how the year started, particularly after a soft back half of 2024. In-market sales were fairly constant across January, February, and March. This consistency allowed our distributors to reduce their inventory levels, positioning us well as we move forward.
Q: What impact has the competition from Ibright had on ICL sales, and are there any adoption tendencies you're noticing?
A: Warren Faust, President and COO: The impact has been minimal so far. While new lenses often enter the market with promotional pricing, we haven't seen significant uptake. Our established presence with Evo ICL in China and globally seems to be a strong competitive advantage. Steve Farrell, CEO, added that increased awareness of alternatives to glasses and contacts is beneficial in the long run.
Q: Given the withdrawal of guidance due to tariffs and economic uncertainty, does the current picture seem better than what was expressed in February?
A: Steve Farrell, CEO: While there is global uncertainty, we are mitigating tariff issues and making progress on cost controls. We believe we have a good shot at hitting our guidance, but we hold ourselves to a higher standard and want to be certain before providing formal guidance. We are committed to transparency and helping investors understand our business.
Q: Can you quantify the inventory levels in the channel and consignment in China, and how do you plan to mitigate tariffs in 2026?
A: Warren Faust, President and COO: We have enough inventory to mitigate tariffs through early 2026. Our distributors are reducing their excess inventory, and we are building inventory in our Swiss facility to offset demand. We are planning for the long term and are confident in our ability to manage the situation.
Q: What is the company's latest thinking on global pricing strategy for Visian ICL, particularly in China and the United States?
A: Warren Faust, President and COO: There are no major changes in pricing strategy. We believe in the value that Evo ICL provides to patients and surgeons. While price can be a component of growth, the primary driver is the value of the device and its impact on patients' lives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
