STAAR SURGICAL CO Q3 FY2024 earnings call

• In the third quarter, net sales were $88.6 million, up 10% year-over-year. Constant currency net sales were also up 10%.
• Celebrated the grand opening of the new EVO ICL Experience Center in Southern California, which has nearly 10 times the capacity of the previous center and will offer various training and education programs.
• Attended the 42nd Annual Congress of the European Society of Cataract Refractive Surgeons, where over 80 papers and presentations related to ICL technology were presented.
• In the Americas, STAAR outpaced the U.S. refractive market decline. In EMEA, saw growth in distributor markets. In APAC, despite China's macroeconomic softening, continued to outpace the market.
• Gross profit for Q3 2024 was $68.5 million (77.3% of net sales), down from 79.2% in the prior year quarter due to reduced unit production. Operating expenses increased 10% to $62.8 million, with G&A, selling and marketing, and R&D expenses having specific changes.

In the Americas, sales grew 14% in the third quarter. The U.S. refractive market was down 18% year-over-year, but STAAR's U.S. sales grew 16% year-over-year. In EMEA, sales grew 12% in the quarter, driven primarily by the Middle East and European distributor markets. In APAC, which is the largest market for refractive procedures and STAAR's largest sales region, sales grew 9% in the third quarter. China sales were up 7% and ICL unit growth was positive, though the macroeconomic climate in China softened after the Q2 earnings report. Japan saw 15% sales growth, and South Korea had 11% sales growth in the third quarter, boosted by the strength of South Korea's first ICL-only clinic.

• Maintains fiscal 2024 net sales outlook of approximately $340 million to $345 million.
• Not providing 2025 outlook today but remains confident in long-term growth.
• The macroeconomic landscape in China is transitory, and STAAR is well-positioned to weather current market dynamics with a strong balance sheet.

• Macroeconomic environment uncertainties, such as the dynamic situation in China.
• Reduced unit production leading to less absorption of fixed overhead, which affected gross margin.

Q: Tom, regarding 2025 growth given fluid macro dynamics and Street numbers modeling low teens growth, can you comment?

A: It's premature to comment on 2025 outlook but we have a history of outpacing the market and are confident in our ability to grow.

Q: On China, trends in distributor stocking and U.S. refractive market stabilization?

A: In China, there was a slowdown in the high season, with slightly more inventory in the channel but we think it's appropriate. For the U.S., we continue to take market share and EVO is doing well, and we're expanding the TAM.

Q: On China patients delaying procedures and U.S. refractive market stabilization?

A: Patients in China are still there, and China demand can turn quickly. For the U.S., we contemplate continued downturn in laser vision correction but we're taking market share.

Q: On EMEA specific countries of strength and China competitive landscape?

A: EMEA has strong performance in distributor markets in the Middle East and direct work in countries like the U.K., Spain, Germany. In China, competition is healthy, we're aware of Smile price adjustments, but we think our polymer material and toric version give us advantages, and we'll be prepared with V5 technology by mid-2025.