STAAR Surgical(STAA) - 2024 Q4 - Annual Report

Sales and Revenue - STAAR Surgical Company generated approximately 100% of its net sales from implantable Collamer lenses (ICLs) for the fiscal year ended December 27, 2024[18]. - For the fiscal year ended December 27, 2024, 94% of STAAR's worldwide revenue was generated from product sales outside the United States[19]. - Other Products revenue accounted for less than 1% of total sales in fiscal 2024, indicating a strong focus on ICLs[30]. - In fiscal 2024, net sales to China distributors were $161.3 million, accounting for 51.4% of consolidated net sales, a decrease from 57.6% in fiscal 2023[41]. - The company generated approximately 94% of its total sales outside the U.S. in 2024[144]. - Net sales decreased in fiscal 2024 compared to fiscal 2023, but the company intends to return to sales growth[161]. Product Development and Market Position - STAAR has sold more than 3,000,000 ICLs worldwide as of March 2024, marking a significant milestone for the company[25]. - The company plans to continue developing and launching innovative products to meet clinical needs and customer demands[28]. - STAAR's EVO ICL is the only posterior chamber phakic IOL approved by the U.S. FDA, contributing to its position as the world's largest selling phakic IOL[24]. - The incidence of myopia is projected to affect nearly 5 billion people by 2050, driving demand for refractive procedures[27]. - STAAR's marketing programs aim to position ICL products as a premium option for patients, supported by surgeon education and training initiatives[28]. - Future growth depends on timely development of new ophthalmic products that are accepted by physicians and patients[169]. - Extensive clinical trials required for new products are expensive and have uncertain outcomes, potentially delaying market entry[171]. Manufacturing and Inventory - STAAR maintains significant manufacturing capabilities in California and Switzerland, with ongoing expansions to meet forecasted demand[21]. - Finished goods inventory as of December 27, 2024, was$ 43.3 million, representing 194 Days' Inventory on Hand (DOH)[43]. - The company has increased inventory levels to mitigate risks associated with potential disruptions in manufacturing and production processes[43]. - The company is expanding its manufacturing capabilities in Nidau, Switzerland, which involves significant risks and uncertainties[140]. - The company is vulnerable to disruptions at its principal manufacturing facility in Monrovia, California[140]. Competition and Market Challenges - Competition in the ophthalmic surgical product market is intense, driven by technological innovation and regulatory approvals[45]. - The company’s ICL technology competes with laser vision correction procedures, which are a significant alternative for consumers[46]. - The company faces intense competition from larger companies and low-cost Asian manufacturers in the ICL market[148]. Regulatory Compliance and Risks - Regulatory requirements for medical devices vary widely by country, impacting the time and cost of obtaining market clearance[56]. - The company’s ICL products are classified as Class III devices, requiring a more rigorous PMA approval process to demonstrate safety and effectiveness[62]. - The FDA's review of a PMA application typically takes between six and twelve months, but may extend significantly based on additional information requests[63]. - The company is subject to regular inspections by Notified Bodies in the US and Switzerland to ensure compliance with medical device regulations[74]. - The FDA may impose severe penalties for non-compliance, including revocation of approvals and potential criminal sanctions[69]. - The company is subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (FCPA), which could result in significant penalties for non-compliance[193]. - Changes in U.S. FDA or international regulations could adversely affect the company's competitive position and financial results[187]. Financial and Operational Risks - The company’s pension plans are underfunded by approximately $6.7 million as of December 27, 2024[152]. - The company may incur substantial expenses due to compliance with data protection and privacy regulations[157]. - The company is subject to risks associated with acquisitions, including integration difficulties and unknown liabilities[159]. - The company does not carry insurance for interruptions or potential losses arising from earthquakes or terrorism[143]. - Increased manufacturing, sales, and marketing expenses may exceed expectations, impacting financial condition[162]. - Climate changes and extreme weather conditions could disrupt operations and increase manufacturing costs[166]. - Relationships with healthcare professionals are subject to scrutiny under healthcare compliance laws, which could lead to penalties[182]. - Product recalls could result in lost sales and damage to the company's reputation[184]. Cybersecurity and Risk Management - The company has established policies for assessing and managing material risks from cybersecurity threats, integrated into its overall risk management program[207]. - The Audit Committee is responsible for discussing the company's policies regarding risk assessment and management, including cybersecurity risks[209]. - The company utilizes both internal personnel and external service providers to support its cybersecurity efforts[212]. - The CIO collaborates closely with legal, privacy, and internal audit functions to address cybersecurity and data privacy risks[213]. Investor Relations - The closing price of the company's common stock ranged from$ 23.93 to $52.25 per share during the year ended December 27, 2024[197]. - The largest investor beneficially owns approximately 22% of the outstanding common stock, while the largest three investors own approximately 51%[202]. - The company has not paid any cash dividends on its common stock since inception and does not expect to declare cash dividends in the foreseeable future[198].