Staar Surgical 2025 Q1 Earnings Misses Targets as Net Loss Widens 1523.6%

Staar Surgical (STAA) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company fell short of expectations, as its earnings per share (EPS) of negative $1.10 missed the analysts' consensus estimate of negative $0.67. This marks a significant decline compared to the same quarter last year. The company has withdrawn its financial guidance due to ongoing economic uncertainties and tariff issues. Despite these challenges, Staar Surgical remains optimistic about growth prospects, particularly in China, as it implements strategic measures to mitigate these headwinds and realign its operations.

Revenue
Staar Surgical's revenue for Q1 2025 fell by 44.9% year-on-year, reaching $42.59 million, compared to $77.36 million in the same quarter of 2024. Core Products generated $41.50 million, with the ICLs segment also contributing $41.50 million. Other surgical products added $1.09 million, culminating in total net sales of $42.59 million. The sharp decline in total net sales is primarily attributed to reduced purchases by China distributors.

Earnings/Net Income
Staar Surgical's losses widened significantly to $1.10 per share in Q1 2025, compared to a loss of $0.07 per share in Q1 2024, reflecting a 1471.4% increase in losses. The company's net loss deepened to $54.21 million, marking a 1523.6% increase from the $3.34 million loss in the same period last year. The EPS figures indicate a challenging financial performance for this quarter.

Price Action
The stock price of Staar Surgical climbed 3.79% during the latest trading day, gained 6.46% over the most recent full trading week, and surged 22.11% month-to-date.

Post-Earnings Price Action Review
Following Staar Surgical's earnings report, a strategy of buying shares after a revenue increase quarter-over-quarter and holding for 30 days resulted in moderate returns but underperformed against the benchmark. The strategy's compound annual growth rate (CAGR) was 5.68%, significantly trailing the benchmark's 84.08% by 52.44%. This underperformance underscores the importance of risk management, as it experienced a maximum drawdown of -11.16%. The Sharpe ratio of 0.62 reflects the challenging risk-return profile, emphasizing the need for careful consideration in such a volatile market environment. Investors are advised to remain cautious and consider the broader market context when evaluating this strategy's effectiveness.

CEO Commentary
"STAAR's first quarter sales were in line with expectations, but we can and will do better," said Stephen C. Farrell, CEO of STAAR Surgical. He emphasized that the current results do not reflect the company's earnings potential or brand strength, noting improvements in EVO ICL procedure volumes in China despite macroeconomic challenges. Farrell expressed confidence in resuming normalized sales in China by the third quarter and highlighted growth in key markets outside China. He stated that cost control measures and restructuring activities would align expenses with sales, positioning STAAR for revenue and Adjusted EBITDA growth in the second half of the year.

Guidance
The company expects to resume growth in revenue and Adjusted EBITDA for the full second half of the year. Farrell noted that STAAR's distributors in China are on track to reduce excess inventory by the end of the second quarter, which will support normalized sales. Additionally, the company anticipates that the consigned inventory will be sufficient to meet demand through early fiscal 2026, while cost reductions are projected to lower the annualized SG&A run rate to approximately $225 million by the end of fiscal 2025.

Additional News
In recent developments, Staar Surgical has streamlined its management structure to enhance operational efficiency, with Warren Faust promoted to President and COO. The company is also expanding its manufacturing capabilities in Switzerland, which is expected to help mitigate tariff impacts and support future growth. Additionally, Staar Surgical has focused on cost optimization, aiming to reduce SG&A expenses to approximately $225 million by the end of 2025. These strategic initiatives reflect the company's commitment to improving profitability and navigating current challenges effectively.