Staar Surgical Co.’s U.S. sales have long been problematic for the maker of implantable eye lenses.
At its Investor Day in September, executives with the Lake Forest-based firm projected a compounded annual growth rate in the U.S. around 30% to 50% by 2026. Two months later, when executives said initial U.S. growth would be slower than expected, the company’s shares dropped 17% on one day alone.
The company (Nasdaq: STAA) on Feb. 26 revealed just how bad U.S. fourth-quarter sales were—they declined 8% to $4.2 million on a year-over-year basis. Staar executives said it was an industrywide problem.
“In the U.S., it wasn’t about growth; it was a real deceleration,” Chairman and Chief Executive Tom Frinzi told analysts on a conference call.
“I think in the fourth quarter, the market research isn’t out yet, but it would suggest that it was about 20% down in many of the U.S. practices in the fourth quarter.”
By contrast, Staar’s growth in China, by far its biggest market, accelerated, climbing 30% in the fourth quarter. For 2023 overall, sales in China climbed 25% to $185.4 million.
In November, an investor suggested Staar spin off the Chinese unit, saying it could be worth as much as $5 billion.
Staar currently counts a $1.7 billion valuation.
13% Growth in 2023
Staar sells proprietary Implantable Collamer Lens (ICL), which competes with LASIK surgery as an alternative for people who want to replace contact lenses or glasses.
The product treats patients with myopia, or nearsightedness, which Staar said is expected to impact half of the world’s population by 2050.
A year ago in January, Frinzi took over from Caren Mason, who as CEO for eight years grew the company’s sales fourfold and saw its market cap more than quadruple to over $2.3 billion.
The company on Feb. 26 reported sales climbed 13% to $322.4 million in 2023 while net income fell 46% to $21.3 million.
“For fiscal 2023, every large market delivered positive sales growth,” Frinzi said in a statement. “With healthy margins, no debt and a record $232 million of cash, cash equivalents and investments on the balance sheet we will continue to strategically invest in our growth opportunities.”
Frinzi, who counts a long history in Orange County’s ophthalmology industry, including as worldwide president for Johnson & Johnson’s vision business, faced skepticism on Wall Street in his first year.
While the shares touched as high as $73.13 last May, they ended the year with a 36% drop.
The big question facing investors is whether Staar can grow its U.S. sales, which represented only 5.4% of its revenue in 2023.
Staar has made several moves to improve its U.S. sales. A year ago, the Food and Drug Administration approved its EVO Visian ICL lens, its newest family of lenses that treat myopia.
The company opened a new training facility in Lake Forest to expand the number of doctors who perform the surgery. Staar hired celebrities like Tennessee Titans quarterback Will Levis and members of the multi-platinum trio the Jonas Brothers.
This year, the company is projecting companywide revenue of $335 million to $340 million, indicating a 3.9% to 5.5% growth rate. It’s projecting U.S. sales will grow 10%, the same pace as its sales in China.
In the week after the report, shares increased 12% to $34.50 each and a $1.7 billion market cap.
