STAAR SURGICAL CO (STAA) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 revenue was $42.6M, down 45% year over year, but above consensus; EPS was a larger-than-expected loss due to China sell-in pause and restructuring (revenue beat vs estimates; EPS miss) . Consensus: revenue $40.3M*, EPS -$0.60*; Actual: $42.6M and -$1.10; beat on revenue, miss on EPS. Values retrieved from S&P Global*.
Ex-China revenue grew 9% YoY to $42.2M; China revenue was $0.4M as distributors consumed elevated in-country inventory, consistent with plan to resume normalized China sales in Q3 .
Gross margin fell to 65.8% (from 78.9% a year ago) on lower U.S. production volumes, Switzerland ramp costs (~6 pts), and higher excess/obsolete reserves (~4 pts); management targets ~70% in 2H25 before returning to 75–80% longer-term .
Guidance was withdrawn given global uncertainty and evolving China tariffs; company executed tariff mitigation (consignment into China) and is ramping Switzerland manufacturing; STAA later authorized a $30M share repurchase (potential stock reaction catalyst) .

What Went Well and What Went Wrong

What Went Well

Ex-China growth: Net sales excluding China rose 9% YoY to $42.2M; regions ex-China posted Y/Y growth (Americas +9%, EMEA +10%, APAC ex-China +8–10%) .
Tariff mitigation and supply assurance: Consignment inventory shipped to China ahead of tariff implementation; management believes sufficient inventory in-country to meet most demand into early 2026; Switzerland facility ramp underway to supply China without U.S.-origin tariff exposure .
Clear cost actions: $22.7M restructuring, impairment and related charges to right-size operations and target ~$225M SG&A run-rate exiting 2025; majority focused on U.S. .
Management tone on China procedures: “In-market demand in China is getting stronger,” and expect normalized recognized sales in Q3, including revenue recognition of prior $27.5M shipment upon payment .

What Went Wrong

China sell-in pause crushed reported sales: China revenue was $0.4M in Q1 as distributors consumed existing inventory; global sales down 45% YoY .
Gross margin compression: 65.8% vs 78.9% YoY on lower U.S. volumes, Switzerland ramp (≈6 pts), and excess/obsolete inventory reserves (≈4 pts) .
EPS miss vs consensus: Diluted EPS -$1.10 vs -$0.60* consensus; adjusted EBITDA swung to a $(26.4)M loss vs $5.3M a year ago . Values retrieved from S&P Global*.
Guidance withdrawn: February 2025 outlook rescinded due to macro uncertainty and evolving tariff policy, increasing investor modeling difficulty .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$88.6	$49.0	$42.6
Diluted EPS ($USD)	$0.20	$(0.69)	$(1.10)
Gross Margin %	—	64.7%	65.8%
Adjusted EBITDA ($USD Millions)	$16.2	$(20.8)	$(26.4)
Adjusted EBITDA Margin %	18.3%	(42.6)%	(62.0)%
Net Sales ex-China ($USD Millions)	$36.8	$41.4	$42.2
China Sales ($USD Millions)	$51.8	$7.5	$0.4

Estimate comparison (Q1 2025):

Metric	Consensus*	Actual	Outcome
Revenue ($USD)	$40.3M*	$42.6M	Beat
EPS (Diluted)	-$0.60*	-$1.10	Miss
EPS - # of Estimates	10*	—	—
Revenue - # of Estimates	12*	—	—
Values retrieved from S&P Global*.

Segment/geography

Sales by Region ($USD Millions)	Q3 2024	Q4 2024	Q1 2025
Americas	$6.0	$6.4	$6.7
EMEA	$9.8	$12.9	$12.3
APAC	$72.8	$29.7	$23.5
Global Sales	$88.6	$49.0	$42.6

Key KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Global ICL Unit Growth YoY	6%	(39)%	(48)%
Cash, Cash Equivalents & Investments ($USD Millions)	—	$230.5	$222.8
Accounts Receivable ($USD Millions)	—	$77.9	$40.0
SG&A ($USD Millions)	—	$59.6	$62.7
Restructuring, Impairment & Related Charges ($USD Millions)	—	—	$22.7
Net Sales ex-China YoY Growth	—	+17% (ICL ex-China)	+9%

Guidance Changes

Metric	Period	Previous Guidance (Feb 11)	Current Guidance (May 7)	Change
ICL Sales ex-China	FY 2025	$165–$175M	Withdrawn	Withdrawn
China ICL Sales (H1)	H1 2025	< $5M	Minimal purchases; distributors consuming inventory	Maintained (qualitative)
China ICL Sales (H2)	H2 2025	$75–$125M	Withdrawn	Withdrawn
Gross Margin	FY 2025	~75%	2H25 target ~70%; long-term 75–80% after Swiss ramp	Lower near-term
Adjusted EBITDA (per quarter)	H1 2025	≈ $(30)M	Q1 actual $(26.4)M	Better than guide (Q1)
Year-end Cash	FY 2025	$150–$175M	Not updated; “cash not expected to drop below $140M before improving in 2H”	Maintained YE range; added floor
SG&A Run-rate	Exit 2025	—	~$225M run-rate	Introduced
Capital Allocation	6 months	—	$30M share repurchase authorization	Introduced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2025)	Trend
China inventory / sell-through	Elevated inventory; $27.5M shipped in Dec with extended payment terms, no revenue recognized; rebound hoped for 2H25	Distributors consuming inventory; China sales $0.4M; normalized sales expected in Q3; $27.5M revenue recognition upon payment in Q3	Improving sell-through; Q3 normalization
Tariffs mitigation	Plan to leverage Switzerland manufacturing	Consignment into China pre-tariff; Switzerland validation/approvals expected summer; capacity target 300k by end-2026 (800k LT)	Proactive mitigation advancing
EVO+ (V5) approval	Mid-year 2025 expectation	On track for China approval mid-year; limited launch Q4’25 contemplated	On track
Cost controls	2025 ranges and OpEx targeting	$22.7M restructuring; SG&A run-rate targeted ~$225M; focus on U.S. inefficiencies	Accelerating
Competition (iBright)	Acknowledged new entrant	Immaterial uptake thus far; may sample/free lenses; welcome awareness expansion	Limited impact to date
U.S. strategy	Highway 93/Fast Lane; share gains	Measured spend reductions; maintain clinical and economic confidence initiatives; broaden funnel beyond laser market	Focused, cost-disciplined growth
Regulatory	—	Taiwan EVO/EVO+ approval; Brazil label expansion to -0.5D	Positive regulatory momentum

Management Commentary

“We have to do better, and we will… return this great company to sustainable growth that reflects our brand’s earnings power and strength.” — CEO Stephen Farrell .
“In-market demand in China is getting stronger… on track to resume more normalized reported sales for China beginning in Q3… expect to recognize in Q3 the $27.5M of sales associated with the Q4 2024 order.” — CEO Stephen Farrell .
“Consigned inventory… sufficient to meet most demand through early 2026… ramping Switzerland manufacturing… validations and approvals expected this summer.” — President & COO Warren Foust .
“We are targeting 70% gross margin in the second half of 2025… expect a return to 75–80% after Switzerland ramp.” — Interim CFO Deborah Andrews .
“We are withdrawing the Company’s previous financial outlook” due to economic uncertainty and evolving tariff policy. — CEO Stephen Farrell .

Q&A Highlights

Guidance withdrawal vs qualitative “color”: Management withdrew formal guidance but provided ranges and confidence commentary; emphasized transparency and near-term inability to be “near certain” amid tariff uncertainty .
China trends and inventory: End-market sales consistent through Q1 months; inventory to contractual levels by end of next month; normalized sales Q3; $27.5M payment/revenue by Q3; sufficient in-country/consignment inventory .
Tariffs and supply chain: Consignment inventory plus planned Swiss manufacturing to mitigate tariffs; approvals expected summer; optimistic tariffs may ease; contingency plans in place .
Competition: iBright impact immaterial; EVO brand strength and toric offering differentiate; competition could expand the pie .
Pricing and U.S. go-to-market: No major pricing changes; focus on clinical/economic confidence; measured U.S. cost reductions while sustaining growth initiatives and expanding beyond laser funnel .

Estimates Context

Q1 2025 results vs consensus: Revenue $42.6M vs $40.3M* (beat); EPS -$1.10 vs -$0.60* (miss). EPS # of estimates: 10*; Revenue # of estimates: 12*. Values retrieved from S&P Global*.

Where estimates may need to adjust:

Model lower near-term gross margin given Switzerland ramp and inventory reserves (management indicates ~70% in 2H25 vs prior ~75%) .
Ex-China growth holds; add Q3 China normalization and $27.5M recognition timing to Q3 revenue cadence; consider consignment revenue timing effects .
Reflect withdrawn formal FY guidance and tariff uncertainty; build scenarios around tariff evolution and Swiss capacity timing .

Key Takeaways for Investors

Q1 prints show ex-China resilience and revenue beat, but EPS was pressured by restructuring and margin headwinds; ex-China momentum remains intact .
China normalization is a Q3 story: expect recognized sales to resume then, including $27.5M revenue upon payment; monitor sell-through and inventory reduction milestones .
Margin trajectory: expect ~70% GM in 2H25 and path back toward 75–80% as Swiss manufacturing scales and U.S. underutilization abates—model transitional cost drag through 2025 .
Tariff mitigation is credible: consignment and Switzerland supply reduce near-term tariff exposure; regulatory timeline in China (EVO+ mid-year) adds potential ASP/product catalyst .
Capital allocation signal: $30M buyback authorization highlights management confidence and could support shares near-term amid guidance withdrawal .
Cost discipline: $22.7M restructuring and targeted ~$225M SG&A run-rate exiting 2025 should underpin EBITDA recovery in 2H if revenue rebounds as planned .
Trading lens: Near-term volatility likely around China/tariff headlines; a Q3 inflection (recognition of consignment and payment) plus EVO+ approval could be positive catalysts—watch monthly China procedure trends and tariff developments .

Additional Documents (Q1 2025 period)

STAAR Surgical Reports First Quarter 2025 Results (press release) –.
Form 8-K including Exhibit 99.1 (press release) and 99.2 (call slides) –.
Share repurchase authorization ($30M) press release (May 16, 2025) .
Board changes and earnings call scheduling (April 23–24, 2025) .

Notes: All non-GAAP metrics per company definitions and reconciliations; adjusted EBITDA reconciliation provided in filings . Constant currency sales provided for transparency .