STAAR SURGICAL CO (STAA) Q2 2025 Earnings Summary

Executive Summary

Q2 revenue of $44.3M declined 55% YoY on minimal China distributor purchases as channel inventory was consumed; ex‑China revenue grew 10% YoY, and revenue rose sequentially from Q1 ($42.6M) while gross margin rebounded to 74.0% from 65.8% in Q1 .
Results exceeded S&P Global consensus: revenue $44.3M vs. $40.5M est., and Primary EPS −$0.13 vs. −$0.56 est. (note Primary EPS differs from GAAP diluted EPS of −$0.34). Values retrieved from S&P Global.*
Operating discipline improved: total OpEx fell sequentially to $62.8M (from $85.4M in Q1); adjusted EBITDA loss narrowed to $(14.9)M from $(26.4)M in Q1; cash/investments were $189.9M, no debt; the company repurchased ~261k shares for $4.5M at $17.17 avg, with $25.5M remaining on a $30M authorization .
No earnings call due to the pending Alcon acquisition; prior FY25 outlook was withdrawn in Q1 and not reinstated in Q2; the $28.00 per share all‑cash offer is the dominant near‑term stock catalyst pending approvals .

What Went Well
- Ex‑China sales resilience: Q2 net sales ex‑China rose 10% YoY to $39.0M, demonstrating underlying demand outside China .
- Sequential margin recovery: gross margin improved to 74.0% from 65.8% in Q1 as mix and cost actions helped, despite being below 79.2% a year ago .
- Cost containment: OpEx fell to $62.8M from $85.4M in Q1; ex‑restructuring, OpEx was $57.5M vs. $62.7M in Q1 as cost optimization continued .
What Went Wrong
- China sales remained depressed: distributors “made minimal purchases… opting to utilize existing in‑country inventory,” driving net sales down 55% YoY to $44.3M and APAC revenue down sharply YoY .
- Profitability pressure: operating loss was $(30.0)M vs. $11.9M operating income in Q2‑24; GAAP diluted EPS was −$0.34 vs. $0.15 a year ago .
- Restructuring costs persisted: $5.2M of restructuring/impairment charges in Q2 (after $22.7M in Q1) as the company realigned leadership and footprint .

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	$99.0	$42.6	$44.3
GAAP Diluted EPS	$0.15	$(1.10)	$(0.34)
Gross Margin %	79.2%	65.8%	74.0%
Operating Income (Loss) ($M)	$11.9	$(57.4)	$(30.0)
Net Income (Loss) ($M)	$7.4	$(54.2)	$(16.8)
Adjusted EBITDA ($M)	$16.2	$(26.4)	$(14.9)

Segment/Geography

Sales by Region ($M)	Q2 2024	Q1 2025	Q2 2025
Americas	$6.656	$6.739	$7.307
EMEA	$10.316	$12.331	$11.436
APAC	$82.033	$23.519	$25.577
China	$63.519	$0.389	$5.299
Global ex‑China	$35.486	$42.200	$39.021

KPIs and Balance Sheet

KPI	Q2 2024	Q1 2025	Q2 2025
Total Operating Expenses ($M)	$66.5	$85.4	$62.8
Restructuring/Impairment ($M)	$0.0	$22.7	$5.2
Cash & Investments ($M)	$230.5 (12/27/24)	$222.8 (3/28/25)	$189.9 (6/27/25)
Debt	None	None	None
Share Repurchase	—	—	261k shrs; $4.5M; avg $17.17; $25.5M auth. remaining
Global ICL Unit Growth YoY	+3%	−48%	−63%

Estimates vs. Actuals (S&P Global)

Metric	Consensus	Actual	# of Estimates
Revenue ($)	40,517,130*	44,320,000*	10*
Primary EPS	−0.55571*	−0.1277*	7*

Values retrieved from S&P Global.* Note: S&P “Primary EPS” may differ from GAAP diluted EPS (GAAP diluted EPS in Q2‑25 was −$0.34) .

Metric	Period	Previous Guidance (2/11/25)	Current (Q2‑25)	Change
ICL Sales ex‑China	FY2025	$165–$175M	Withdrawn (as of Q1; unchanged)	Withdrawn
China ICL Sales	2H2025	$75–$125M	Withdrawn (as of Q1; unchanged)	Withdrawn
Gross Margin	FY2025	~75% (low‑70s 1H; mid‑/high‑70s 2H)	No update; outlook withdrawn	Withdrawn
Adjusted EBITDA	FY2025	$(50)M to $(15)M; 1H ~$(30)M/quarter; 2H +$5M to +$22.5M/quarter	No update; outlook withdrawn	Withdrawn
Year‑End Cash	FY2025	$150–$175M	No update; outlook withdrawn	Withdrawn

Note: Company did not host a Q2 call due to pending Alcon acquisition .

Topic	Q4 2024 (Q4/FY PR)	Q1 2025	Q2 2025 (Current)	Trend
China channel inventory & demand	Shipped $27.5M to China in Dec with extended terms; did not recognize revenue; elevated inventories amid weak consumer confidence	Minimal China purchases; on track to reduce excess inventory by end‑Q2; expected normalized China sales in Q3	Distributors made minimal purchases, utilizing in‑country inventory; China sales $5.3M	Working through inventory; sales still subdued in Q2
Tariff mitigation & Switzerland manufacturing	Period costs from Nidau ramp; margin impact noted	Consignment into China; ramping Switzerland; sufficient in‑country product through early 2026	Not specifically updated in Q2 PR; sequential margin improvement	Execution ongoing; costs moderating sequentially
Cost control & SG&A	FY24 OpEx up; planned cost cuts in 2025	Restructuring initiated; targeting ~$225M SG&A run‑rate by exit‑2025	OpEx down Q/Q; $5.2M restructuring in Q2	Run‑rate improvement continuing
Regional trends ex‑China	Ex‑China ICL up 13% in FY24	Net sales ex‑China +9% YoY	Net sales ex‑China +10% YoY	Sustained growth ex‑China
M&A	—	—	Alcon to acquire STAA for $28/share cash; no Q2 call	Deal drives near‑term focus

“Net sales excluding China of $39.0 million up 10% Y/Y” (Second Quarter 2025 Financial Overview) .
“Distributors in [China] made minimal purchases during the quarter, opting to utilize existing in‑country inventory to meet procedural demand” .
Prior quarter CEO: “We are on track to resume normalized sales in China in the third quarter.” (Q1 PR) .
COO on mitigation: “We believe this consigned inventory plus distributor‑owned inventory already in country will be sufficient to meet most surgeon and patient needs for fiscal 2025 and the beginning of fiscal 2026… [and] we are readying our Switzerland manufacturing facility” .
CFO appointment release: “On track to achieve our targeted $225 million annual SG&A run rate ahead of schedule.” .

Q2 revenue beat consensus ($44.3M vs. $40.5M), and S&P “Primary EPS” beat (−$0.13 vs. −$0.56). Values retrieved from S&P Global.*
Street models likely need to reflect (a) stronger‑than‑modeled sequential gross margin recovery, (b) continued China sales lag as inventory drawdown persists, and (c) lower OpEx run‑rate exiting Q2 .

Core ex‑China demand remains healthy (ex‑China net sales +10% YoY), supporting the product/brand thesis despite China volatility .
Sequential gross margin recovery (74% vs. 65.8% in Q1) and lower OpEx indicate cost actions are taking hold, reducing adjusted EBITDA losses .
China remains the swing factor; distributor destocking continued in Q2 and still weighs on APAC/ICL units; monitor sell‑through and tariff‑mitigation execution .
Strong liquidity ($189.9M cash/investments, no debt) and buyback activity ($4.5M in Q2; $25.5M authorization remaining) provide downside support ahead of M&A closure .
No reinstated outlook and no Q2 call; near‑term stock path is dominated by the $28 cash takeout by Alcon subject to approvals/timing .
For fundamental holders, the medium‑term lens remains: normalize China, sustain ex‑China growth, lift gross margin back toward mid/high‑70s as volumes recover .

Footnote: Values retrieved from S&P Global.*