STAAR SURGICAL CO (STAA) Q3 2025 Earnings Summary

Executive Summary

Q3 2025 net sales were $94.7M, up 6.9% year-over-year and more than double Q2 2025, driven by recognition of $25.9M from the December 2024 China shipment; ex-China net sales rose 7.7% to $38.9M .
Gross margin expanded to 82.2% (vs. 74.0% in Q2 2025 and 77.3% in Q3 2024) mainly because the $25.9M China shipment revenue carried 100% gross margin (cost of sales recognized in Q4 2024) and lower period costs after Q1 cost actions .
GAAP diluted EPS was $0.18 (vs. $0.20 a year ago; $(0.34) in Q2); Adjusted EBITDA rose to $34.6M ($0.68/share) from $16.2M a year ago, reflecting higher gross profit and reduced OpEx despite merger-related costs .
The Street’s Q3 2025 consensus was $89.4M revenue and $0.28 Primary EPS; actuals beat on both revenue and Primary EPS (Primary EPS actual 0.471*) — while GAAP EPS printed $0.18, reflecting higher taxes and lower other income *.
No Q3 earnings call was held due to the pending Alcon acquisition; management instead emphasized operational progress and share repurchases as catalysts amid China inventory normalization .

What Went Well and What Went Wrong

What Went Well

Ex-China growth: Net sales excluding China increased 7.7% Y/Y to $38.9M, evidencing resilient adoption outside China .
Margin recovery: Gross margin rose to 82.2% aided by the timing of cost of sales recognition on the China shipment and Q1 cost reductions; operating income improved to $18.5M vs. $5.7M Y/Y .
Cost discipline and buybacks: Total OpEx fell Y/Y to $59.4M even with $5.9M merger costs; 115k shares were repurchased in Q3 under the $30M authorization .

Selected management quotes (prior quarter context given no Q3 call):

“We are rapidly turning the corner, and our long-term prospects are excellent.” — CEO Stephen C. Farrell (Q1 press release) .
“We negotiated consignment agreements… we believe [China inventory] will be sufficient to meet most demand through early 2026.” — President/COO Warren Foust (Q1 call) .
“We believe these actions will position us to exit 2025 with an SG&A run rate of approximately $225 million.” — Interim CFO Deborah Andrews (Q1 call) .

What Went Wrong

China orders: Lower new orders from China distributors (leaner inventory management) made organic demand in China softer, with Q3 China sell-in dependent on the December shipment recognition .
Taxes/other income: Income taxes rose to $9.9M (vs. $3.2M Y/Y) due to reversal of H1 tax benefits upon China shipment recognition; other income declined vs. prior year, weighing on GAAP EPS .
Elevated merger and restructuring noise: $5.9M merger-related costs in Q3 (and cumulative restructuring in H1) distort non-GAAP vs. GAAP comparisons and obscure core profitability trajectory .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$88.590	$44.320	$94.732
Gross Margin %	77.3%	74.0%	82.2%
Operating Income ($USD Millions)	$5.682	$(29.964)	$18.490
Net Income ($USD Millions)	$9.980	$(16.812)	$8.884
Diluted EPS ($USD)	$0.20	$(0.34)	$0.18
Adjusted EBITDA ($USD Millions)	$16.241	$(14.939)	$34.6
Adjusted EBITDA per Diluted Share ($USD)	$0.33	$(0.30)	$0.68

Segment/Geography

Region Sales ($USD Millions)	Q3 2024	Q2 2025	Q3 2025
Americas	$6.029	$7.307	$7.211
EMEA	$9.614	$11.436	$10.364
APAC	$72.947	$25.577	$77.157
Global Sales Ex-China	$36.122	$39.021	$38.899

Country

Country Sales ($USD Millions)	Q3 2024	Q2 2025	Q3 2025
China	$52.468	$5.299	$55.833
Japan	$10.534	$10.915	$11.226
South Korea	$5.096	$4.293	$5.491
United States	$4.681	$5.635	$5.632

KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Global ICL Unit Growth (%)	6%	(63%)	9%
Net Sales Ex-China ($USD Millions)	$36.122	$39.021	$38.899
Gross Margin %	77.3%	74.0%	82.2%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth ex-China	FY 2025	9%–15% growth (discussed)	Guidance withdrawn (May); no update in Q3	Withdrawn
China revenue	FY 2025	$75M–$125M (discussed)	Guidance withdrawn (May); no update in Q3	Withdrawn
Gross margin	FY 2025	~70% (discussed)	Recognized margin drivers; no formal guidance; margin aided by shipment timing	Withdrawn
SG&A run-rate	Exit 2025	~$225M target (discussed)	Continuing cost optimization; Q3 OpEx down Y/Y	Maintained directional
Year-end cash	FY 2025	$150M–$175M (discussed)	No formal update in Q3; cash/cash equivalents/investments $192.7M at 9/26/25	Withdrawn
Adjusted EBITDA	FY 2025	~$(30)M loss (discussed)	No formal update; Q3 Adj. EBITDA $34.6M	Withdrawn
Earnings call	Q3 2025	N/A	No call due to pending Alcon acquisition	N/A

Earnings Call Themes & Trends

Topic	Q1 2025 Mentions	Q2 2025 Mentions	Q3 2025 Current Period	Trend
China demand & inventory	In-market ICL procedures improving; normalize sell-in by Q3; China shipment revenue recognition in Q3	Minimal China purchases; distributors consuming inventory	Q3 revenue includes $25.9M recognition from Dec shipment; distributors managed inventory lean	Improving sell-through; cautious distributor restocking
Tariffs & mitigation	Consignment inventory shipped to China; Switzerland manufacturing ramp to mitigate longer-term tariffs	Continued ramp; cost actions ongoing	Shipment recognition and ex-China growth; limited forward tariff detail in release	Mitigation actions in place; Switzerland ramp ongoing
Cost controls & SG&A	Target exit run-rate ~$225M; restructuring charges	OpEx down Y/Y; restructuring/impairment $5.2M	OpEx $59.4M vs $62.8M Y/Y; $5.9M merger costs	Sustained discipline; merger costs add noise
Product roadmap (EVO+ V5)	On-track for China approval mid-year; premium positioning contemplated	Not updated in Q2 8-K	Not addressed in Q3 8-K; focus on sales/margins	Await further regulatory updates
Competition	Eybrite impact “immaterial thus far”	Not mentioned	Not mentioned	Stable/limited impact
U.S. strategy	Measured DTC and events; right-size spend; focus on conversion culture	Americas growth 10%	Americas $7.2M vs $7.3M in Q2	Steady; disciplined spend

Management Commentary

“STAAR’s first quarter sales were in line with expectations, but we can and will do better. We are rapidly turning the corner, and our long-term prospects are excellent.” — CEO Stephen C. Farrell (Q1 press release) .
“We worked with our distributors in China to set up consignment agreements and shipped ICLs ahead of tariff implementation deadlines… sufficient to meet most demand through early 2026.” — President/COO Warren Foust (Q1 call) .
“We believe these actions will position us to exit 2025 with an SG&A run rate of approximately $225 million.” — Interim CFO Deborah Andrews (Q1 call) .
Q3 release emphasized margin mechanics: cost of sales for the December China shipment recognized in Q4 2024, while $25.9M was recognized in Q3 2025 at 100% gross margin .
Q3 postured toward capital allocation and pending deal: 115k shares repurchased; no debt; no call due to Alcon transaction .

Q&A Highlights

China trajectory: End-market ICL procedures in China improved; sell-in to normalize by Q3; distributors to contractual inventory levels by end of next month (from Q1 call) .
Tariff mitigation: Rapid consignment and Switzerland capacity ramp; planning for long-term neutrality to tariff risk .
Competition: Eybrite uptake “immaterial” thus far; competition could expand category awareness .
Pricing: No major changes; value proposition drives demand, with potential premiums for EVO+ in China .
U.S. approach: Measured investments, focus on surgeon confidence and conversion culture; targeting practices able to scale EVO ICL .

Estimates Context

Metric (Q3 2025)	Consensus	Actual
Revenue ($USD)	$89.387M*	$94.732M*
Primary EPS ($USD)	$0.28*	$0.471*
EBITDA ($USD)	$17.525M*	$26.504M*
Primary EPS - # of Estimates	6*	—
Revenue - # of Estimates	8*	—

Values retrieved from S&P Global*.
Notes: Company-reported GAAP diluted EPS was $0.18 (vs. normalized “Primary EPS” above), reflecting higher income taxes and lower other income despite strong gross margin . The Street typically benchmarks Primary (normalized) EPS; STAAR reports GAAP diluted EPS in its filings.

Key Takeaways for Investors

Core demand outside China remains healthy (ex-China +7.7% Y/Y) and should underpin baseline growth while China distributors manage inventory more tightly .
The Q3 revenue/Primary EPS beat versus consensus was aided by one-off timing (China shipment recognition at 100% gross margin); normalize Q4/Q1 models for this effect *.
Margin trajectory is improving with cost actions, but GAAP EPS lagged due to taxes/other income; focus on OpEx control and merger costs when modeling profitability .
Switzerland manufacturing ramp and consignment inventory provide tariff risk mitigation into 2026; monitor regulatory approvals and ramp efficiency for medium-term gross margin recovery .
Americas/EMEA steady; APAC dominance continues with China normalization; watch Japan/Korea consistency as stabilizers to near-term volatility .
With no Q3 call and pending Alcon acquisition, near-term stock narrative likely centers on deal probability and timing; fundamentals show operational improvement despite noise .
Adjust models: Strip out the Q3 shipment timing benefit, incorporate lower OpEx run-rate, and use Primary EPS for consensus comparisons while reconciling to GAAP diluted EPS for valuation *.

Source Documents Reviewed

Q3 2025 8-K 2.02 earnings press release and attached financials .
Preliminary net sales 8-K (Oct 20, 2025) .
Q2 2025 8-K 2.02 earnings press release and financials .
Q1 2025 press release and full earnings call transcript .
Merger-related press releases (context) .