STAAR Surgical (STAA) 5 May 192019 Q1 Earnings call transcript

Good day, ladies and gentlemen, thank you for standing by. Welcome to the STAAR Surgical First Quarter 2019 Financial Results Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following the presentation, the call will be open for questions. [Operator Instructions] This call is being recorded today, Wednesday, May 1st, 2019. like the I'd Mr. over time, this to conference turn to At Moore, Media STAAR and Director, and Brian Investor for Relations Senior Corporate Development Surgical.

Officer. joining XXXX, review my the and Thank financial Eastern Deborah me results Surgical The Relations Kevin, in Investor afternoon, first company's XX, call us quarter Caren President XXXX. Andrews, the are first Chief and results on after Financial for with is release as of issued conference Senior Director, www.staar.com. available to you, quarter press STAAR March on and new Mason, afternoon Thank this website our role for the Time ended of just good CEO; at now you STAAR's was everyone. X:XX and P.M. Along

events and associated differ today's described from are in uncertainties statements as to no the with with so. forward-looking statements these harbor conference obligation remind about is date begin, intend webcast caution that statements the are and and by important uncertainties those cause STAAR's of a this This includes make safe as let course judgment of materially company STAAR to periodic quickly to that call, risks These or and call are assumes We of historical forward-looking required call results in statements. forward-looking release is statements. does forward-looking outcomes actual forward-looking on described as subject we statement that filings in the the not me conference do any as not statement. during beliefs in The the plans, the press remarks statement and Except update and will SEC. made a analysis actual statement the this fact to numerous public that and well reflect you you this future based prospects. the to conference of risks expectations, projections, could Before law, company's

the these non-GAAP GAAP adjusted helpful supplement non-GAAP reconciling release. the in performance. to information is that net supplemental addition, income have per information historical assessing numbers in provided future today's information are non-GAAP and adjusted meaningful numbers, to GAAP In believe the we A table earnings included provide We press our and share. and

Following open our prepared remarks, turn Caren to that, with ask this Mason, line President with to everyone and we initial STAAR. We then themselves I'd questions re-queue like publishing their analyst for of analysts. We in with to over follow-ups. the to And limit any will questions, from CEO call that advance two thank process. the cooperation

and good Thank you, Brian, afternoon, everyone.

The first targets to margin, the Growth global reported rates in ophthalmic was quarter X year significantly publication to driven of X% our sector XX% ICL XXXX. research target first annual points the our the year projected last quarter quarter strategic at for earnings the levels compared were and operating we XXXX financial as start the call today to February. above the and strong industry. supporting XXXX. unit a XX% ahead reported a which or for to X% Sales, continued outlined for achieving growth you solid we share all margin The late per on results growth the priorities was full up growth gross of ophthalmic ICL on are in for and prior above basis, our in market by be

for and procedure the primary vision consecutive represented of unit quarter refractive fact, and ICL record first a repositioning ICL again sales premium ICL quarter. of of sales the attributable to quarter the and In for the as seventh double-digit the achieved correction. XXXX ICL growth successful units levels

India as in increased the grew And North including sales negative prior grew XX%. and the XX%, in ICL constant ICL sales first U.S. was basis, XX% not grew respectively XX% at China Canada. sales decline quarter total Asia America currency growth impact. UK of in quarter year. On first and offset anticipated ICL growth an in Japan Germany XX% the the XX%, in regional XX% XXXX, net net a exceptional. over XX% Korea For XX%,

and strategic practices. celebrate During celebrating as milestone communications of and the for today first before of outstanding continue ICL we especially years in publications, we provide validating creation We the than success accelerating our quarter, efforts. the extraordinary implanted XXX Also more especially more X actual significant selected employees, was million and the evidenced alliance The been is peer partner and long-term clinical illustrate efficacy, refractive marked audited partners to X appreciably than collamer the of ICL several we XXth XX beyond our surgeons XXXX more and units implants we agreements having date with to unannounced lenses, announced quarter, into prior and market date the milestone calculated investors. surgeon ICL the first media growth outcomes. and to are a the our timely cooperation and appreciation the making announcement. ICL new the The our since implantable by combined. ICL. significant and our the agreements agreements, safety to April U.S. million end of internally success outreach and supporting power entered we closely reviewed their there These Subsequent

the performance, beginning we with as more it the recent make sustained only part, continue or a larger for a growth pleased surgeons of to While the their believe of we are ICL at refractive globally offering part meaningful our just practice.

estimated vision X the the As million we refractive measure procedures ICL globally. annual to occur correction against

annual believe the for regard trial a earlier With to myopia pivotal need million was achieve versions we fully share which can lens, the near We to total ICL are in XXX,XXX in EVO the range. age presbyopia If our in market related to additional ICL which see a is year for to which correction lens near X.X commanding opportunity. we and of we presbyopia, our for share correction, alone, current would call. lenses you XX% addresses X% per our to enrolled vision add medium-term ICL or equate market the European between with the distance X.X Our XX% year. reported lenses for last that The as lens the EDOF. on vision a million this is trial an opportunity

forward is expanded and our remains obtain are the Evovisian required Earlier interactive lowering Japan and the remainder will for acceptable ICL We and Germany in the FDA of month in the priorities ICL strategic sharing plan low respected six We the these ophthalmic diopter our mid that societies we the one remain patients of body range today, have summer. in information that announced conducting diopter CE ICL, with These or and diopters our we'll from Mark ophthalmologist broadly their submit the from methods ophthalmic the an accelerate three the Evovisian study this helping application regulated determining visual of contact when with for lesser of patient pivotal and PMA societies look glasses hassles our now data of permitted range patients prescriptions, growth. confidence inconveniences the usage leading societies and follow-up refractive more the greater diopters. negative lenses regarding to the reputable from to in additional family to Similarly preferred seeking future we permitted the appropriate. freedom when of dialogue appropriate. to from disposable of give for negative Once use lenses. patients six Increasing when again, pronouncements our U.S. supplemental approval provide to

U.S. U.S., we the addition the leaders, whom mentioned of establishing strong our a Turning business to last the cadre the on our in that the with call rebuilding U.S. we console we and partner experts of ophthalmic ICL surgeons products. are with EVO process family will ICL and of pending of of our for thought

you through towards operating I at already our that and announce in the made and underway. rooms We won't We in our like with Summit clean of next equipment the And investments U.S. manufacturer are this the signed highlight refractive growth imperatives for of have U.S., our I to will is capital of to Lake our strategic our and to Dozens number progress XXXX with into participate a strategic on pleased of we lens we the for the expense leading support prudent opportunity a of agreed continue realizing step we beyond. but on facility and during presbia surgeons for Console will the already first having purchased to with made on EDOF ICL construction go detail Surgeons last growth leaders Forest much in have imperatives. call, few EVO our summer. quarter progress several outlined the alliances too STAAR. finally, clinical our

in and before expected addition manufacturing to remarks. the double seasonally second additional to efforts California enter in financial earnest obviously sufficient continued we and are outlined. in demand than and now my our impact are investments highest turn review QX quarter our call are positively I'll QX, projected to seasons the which this plan. now these lens, more the manufacturing begin facility meet of efforts further just year significant myopia of this to implant Those also high half as our Deborah? capacity highlights. in For XXXX. our I STAAR quarters prepared Even has year capacity will capacity Monrovia, we the over of to Deborah XXXX first

overview million of prior financial the provide the and net $XX.X for STAAR XXXX, Thank of increased net afternoon million. headwinds, period quarter primarily the period. XX% then with of an over and sales $XX.X sales XX% Adjusted in year of detail top-line I'll in the reported summary approximately increase to the the $XX.X the start have first more you, good down would reported over results income the statement. Caren, everyone. currency year million ago euro,

products growth driven Caren top-line of will and of QX. the declined in sales, quarter. rate XX% XX% the was which company increase sequentially by represented second We in total sales resuming revenue potentially less third the strong other offset partially net by which decline be As quarter, ICL of segment anticipate product the sales XX%, other quarters, mentioned, in growth in

increased quarter first partners. lower income from of to total profit increased million, points were favorable to sales And look operating $XX.X million. statement; components volume due due expenses prior of large sales consumer margin The for is increase the for resulting related strategic facility salary gross the expenses dioptre the of parts, $XX.X spending quarter and the as quarter margin effect million mix, increased profit of year XX.X%. continued XXX increase $XX.X $X.X XX%, expenses, margin marketing. selling prices million gross closer improvement were to including prior Marketing ICLs commitments to to in first and sales G&A decreased net first of and by margin compared investments were increased expenses, stock-based strategic $X.X included while of quarter lower XX.X%, in average headcount The headcount, million million injector company increased and Taking down year dollars compared G&A operating was basis expense gross and XX%. our the compared partially and compensation travel in and ago. the an of selling Moving were year XX% up Total as digital, ICL offset in the and compared product gross for $X.X costs. quarter to the at increased

sales and XXXX. to marketing were million QX sales the compared in below through QX expenses XXXX, and $XX.X QX, up expense for of average Although marketing

compared year generated to compared clinical during ago Net for compared operating as quarter first the compensation with dollars ago or more million share. diluted included than adjusted XXXX or in during period quarter the per for $X.X information reported $X.X financial of million expenses. We the compared million increase to On of income with is diluted the generation a $X.XX income of $X.X first net margin diluted approximately $X GAAP we share. $X.XX non-GAAP million for A net million to of gross the $X.X were to the quarter our million $X.XX per quarter. basis, ago or same per reconciling first ICL million operating information R&D income of the quarter. next $X.XX related to share expenses release. the approximately per share in headcount, diluted and table presbyopia. was year expenses income the $X.X net today's in optic as adjusted million offset in year EDOF Higher $X.X R&D expenses operating the include income income of or $X.X Our non-GAAP

XXXX. XXth, with cash activities Turning of million our compared from our now equipment, a sheet; and $XXX $X.X cash, questions. Company XXXX, concludes XX, ready and December totaled $XXX.X revolving we're in at property Operator, XXXX, equivalents of to XXX,XXX restricted balance in repaid prepared the The at cash credit as million to our operating on approximately cash March and wholly-owned invested now line million Japanese This our XXX,XXX of remarks. subsidiary. in quarter take first generated

Instructions] Jason [Operator Canaccord Genuity. Mills comes with Our first from question

Hi, Congrats start question. Caren for on and Deborah. a the hear year. Thanks Can to taking the me okay? you good

Yes, Jason.

Super.

to going apologize abide extra investors because in I advance by lots here. rules. things if and questions squeeze I But to -- try So, I I'm in. there in think Brian's are of that are interested an

larger difficult for do My wanted question, contribution long your think units at first exactly unit be as By of growth challenge, over will in we'll me. QX the U.S., worldwide XXXX, have more your big you I I'll be part That's years is, math last the doubled to factor hasn't for my also back take but years. there for the get but been expectation stop math, just to and confirm again that two looking ICL numbers the now. a becomes it'll talk forward a how Caren. which question, First, going that question a double from about the of and you big that ICLs, maybe -- in two know

Okay.

would we the unit we our again So, end of hope could double from growth by XXXX that XXXX.

is though stronger. to focus go Our

for at just and at have going a that in and to we on profile are definitely presbyopia so, Korea of grew to how we believe have grew to to XX%. than standpoint, And meeting we point. these fit to in. plan Spain China X.X% our achieved XXXX, a market time, in share at this of from and will from will we to X.X% we information aggressive rebuild X.X% course, XXXX But investor strategic estimates, will that X.X% And Japan even the you fit told from grew our more a refocus if take QX U.S. recalibrate, November, XX.X%, grew just are from and of look XX%, we've to but how you definitive XX.X%, from QX think

the So, to as down Japan announcement our goal have moving Germany diopter about today the our societies ophthalmic lenses curve. is and

gaining all great your goal refractive solution is Our based to become needs a lens for traction. definitely

there, helpful. of thank Lot very That's color you.

What U.S. forward have U.S. make Could your but you've around today you the questions. to supplemental with of EVO still maybe us truly us details societies making filing is we're do Second I the any some things that range? expand moving color But a question Japanese in one, these a low well a of as border for with there, give A the And the alliances. of constitute, lens. German the diopter mile lot its many FDA as alliances or what believe, goes can and on I'll of waiting in when down to couple decisions give here yeah, Germany of imply FDA minus -- to announced And the on in to opportunity the comment opportunity what EVO a back with for the decision if U.S. Thank you. you might that you're the U.S.? in you goes Could in to queue. application get Germany.

Okay.

strategic the agreements. the with similar strategic very So, are alliances, to to U.S. alliances regard

you're As a we aware U.S., in lower have base. the

the well training. the practice So, dollars, expansion support, level digital terms difference marketing unit direct the of development is marketing expected is that as only in of return surgeon really and as strategic growth and

that U.S. strategic we family have and the brought also us and definitely those change current we all alliances in those will product a are made of to have world around now related product the that components numbers. successful so the of to a So, signing alliances hope we that the have dramatically future

the diopter fundamentally, expanded In our means and not diopter announcement, that opportunity. against gone terms which an down high now German is Japan being Germany has to of a -- one, yes, has now all to minus being reputation Society

can't we sure our for they see FDA but reads We say I are press so, that hope is releases, important. And this hugely the adjacent.

lenses the plus think news, XXX,XXX is today's be reviewed announcement of that positive bottom along these clinical all and I with this implanted million EVOs peer excellent journal helpful. in would the good XXX articles line

Stephens. question Chris comes Our next from Cooley of

then Good queue the got a afternoon, Thanks Jason to all as try questions. taking in the for ask well. at get everyone. in stuff start. good always and -- I'll here squeeze couple gets the back and

we growth of the When at I realized the when two-part could China decelerated growth well. do this particular, grown we denominator at unit But help has you us maybe rate the maybe here, XX%. there. Just as in bit. a there understand, phenomenal growth look better I'll that of But has look on side

about in could from us of you from then of little maybe us there, the the guess what particular? market rate I've I bit my that. large talk help end an obviously perspective one after got And So, contribution one we're seeing understanding growth there follow-up better to customer there? get a -- Just

terms if growth, we impact of we're really in course, at at currency unit euro, looking China, which a XX% on adjusted do look does of the So, XX%. based not

majority at of looking their said that of heavy rate it's we exactly what's occur be, what were implants growth will not, are in QX. and we China's China we happening which you If is would QX seasons in growth is decelerating, in the

but are numbers exceptionally through strong implant inventory, demand. QX a will you're all are for confident in last of like and have do quarter week the numbers essence basis, implant China. QX first what the we another we a in we and that of a the of very aware to coming obviously, clearly prudent softening, a have and ahead looks see potential we in relative not But So, going it's -- on management

But just think question I in as to play capabilities as that much. updated curious a production too. the clarify there to be that's time in to Forest bit well associated pertains and I'm us up. get in continued coming involved timeframe we'll might you've Deb Monrovia help a anticipation. what costs? thoughts facility, hear over the little then the wanted how towards that it the your going so here Lake another I'm ramping up about as Thanks just strategically to maybe bit, expansion Switzerland? And about there excited if

just our initially be site as lenses a site being then ICL manufacturing begin will a strategically, to distributed for there Company. re-opened eventually, are for is premium will China. Europe. we expand production It that So, manufacturing And Switzerland dedicated all into to

supporting We of Monrovia expect that rest the remain world. aggressively will

In and new new -- administrative general as leased operations. as operations our terms offices, we are of have a packaging definitely already well commercial costs, we for space and

So will this can our that current manufacturing. use expectation how XXX% is outlays that be we for the facility much capital And ICL Deborah year?

total In for or Nidau? just

Nidau. for Just

$X probably Just for Nidau about million.

comes with question Brian Weinstein next Our from William Blair.

and Caren about guidance. the we there on above touch you Caren. relates the terms baked in in contracts that touch little you that ICL we if And guidance, what there anything afternoon, as in talk This you just the reiterate first up then us minimums first it Maybe that's could hear growth on Maybe signed? is Brian. I you bit you remind Thanks. is? good can -- could Deborah. year the to it maybe of you the and Is expect? build didn't could did, Andrew for Hi, for on just hi, the that a

growth. and be directionally are unit be we plus looking said XX% We Street track. we'd we So revenue at plus on told overall ICL definitely growth XX% we would that The

What said operating said our We on that would We we improve We on are were part we're sure your would cash We position track. cash last question? cash margin, are improve we of on are we make our the gross we were margin, track. track. flow we that definitely said on positive we're track. And we on would would total was higher second improve and our than track. year, we we --

guidance, the as on ICL relates growth. it then, And to that mainly

in is you've with partners? that, of build-up signed build above the there that about think in that the out you minimums that anything contractual strategic your baked As

Absolutely.

us an additional magnitude you Could bit of maybe give of on a little that? with the color --

In focus we're in one great it of put get willing to as to our to become this practice model ophthalmologists procedure. that primary ophthalmologists Let's market way; is to to and just that, large create hundreds to the makes a order the the share work do group a much business from sense.

is, closer about we is have do more get and we we then with And diopter as only clinics, closer definitely and market actually greater we for but too so, getting and achievable, that what XX% move opportunity to Japan, what above ICL much in and we in now off we start share, we lower patients recently China. talked believe example,

have yes, And growth. definitely require volume. the percentage so our most you for with agreements, balance a of But that, decent of to we you do remember,

and So, different if say XX,XXX XX%, for if a we you are that's XX% using we'd XXX ICLs talking certainly grow here ICLs to XX%. about using asking someone you we're to scenario like we're and than

all in the balance do all So, mix. we

as think as so the relates we And to diopter and Could here. down you Thanks the move maybe remind Japan. it Germany much. pricing question Congrats of about you announcements just how then, us as out should curve? on pricing follow-up a on

You're mid-term and help business the assist around as by see surgeons managing welcome. We acquisitions short lower patient to diopter to our in pricing. a expectations accelerate pricing

with [ph]. And higher see narrowing you'll premium time to the And a presbyopia see diopter passes the lens so lower with you'll range as the Toric a spheric always and the you'll of all lenses the becomes diopter lenses see it premium. difference

balances way. So a price before of right it's only matter time the elasticity the

Company. Benchmark Our Jackson next from comes Bruce question with

and question. for good taking thank afternoon, good my afternoon Hi, you

Europe. lenses as new presbyopia that to you these in think So over the extent guidelines well? will Do with the

will ICL on I so, expect a whole at but be good but but that's point, question this it's would that refractive can't contemplating. predict that, obviously I area, certainly

And then about my States. United was other the question

the queue. number Do us a revenue see with afternoon. didn't you I know, to can wanted that you the in United I this share have States So,

XX% up in revenue.

the you're with see just with the is year. patients that generally ICL, the there physicians how developing backlog patients course that the are do uptick working Toric it's then, current that the version sales of the of existing understanding through over of still backlog domestic And the growth and you our seeing of some

done way of think in good roll with the finding a we've very surgeons Toric a the to job to I Well, the need out available certification product lenses markets training, and as be. major

which So past for in ship of this XX% within point is with at concerned sizes of up the so keeping XX order. backlog not, us to demand was we we're believe able are we that hours Toric and

So the a size six most wait approximately to you would customized for lens. to is special have Toric four weeks

Jim Sidoti Sidoti Our from next question comes & Company. with

Good you me? hear afternoon. Could

Yes, Jim.

afternoon, Good Caren.

if in the million, around lens been the $XX.X get number in look to assuming you sales the $XX four marketing quarters. later -- it's that approved Should in we we at year EVO and expect to spending, U.S.? that the pick that million last So, up start

ESCRS beginning increase QX. Yes, have that's correct, Jim. in second it the trade to ASCRS do Also third We quarter, we shows the expect probably quarter. in recall, in you as

do I the the yes, So in to expect of remainder year. increase

you come EVO once out do new campaign approved? to have a marketing And is

Yes.

that it right, for was me. All Okay.

Jim. Thanks,

Stephens. Our question from with comes Cooley next Chris

want for quickly in. and Good question to thank to you one correctly. and afternoon, I more squeeze initial to go allowing my very just you make back sure I all me heard

many. for focus of topic a been has this know I actually So,

about in been I and performing the expected are up assuming the from XQ standpoint conditions market China, in-market and quarters with a as seasonal XQ So, think the trends have and also when those strongest still we change. am not the there, demand in ramping

was you'd second those up Am implicitly, revenues be into an off we the thinking XQ start. impressive correctly? quarter of I about what roll to as that expect sequentially So, obviously

give a Chris, Yes, you color. I'll little more

QX If the you be to at what at compare QX, and similar. might then prior to trajectory to growth it China in it we quite should look expect at year it look QX QX

and Got you look it, forward to on super. Saturday. Congrats, again see I

And line, you're forward Chris. seeing at Jason, if look Saturday, as to Thanks much. still at see the ASCRS. We'll you on very well we

to weeks their forward participation call like we're coming road the we're I'd many on and on look with today. when be. the to you we our of that, with for So everyone speaking where thank to We in the going on --

we're and of San be May weekend, be Diego. at Forest welcoming headquarters UBS the Jefferies booth ASCRS this Vegas. our forward Tour you America We'll to in We're Bus Conference we a at New going May on be hosting to Conference Las Bank Merrill many XXth Lake STAAR's to Xth. XXth. Lynch of going on at So, And during in Investor on at Healthcare in seeing June York look Healthcare

we always, As you. appreciate of All all and best the company. to your interest investment our in

presentation. and gentlemen, Ladies today's this does conclude

may have a You wonderful now and disconnect day.