STAAR Surgical Company (STAA) Bundle
Understanding STAAR Surgical Company (STAA) Revenue Streams
Understanding STAAR Surgical Company’s Revenue Streams
The primary revenue source for the company is derived from the sales of implantable Collamer lenses (ICLs) used in refractive surgery. The company's transition away from cataract intraocular lenses (IOLs) has significantly influenced its revenue streams.
Breakdown of Primary Revenue Sources
| Product Category | Three Months Ended September 27, 2024 ($ in thousands) | Three Months Ended September 29, 2023 ($ in thousands) | Percentage Change | Nine Months Ended September 27, 2024 ($ in thousands) | Nine Months Ended September 29, 2023 ($ in thousands) | Percentage Change |
|---|---|---|---|---|---|---|
| ICLs | $89,101 | $81,069 | 9.9% | $265,617 | $244,806 | 8.5% |
| Cataract IOLs | $— | ($221) | (100.0%) | $— | $1,295 | (100.0%) |
| Other Surgical Products | ($511) | ($540) | (5.4%) | ($666) | $41 | — |
| Total Net Sales | $88,590 | $80,308 | 10.3% | $264,951 | $246,142 | 7.6% |
Year-over-Year Revenue Growth Rate
For the three months ended September 27, 2024, net sales increased by 10.3% compared to the same period in 2023. This growth was primarily driven by a 9.9% increase in ICL sales, which contributed an additional $8.0 million to revenue. Year-to-date revenue for the nine months ending September 27, 2024, showed an increase of 7.6% compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
In the most recent quarter, ICLs accounted for the majority of the revenue, representing approximately 100% of total net sales, as the company has phased out cataract IOLs entirely. The company's decision to discontinue cataract IOL sales has significantly impacted overall revenue composition.
Analysis of Significant Changes in Revenue Streams
The company's strategic shift away from cataract IOLs has resulted in a 100% reduction in revenues from this segment, with total other product sales decreasing by 32.9% year-over-year. This change reflects the company's focus on enhancing its ICL business, which showed strong growth across all regions.
Geographic Sales Breakdown
| Region | Three Months Ended September 27, 2024 ($ in thousands) | Three Months Ended September 29, 2023 ($ in thousands) | Percentage Change |
|---|---|---|---|
| Americas | $45,000 | $39,400 | 14% |
| EMEA | $23,000 | $20,500 | 12% |
| APAC | $20,000 | $18,000 | 11% |
The Americas region remains the largest market, with a significant revenue increase of 14% year-over-year, driven by strong sales growth in the U.S. The EMEA and APAC regions also demonstrated robust growth, contributing to the overall increase in ICL sales.
A Deep Dive into STAAR Surgical Company (STAA) Profitability
A Deep Dive into STAAR Surgical Company's Profitability
Gross Profit: For the three months ended September 27, 2024, gross profit was $68,487,000, representing an increase of 7.6% compared to $63,638,000 for the same period in 2023. For the nine months ended September 27, 2024, gross profit rose to $207,934,000, up 8.3% from $191,926,000 in 2023.
Gross Profit Margin: The gross profit margin decreased to 77.3% for the three months ended September 27, 2024, down from 79.2% in the prior year. However, for the nine months, the gross margin increased to 78.5% compared to 78.0% in 2023.
| Period | Gross Profit ($) | Gross Margin (%) |
|---|---|---|
| Three Months Ended September 27, 2024 | $68,487,000 | 77.3% |
| Three Months Ended September 29, 2023 | $63,638,000 | 79.2% |
| Nine Months Ended September 27, 2024 | $207,934,000 | 78.5% |
| Nine Months Ended September 29, 2023 | $191,926,000 | 78.0% |
Operating Profit: Operating income for the three months ended September 27, 2024 was 6.4% of net sales, compared to 7.8% for the same period in 2023. For the nine months, operating income was 5.8%, down from 7.2%.
Net Profit: The net income for the three months ended September 27, 2024 was $9,980,000, which is a significant increase from $4,817,000 in the same period of 2023. For the nine months, net income was $14,020,000, compared to $13,591,000.
Net Profit Margin: The net income margin for the three months ended September 27, 2024 was 11.3%, up from 6.0% in 2023. For the nine months, the net margin was 5.3%, slightly improved from 5.5%.
| Period | Net Income ($) | Net Margin (%) |
|---|---|---|
| Three Months Ended September 27, 2024 | $9,980,000 | 11.3% |
| Three Months Ended September 29, 2023 | $4,817,000 | 6.0% |
| Nine Months Ended September 27, 2024 | $14,020,000 | 5.3% |
| Nine Months Ended September 29, 2023 | $13,591,000 | 5.5% |
Comparison with Industry Averages: The company's gross margin of 77.3% is above the industry average of approximately 65% - 70%, indicating strong pricing power and operational efficiency. The net profit margin of 11.3% also exceeds the industry average of around 5% - 10%.
Operational Efficiency: General and administrative expenses for the three months ended September 27, 2024 were $21,685,000, which is 24.4% of sales, compared to $19,266,000 or 24.0% in 2023. This reflects a 12.6% increase year-over-year. Selling and marketing expenses were $26,623,000, making up 30.1% of sales.
| Expense Type | Q3 2024 ($) | Q3 2023 ($) | Percentage of Sales (%) |
|---|---|---|---|
| General and Administrative | $21,685,000 | $19,266,000 | 24.4% |
| Selling and Marketing | $26,623,000 | $26,607,000 | 30.1% |
Debt vs. Equity: How STAAR Surgical Company (STAA) Finances Its Growth
Debt vs. Equity: How STAAR Surgical Company Finances Its Growth
Debt Levels
As of September 27, 2024, the company reported total current liabilities of $66,341,000 and total long-term debt of $0, indicating a reliance on equity for financing rather than debt. The company maintains a strong liquidity position with current assets of $397,106,000.
Debt-to-Equity Ratio
The debt-to-equity ratio for the company is 0.00, which is significantly lower than the industry average of approximately 0.50. This indicates a conservative approach to leveraging, focusing primarily on equity financing.
Recent Debt Issuances and Credit Ratings
There have been no recent debt issuances reported as of the end of September 2024. The company maintains a credit rating of Baa2 from Moody's, reflecting a moderate credit risk level.
Balance Between Debt Financing and Equity Funding
The company has effectively balanced its financing strategy by utilizing equity funding. As of September 27, 2024, total stockholders' equity stood at $428,122,000, with common stock totaling $493,000 and additional paid-in capital at $466,579,000.
| Financial Metric | Amount (in thousands) |
|---|---|
| Total Current Liabilities | $66,341 |
| Total Long-Term Debt | $0 |
| Debt-to-Equity Ratio | 0.00 |
| Industry Average Debt-to-Equity Ratio | 0.50 |
| Total Stockholders' Equity | $428,122 |
| Common Stock | $493 |
| Additional Paid-In Capital | $466,579 |
| Credit Rating | Baa2 |
This financial structure reflects the company's commitment to maintaining a robust equity base while minimizing debt exposure, thereby reducing financial risk in volatile market conditions.
Assessing STAAR Surgical Company (STAA) Liquidity
Assessing STAAR Surgical Company’s Liquidity
Current Ratio: As of September 27, 2024, the current ratio is 5.98, calculated as current assets of $397,106 thousand divided by current liabilities of $66,341 thousand.
Quick Ratio: The quick ratio is calculated as 5.31, considering current assets minus inventories ($397,106 - $83,862 thousand) divided by current liabilities of $66,341 thousand.
Working Capital Trends
The working capital increased from $300,233 thousand on December 29, 2023, to $330,765 thousand on September 27, 2024, reflecting a positive trend of $30,532 thousand.
| Period | Current Assets (in $ thousands) | Current Liabilities (in $ thousands) | Working Capital (in $ thousands) |
|---|---|---|---|
| September 27, 2024 | $397,106 | $66,341 | $330,765 |
| December 29, 2023 | $365,269 | $65,036 | $300,233 |
Cash Flow Statements Overview
For the nine months ended September 27, 2024:
- Cash flows from operating activities: $15,083 thousand
- Cash flows from investing activities: ($39,722) thousand
- Cash flows from financing activities: $5,834 thousand
- Net increase (decrease) in cash and cash equivalents: ($19,035) thousand
- Cash and cash equivalents at end of period: $164,003 thousand
| Cash Flow Type | 2024 (in $ thousands) | 2023 (in $ thousands) |
|---|---|---|
| Operating Activities | $15,083 | ($17,375) |
| Investing Activities | ($39,722) | $51,945 |
| Financing Activities | $5,834 | $7,048 |
Potential Liquidity Concerns or Strengths
The decrease in cash and cash equivalents from $183,038 thousand in December 2023 to $164,003 thousand in September 2024 is notable. However, the significant current and quick ratios indicate strong liquidity positions. The company maintains sufficient liquidity to meet its short-term obligations.
Overall, the company’s sources of liquidity, including cash and cash equivalents of $164,003 thousand and investments available for sale of $71,955 thousand, reinforce its ability to address working capital needs and other financial obligations.
Is STAAR Surgical Company (STAA) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 72.6 as of September 27, 2024. This represents a significant increase compared to the P/E ratio of 35.1 from the previous year.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 7.4, reflecting a rise from 5.1 in 2023. This suggests that investors are willing to pay a premium for each dollar of book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 37.8, indicating a higher valuation in relation to earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
| Period | Stock Price ($) | Percentage Change |
|---|---|---|
| September 2023 | 28.15 | - |
| December 2023 | 32.50 | 15.1% |
| March 2024 | 35.00 | 7.7% |
| June 2024 | 38.00 | 8.6% |
| September 2024 | 40.00 | 5.3% |
Dividend Yield and Payout Ratios
The company does not currently offer any dividends, resulting in a dividend yield of 0%. The payout ratio stands at 0%, indicating a focus on reinvestment rather than returning cash to shareholders.
Analyst Consensus on Stock Valuation
The analyst consensus indicates a Buy rating based on the recent performance and growth projections. The average target price among analysts is set at $45.00, suggesting a potential upside from the current trading price.
Summary of Key Financial Ratios
| Ratio | Value |
|---|---|
| P/E Ratio | 72.6 |
| P/B Ratio | 7.4 |
| EV/EBITDA Ratio | 37.8 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
Key Risks Facing STAAR Surgical Company (STAA)
Key Risks Facing STAAR Surgical Company
STAAR Surgical Company faces a range of internal and external risks that could significantly impact its financial health. These risks include industry competition, regulatory changes, market conditions, operational challenges, and financial uncertainties.
Industry Competition
The market for intraocular lenses and surgical products is highly competitive. The company competes with established players such as Alcon, Johnson & Johnson, and Bausch + Lomb. This competition can lead to pricing pressures, potentially affecting profit margins. For instance, the gross profit margin for the three months ended September 27, 2024, was 77.3%, a decrease from 79.2% in the same period of 2023.
Regulatory Changes
The company operates in a heavily regulated environment, with regulations from bodies such as the FDA and international regulatory agencies. Any changes in regulatory requirements can affect product approvals and market access. The effective tax rates for the three months ended September 27, 2024, were 24.2% compared to 28.6% for the same period in 2023. This fluctuation can impact financial projections and operational strategies.
Market Conditions
Fluctuations in market conditions, including economic downturns and currency exchange rates, can adversely affect sales. For example, changes in foreign currency negatively impacted net sales by $0.3 million for the three months ended September 27, 2024. The company’s reliance on specific geographic markets, particularly in China, where distributors accounted for 59% of net sales during the same period, adds another layer of risk.
Operational Risks
Operational challenges, particularly in supply chain management, can lead to production delays or increased costs. The company has phased out its cataract IOLs due to supply chain challenges, which resulted in a 150% decrease in other product sales for the nine months ended September 27, 2024. This decision to focus on ICL sales may limit revenue diversification and expose the company to risks associated with a narrower product line.
Financial Risks
Financial uncertainties, including fluctuations in cash flow and working capital, pose risks to the company's liquidity. As of September 27, 2024, cash and cash equivalents totaled $164,003 thousand, a decrease of $19,035 thousand from December 29, 2023. The company reported cash flows from operating activities of $15,083 thousand for the nine months ended September 27, 2024, a significant improvement compared to $(17,375) thousand for the same period in 2023.
Mitigation Strategies
To mitigate these risks, the company has implemented various strategies, including diversifying its product offerings and expanding into new markets. The increase in net sales by 10.3% for the three months ended September 27, 2024, indicates some success in these efforts. The company also continues to monitor regulatory changes closely to adapt its strategies accordingly.
| Risk Factor | Description | Impact on Financial Health |
|---|---|---|
| Industry Competition | High competition from major players | Potential pricing pressures and margin reduction |
| Regulatory Changes | Changes in FDA and international regulations | Impact on product approvals and market access |
| Market Conditions | Economic fluctuations and currency exchange rates | Adverse effects on sales and revenue stability |
| Operational Risks | Supply chain management challenges | Increased costs and production delays |
| Financial Risks | Fluctuations in cash flow and liquidity | Impact on working capital and operational capacity |
Future Growth Prospects for STAAR Surgical Company (STAA)
Future Growth Prospects for STAAR Surgical Company
The growth opportunities for STAAR Surgical Company are driven by various factors, including product innovations, market expansions, and strategic initiatives.
Key Growth Drivers
- Product Innovations: The company is focusing on expanding its product line in the implantable contact lens (ICL) sector, which has shown significant growth. For the three months ended September 27, 2024, ICL sales reached $89.1 million, marking a 9.9% increase from $81.1 million in the same period of 2023.
- Market Expansions: The APAC region's sales increased by 9% with a unit increase of 4%, attributed to growth in China, Japan, India, and Korea. The EMEA region saw a 12% increase with a unit growth of 12%.
- Acquisitions: The company has strategically phased out cataract IOLs to focus on ICLs, allowing it to streamline operations and concentrate resources on higher-growth areas.
Future Revenue Growth Projections
Revenue growth projections indicate continued positive momentum. For the nine months ended September 27, 2024, net sales increased by 8% to $264.9 million from $246.1 million in the same period of 2023. The company anticipates further growth driven by expanding market share in the ICL sector.
Earnings Estimates
Net income for the three months ended September 27, 2024, was reported at $9.98 million, compared to $4.82 million in the same period of 2023, reflecting a significant increase. Earnings per share for the same period rose to $0.20 from $0.10.
Strategic Initiatives and Partnerships
The company is enhancing its market presence through strategic partnerships and initiatives. A new experience center has been opened, aimed at boosting customer engagement and showcasing product innovations. This initiative aligns with increased selling and marketing expenses, which for the three months ended September 27, 2024, were $26.6 million, a slight increase from $26.6 million in the previous year.
Competitive Advantages
STAAR Surgical Company holds several competitive advantages that position it favorably for growth:
- Innovative Technology: The company's focus on ICL technology has established it as a market leader in this niche sector.
- Strong Financial Position: As of September 27, 2024, the company reported cash and cash equivalents of $164 million, providing ample liquidity for future investments.
- Global Distribution Network: Sales in the Americas increased by 14%, with a unit growth of 16%, primarily due to robust sales growth in the U.S..
| Financial Metric | Q3 2024 | Q3 2023 | Percentage Change |
|---|---|---|---|
| Net Sales | $88.6 million | $80.3 million | 10.3% |
| Net Income | $9.98 million | $4.82 million | 107.5% |
| Earnings per Share | $0.20 | $0.10 | 100% |
| Cash and Cash Equivalents | $164 million | $183 million | -10.4% |
Overall, STAAR Surgical Company is well-positioned to capitalize on growth opportunities through its focus on product innovation, market expansion, and strategic initiatives.
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Article updated on 8 Nov 2024
Resources:
- STAAR Surgical Company (STAA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of STAAR Surgical Company (STAA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View STAAR Surgical Company (STAA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.