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What changed in STAAR SURGICAL CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of STAAR SURGICAL CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+323 added−302 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-23)

Top changes in STAAR SURGICAL CO's 2023 10-K

323 paragraphs added · 302 removed · 233 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+34 added−22 removed117 unchanged
Biggest changeThe global cataract IOL market is highly concentrated, with the top five competitors (Alcon, Johnson & Johnson, Hoya, Bausch & Lomb and Carl Zeiss Meditec) combined accounting for approximately 66% of total market revenue, according to Market Scope reports. 6 The Human Eye The following discussion provides background information on the structure, function, and some of the disorders of the human eye to enhance the reader’s understanding of our products described in this report.
Biggest changeThe Human Eye The following discussion provides background information on the structure, function, and some of the disorders of the human eye to enhance the reader’s understanding of our products described in this Annual Report. The human eye is a specialized sensory organ capable of receiving visual images and transmitting them to the visual center in the brain.
Because presbyopia often results in the need for reading glasses, it is sometimes confused with farsightedness. intraocular – within the eye. injector or injector system – a device in the form of a syringe that is used to deliver a foldable IOL into the eye through a slender nozzle in minimally invasive cataract surgery. iridotomy – a small hole created in the iris, usually made with a YAG laser.
Because presbyopia often results in the need for reading glasses, it is sometimes confused with farsightedness. intraocular – within the eye. injector or injector system – a device in the form of a syringe that is used to deliver a foldable IOL into the eye through a slender nozzle in minimally invasive eye surgery. iridotomy – a small hole created in the iris, usually made with a YAG laser.
We also maintain commercial offices in China, Germany, Spain, India, Singapore, and the U.K. 2 Financial Information about Segments and Geographic Areas 100% of the Company’s sales are generated from the ophthalmic surgical product segment and, therefore, the Company operates as one operating segment for financial reporting purposes. The Company’s principal products are ICLs used in refractive surgery.
We also maintain commercial offices in China, Germany, Spain, India, Singapore, and the U.K. Financial Information about Segments and Geographic Areas 100% of the Company’s sales are generated from the ophthalmic surgical product segment and, therefore, the Company operates as one operating segment for financial reporting purposes. The Company’s principal products are ICLs used in refractive surgery.
Despite measures taken to protect our intellectual property, unauthorized parties may copy aspects of our products or obtain and use information that we regard as proprietary. Seasonality While certain individual markets may be impacted by seasonal trends on a quarterly basis, in the aggregate, seasonality does not materially affect our sales.
Despite measures taken to protect our intellectual property, unauthorized parties may copy aspects of our products or obtain and use information that we regard as proprietary. 5 Seasonality While certain individual markets may be impacted by seasonal trends on a quarterly basis, in the aggregate, seasonality does not materially affect our sales.
The FDA may also issue warning letters or untitled letters, refuse our request for 510(k) clearance or PMA approval, revoke existing 510(k) clearances or PMA approvals previously granted, impose operating restrictions, enjoin, and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us.
The FDA may also issue warning letters or untitled letters, refuse our request for 510(k) clearance 9 or PMA approval, revoke existing 510(k) clearances or PMA approvals previously granted, impose operating restrictions, enjoin, and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us.
Requirements for manufacturers and MAHs include compliance with Japanese regulations covering GQP (good quality practice) and GVP (good vigilance practice), which largely include conformity to the ISO 13485 standard and are similar to good manufacturing practice and post-market surveillance requirements in the United States, as well as the assignment of internal supervisors over marketing, quality assurance, and safety control.
Requirements for manufacturers and MAHs include compliance with Japanese regulations covering GQP (good quality practice) and GVP (good vigilance 11 practice), which largely include conformity to the ISO 13485 standard and are similar to good manufacturing practice and post-market surveillance requirements in the United States, as well as the assignment of internal supervisors over marketing, quality assurance, and safety control.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding STAAR and other issuers that file electronically with the SEC at http://www.sec.gov . Glossary The following glossary is intended to help the reader understand some of the terms used in this Report. acrylic – a broadly used family of plastics.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding STAAR and other issuers that file electronically with the SEC at http://www.sec.gov . Glossary The following glossary is intended to help the reader understand some of the terms used in this Annual Report. acrylic – a broadly used family of plastics.
A person with myopia cannot clearly see distant objects without eyeglasses or contact lenses. ophthalmologist – a surgeon who specializes in the diseases and disorders of the eye and the related visual pathway. ophthalmic – of or related to the eye. 15 optic – the central part of an IOL or ICL, the part that functions as a lens and focuses images on the retina.
A person with myopia cannot clearly see distant objects without eyeglasses or contact lenses. ophthalmologist – a surgeon who specializes in the diseases and disorders of the eye and the related visual pathway. ophthalmic – of or related to the eye. optic – the central part of an IOL or ICL, the part that functions as a lens and focuses images on the retina.
We believe this will result in a significantly increased number of patients seeking refractive procedures. We believe that over the past decade negative publicity regarding LASIK has reduced patient interest in the LASIK procedure. The ICL is a lens-based refractive procedure (unlike LASIK) with over 2,000,000 ICLs sold to date.
We believe this will result in a significantly increased number of patients seeking refractive procedures. We believe that over the past decade negative publicity regarding LASIK has reduced patient interest in the LASIK procedure. The ICL is a lens-based refractive procedure (unlike LASIK) with over 2,500,000 ICLs sold to date.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. In addition, recent health care reform legislation has strengthened these laws.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. In 10 addition, recent health care reform legislation has strengthened these laws.
In addition, the FDA will conduct a pre-approval inspection of the manufacturing facility to ensure compliance with Quality System Regulation (QSR) which imposes elaborate design, development, testing, control, validation, 8 documentation, complaint handling, supplier control, and other quality assurance procedures in the design and manufacturing process.
In addition, the FDA will conduct a pre-approval inspection of the manufacturing facility to ensure compliance with Quality System Regulation (QSR) which imposes elaborate design, development, testing, control, validation, documentation, complaint handling, supplier control, and other quality assurance procedures in the design and manufacturing process.
Other countries, such as Switzerland and the United Kingdom, have voluntarily adopted laws and regulations that mirror those of the European Union with respect to medical devices, and a number of countries outside of Europe permit importation of devices bearing the CE Mark.
Other countries, such as Switzerland and the United Kingdom, have voluntarily adopted laws and regulations that largely mirror those of the European Union with respect to medical devices, and a number of countries outside of Europe permit importation of devices bearing the CE Mark.
The failure of Switzerland and the EU to enter into a Mutual Recognition Agreement resulted in a change of our EC Authorized Representative, discontinuance of the pre-loaded acrylic IOL for the Swiss market, and registration of our remaining products under Swiss law.
The failure of Switzerland and the EU to enter into a Mutual Recognition Agreement resulted in a change of our EC Authorized Representative, discontinuance of the pre-loaded acrylic cataract IOL for the Swiss market, and registration of our remaining products under Swiss law.
In the European Economic Area (EEA), which is comprised of the 27 Member States of the European Union plus Norway, Iceland, and Liechtenstein, medical devices must comply with the essential requirements of the EU Medical Devices Directive (Council Directive 93/42/EEC).
In the European Economic Area (EEA), which is comprised of the 27 Member States of the European Union plus Norway, Iceland, and Liechtenstein, legacy medical devices must comply with the essential requirements of the EU Medical Devices Directive (Council Directive 93/42/EEC).
The Medical Device Safety Bureau of the MFDS holds primary responsibility for medical device regulations, while departments within the National Institute of Food and Drug Safety (NIFDS) Evaluation oversee the evaluation and research of medical devices. Medical devices require registration and/or approval prior to commercialization.
The Medical Device Safety Bureau of the MFDS holds primary 12 responsibility for medical device regulations, while departments within the National Institute of Food and Drug Safety (NIFDS) Evaluation oversee the evaluation and research of medical devices. Medical devices require registration and/or approval prior to commercialization.
Our distributor in Korea is contractually required to obtain, with our assistance, the necessary health registrations, governmental approvals, or clearances to import, market and sell our products. In Korea, we provide our distributor with information and data 12 to obtain appropriate registrations and approvals, and the distributor obtains such registrations.
Our distributor in Korea is contractually required to obtain, with our assistance, the necessary health registrations, governmental approvals, or clearances to import, market and sell our products. In Korea, we provide our distributor with information and data to obtain appropriate registrations and approvals, and the distributor obtains such registrations.
STAAR’s Collamer® is a collagen copolymer engineered specifically for use in implantable lenses. contrast sensitivity - the ability to visually distinguish an object from its background. crystalline lens – the natural lens that is present in the eye at birth, which is a clear structure, located behind the iris that changes shape to focus light onto the retina. excimer laser – a specialized ultraviolet laser used in ophthalmology to cut or shape eye tissue.
STAAR’s proprietary Collamer material is a collagen copolymer engineered specifically for use in implantable lenses. contrast sensitivity - the ability to visually distinguish an object from its background. crystalline lens – the natural lens that is present in the eye at birth, which is a clear structure, located behind the iris that changes shape to focus light onto the retina. excimer laser – a specialized ultraviolet laser used in ophthalmology to cut or shape eye tissue.
The FDA classifies all medical devices into one of three classes. The FDA establishes procedures for compliance based upon the device’s classification as Class I (general controls, such as establishment registration and device listing with FDA, labeling and record-keeping requirements), Class II (performance standards in addition to general controls) or Class III (premarket approval (PMA) required before commercial marketing).
The FDA classifies all medical devices into one of three classes. The FDA establishes procedures for compliance based upon the device’s classification as Class I (general controls, such as establishment registration and device listing with FDA, labeling and record-keeping requirements), Class II (performance standards in addition to general controls) or Class III (PMA required before commercial marketing).
Our cataract IOL products used in cataract procedures generally are covered by third-party payers in whole or in part depending upon a variety of factors, including the specific product used and geographic location where the procedure using the covered product is performed. The market for some of our IOL products therefore is influenced by third-party payers’ policies.
Our cataract IOL products used in cataract procedures generally are covered by third-party payers in whole or in part depending upon a variety of factors, including the specific product used and geographic location where the procedure using the covered product is performed. The market for some of our IOL products therefore is influenced by third-party payers’ policies. Other Regulations.
In 2021, we formalized a global ESG Steering Committee consisting of cross-functional employees to address environmental, social, and governance issue at STAAR. In addition, we created a cross-functional Diversity, Equity and Inclusion Committee, and a cross-functional Climate Risk Committee. The health and safety of our employees is a top priority. We created and we follow various safety policies and procedures.
In 2021, we formalized a global ESG Steering Committee consisting of cross-functional employees to address environmental, social, and governance matters at STAAR. In addition, we created a cross-functional Diversity, Equity and Inclusion Committee, and a cross-functional Climate Risk Committee. The health and safety of our employees is a top priority. We created and we follow various safety policies and procedures.
The excimer laser is used during LASIK and PRK surgery. foldable IOL – an intraocular lens made of flexible material, which can be inserted with an injector system through a small incision in minimally invasive cataract surgery. hyperopia – the refractive disorder commonly known as farsightedness, which occurs when the eye’s lens focuses images behind the plane of the retina rather than on the retinal surface.
The excimer laser is used during LASIK and PRK surgery. foldable IOL – an intraocular lens made of flexible material, which can be inserted with an injector system through a small incision in minimally invasive eye surgery. 15 hyperopia – the refractive disorder commonly known as farsightedness, which occurs when the eye’s lens focuses images behind the plane of the retina rather than on the retinal surface.
Research and Development We focus on furthering technological advancements in the ophthalmic products industry through the development of innovative premium ophthalmic products (lenses and companion delivery systems), materials and designs. We maintain active internal research and development programs. To achieve our business objectives, we will continue our investment in research and development.
Research and Development We focus on furthering technological advancements in the ophthalmic products industry through the development of innovative premium ophthalmic products (lenses and accessory delivery systems), materials and designs. We maintain active internal research and development programs. To achieve our business objectives, we will continue our investment in research and development.
The Pharmaceuticals and Medical Devices Agency (PMDA), a quasi-governmental organization, performs many of the medical device review functions for MHLW. Medical devices generally must undergo thorough safety examinations and demonstrate medical efficacy before the MHLW grants shonin (premarket device approval) or ninsho (premarket certification).
The Pharmaceuticals and Medical Devices Agency (PMDA), a quasi-governmental organization, performs many of the medical device review functions for MHLW. Medical devices generally must undergo thorough safety examinations and demonstrate medical effectiveness before the MHLW grants shonin (premarket device approval) or ninsho (premarket certification).
For example, STAAR Japan conducted a separate clinical trial in Japan for the shonin application for the ICL. Also, approval for a new medical device will require the manufacturer to undertake to reexamine the safety and efficacy of the device with a 11 review of post-market data gathered within a certain period - normally four years - after approval.
For example, STAAR Japan conducted a separate clinical trial in Japan for the shonin application for the ICL. Also, approval for a new medical device will require the manufacturer to undertake to reexamine the safety and effectiveness of the device with a review of post-market data gathered within a certain period - normally four years - after approval.
Management periodically provides human capital management updates and data to our Board of Directors. Among our Board of Directors, three directors are female, and three directors are male. Two of the directors on our Board of Directors self-identify as members of underrepresented populations.
Management periodically provides human capital management updates and data to our Board of Directors (Board). 14 Among our Board, four directors are female, and two directors are male. Three of the directors on our Board self-identify as members of underrepresented populations.
Clinical trials for a significant risk device may begin once the FDA approves the IDE application. All FDA-regulated clinical studies, whether significant or non-significant risk, must be approved and overseen by the appropriate institutional review boards (IRBs) at the clinical trial sites, and informed consent of the patients participating in the clinical trial must be obtained.
Clinical trials for a significant risk device may begin once the FDA approves the IDE application. All FDA-regulated clinical studies, whether significant or non-significant risk, must be approved and overseen by the appropriate institutional review boards (IRBs) for each clinical trial, and informed consent of the patients participating in the clinical trial must be obtained.
Surgeons have published over 100 peer-reviewed articles with clinical data regarding the safety, effectiveness, and visual quality of the ICL. We believe the ICL provides a safe and effective solution for the growing number of myopic patients who will seek visual freedom from eyeglasses and contact lenses.
Surgeons have published over 100 peer-reviewed articles with clinical data regarding the safety, effectiveness, and visual quality of the ICL. We believe the ICL provides a safe and effective solution for the growing number of patients with refractive conditions who will seek visual freedom from eyeglasses and contact lenses.
The requirements range from minimal requirements to rigorous requirements comparable to those established by the FDA. Obtaining clearance or approval to distribute medical products is complex, costly, and time-consuming in virtually all the major markets where we sell medical devices.
The requirements range from minimal requirements to rigorous requirements comparable to those established by the U.S. FDA. Obtaining clearance or approval to distribute medical products is complex, costly, and time-consuming in virtually all 7 the major markets where we sell medical devices.
Our ICLs are Class III devices subject to the PMA approval process and not 510(k) clearance. The more rigorous PMA process requires us to demonstrate that a new medical device is safe and effective for its intended use.
Our ICL products are Class III devices subject to the PMA approval process and not 510(k) clearance. The more rigorous PMA process requires us to demonstrate that a new medical device is safe and effective for its intended use.
The exit of the UK from the European Union (BREXIT) has resulted in the requirement to re-certify our preloaded acrylic IOL under a non-UK Notified Body, and to separately register our CE Marked products for sale in the UK.
The exit of the UK from the European Union (BREXIT) in 2020 resulted in the requirement to re-certify our preloaded acrylic cataract IOL under a non-UK Notified Body, and to separately register our CE Marked products for sale in the UK.
ITEM 1. Business STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and delivery systems used to deliver the lenses into the eye. We are the leading manufacturer of lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 40 years.
ITEM 1. B usiness STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. We are the leading manufacturer of lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 40 years.
Where we distribute products 5 directly, we rely on local sales representatives to help generate sales by promoting and demonstrating our products with physicians. Our clinical affairs personnel provide training and educational courses globally. One customer, Shanghai Lansheng, our China distributor who sells into China and Hong Kong, accounted for approximately 52% of our consolidated net sales during fiscal 2022.
Where we distribute products directly, we rely on local sales representatives to help generate sales by promoting and demonstrating our products with physicians. Our clinical affairs personnel provide training and educational courses globally. One customer, Shanghai Lansheng, our China distributor who sells into China and Hong Kong, accounted for approximately 58% of our consolidated net sales during fiscal 2023.
Also, we offer health insurance and wellness programs. In response to the COVID-19 pandemic, we implemented numerous changes that we determined were in the best interest of our employees and other stakeholders, and which followed guidelines and regulations of the applicable health authorities. For example, the majority of our employees continue to work from home.
Also, we offer health insurance and wellness programs. In response to the COVID-19 pandemic, we implemented numerous changes that we determined were in the best interest of our employees and other stakeholders, and which followed guidelines and regulations of the applicable health authorities. For example, the majority of our employees (other than manufacturing employees) continue to work remotely.
YAG – an acronym for yttrium-aluminum-garnet, a mineral crystal. Lasers using neodymium-doped yttrium aluminum garnet crystals (Nd:YAG) generate a high-energy beam that can be used in a number of ophthalmic procedures, including creating iridotomies before implantation of some models of the ICL.
Lasers using neodymium-doped yttrium aluminum garnet crystals (Nd:YAG) generate a high-energy beam that can be used in a number of ophthalmic procedures, including creating iridotomies before implantation of some models of the ICL.
In fiscal year 2022, we added approximately 401 employees (including temporary employees) to help keep pace with the growth of our business. Our U.S. overall turnover rate in fiscal year 2022 was approximately 11% (excluding temporary employees), below the overall turnover rate of approximately 18% in the medical device industry.
In fiscal year 2023, we added approximately 325 employees (including 58 temporary employees) to help keep pace with the growth of our business. Our U.S. overall turnover rate in fiscal year 2023 was approximately 11% (excluding temporary employees), below the overall turnover rate of approximately 18% in the medical device industry.
During 2023, we intend to continue our focus on research and development in the following areas: • Development of presbyopia-correcting ophthalmic medical devices, including models that correct cylinder (i.e., astigmatism), including clinical trials of the same; • Development of preloaded injector systems for ophthalmic medical devices; and • Development of a new generation of ophthalmic medical devices and materials.
During 2024, we intend to continue our focus on research and development in the following areas: • Development of a presbyopia-correcting ophthalmic medical device that corrects cylinder (i.e., astigmatism), including clinical trials of the same; • Development of preloaded injector systems for ophthalmic medical devices; and • Development of a new generation of ophthalmic medical devices and materials.
We own or have rights to a number of patents, licenses, trademarks, copyrights, trade secrets, know-how and other intellectual property related and important to our business. As of December 30, 2022, we owned approximately 61 United States and foreign patents and had 19 patent applications pending.
We own or have rights to a number of patents, licenses, trademarks, copyrights, trade secrets, know-how and other intellectual property related and important to our business. As of December 29, 2023, we owned approximately 61 United States and foreign patents and had 21 patent applications pending.
In addition, the Patient Protection Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. 10 Regulatory Requirements Outside the United States. CE Marking .
In addition, the Patient Protection and Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Medical Device Regulations Outside the United States. CE Marking .
Net sales to Shanghai Lansheng during each of the last three fiscal years were as follows: Net Sales to Shanghai Lansheng Fiscal Year Net Sales ($, in thousands) Net Sales as Percentage of Consolidated Net Sales 2022 $ 148,167 52.1 % 2021 $ 107,333 46.6 % 2020 $ 71,692 43.9 % Backlog We generally keep sufficient inventory on hand to ship product immediately or shortly after receipt of an order.
Net sales to Shanghai Lansheng during each of the last three fiscal years were as follows: Net Sales to Shanghai Lansheng Fiscal Year Net Sales ($, in thousands) Net Sales as Percentage of Consolidated Net Sales 2023 $ 185,554 57.6 % 2022 $ 148,167 52.1 % 2021 $ 107,333 46.6 % Backlog We generally keep sufficient inventory on hand to ship product immediately or shortly after receipt of an order.
STAAR responded to the 2014 Warning Letter and the 2015 FDA-483 and implemented its corrective action plans relating to the 2014 Warning Letter and the 2015 FDA-483. O n June 19, 2018, we received a close-out letter from the FDA lifting the 2014 Warning Letter. Healthcare Fraud and Abuse Laws and Regulations.
STAAR responded to the 2014 Warning Letter and the 2015 FDA-483 and implemented its corrective action plans relating to the 2014 Warning Letter and the 2015 FDA-483. On June 19, 2018, we received a close-out letter from the FDA lifting the 2014 Warning Letter. Healthcare Fraud and Abuse Laws and Regulations in the United States.
We implemented additional safety measures for employees who continue critical on-site work such as health screening, implemented social distancing and personal protective equipment requirements, enhanced cleaning and sanitation procedures, and modified workspaces and break areas to reduce the potential for disease transmission.
We implemented additional safety measures for employees who work on-site such as additional personal protective equipment requirements, enhanced cleaning and sanitation procedures, and modified workspaces and break areas to reduce the potential for disease transmission.
The regulatory requirements in our most important current markets, China, Europe, Japan, Korea and the U.S., are discussed below. 7 Regulatory Requirements in the United States.
The regulatory requirements in our most important current markets, China, Europe, Japan, Korea and the U.S., are discussed below. Medical Device Regulations in the United States.
As used in this report, the term does not include sales of non-surgical products like eyeglasses and contact lenses. silicone – a type of plastic often used in implantable devices that is inert, generally flexible and water-repelling. spheric lenses – a spheric lens has surfaces that are shaped like sections of a sphere. toric – refers to the shape of a lens designed to correct astigmatism, which has greater refractive power in some sections of the lens than others.
As used in this Annual Report, the term does not include sales of non-surgical products like eyeglasses and contact lenses. silicone – a type of plastic often used in implantable devices that is inert, generally flexible and water-repelling. spheric lenses – a spheric lens has surfaces that are shaped like sections of a sphere. toric – refers to the shape of a lens designed to correct astigmatism, which has greater refractive power in some sections of the lens than others. 16 YAG – an acronym for yttrium-aluminum-garnet, a mineral crystal.
STAAR has sold more than 2,000,000 ICLs worldwide. STAAR began selling the ICL for myopia for use outside the U.S. in 1997. U.S. sales commenced in 2006. In September 2011, STAAR launched the ICL with CentraFLOW technology, commonly known as EVO ICL, which uses a port in the center of the ICL optic in markets outside the U.S.
STAAR began selling the ICL for myopia for use outside the U.S. in 1997. U.S. sales commenced in 2006. In September 2011, STAAR launched the ICL with CentraFLOW technology, commonly known as EVO ICL, which uses a port in the center of the ICL optic in markets outside the U.S.
The Code of Business Conduct and Ethics is posted on our website, www.staar.com — Investor Information: Corporate Governance. 14 Additional Information We make available free of charge through our website, www.staar.com , our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to any reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as soon as reasonably practicable, after those reports are filed with or furnished to the Securities and Exchange Commission (“SEC”).
Additional Information We make available free of charge through our website, www.staar.com , our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to any reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as soon as reasonably practicable, after those reports are filed with or furnished to the Securities and Exchange Commission (SEC).
According to Market Scope, LLC a publisher of ophthalmic industry data, approximately 4.7 million refractive procedures, primarily laser vision procedures, were expected to be performed worldwide in 2022.
According to Market Scope, LLC a publisher of ophthalmic industry data, approximately 5.8 million refractive procedures, primarily laser vision procedures, were expected to be performed worldwide in 2023.
STAAR®, EVO Visian ICL™, EVO Viva ™, Evolution in Visual Freedom®, Visian®, Collamer®, CentraFLOW®, and AquaPORT®, are trademarks or registered trademarks of STAAR in the U.S., the European Union, or other countries. The scope and duration of trademark protection varies widely throughout the world. In some countries, trademark protection continues only as long as the mark is used.
STAAR®, STAAR Surgical™, EVO ICL™, EVO+ ICL ™, EVO Visian® ICL™, EVO Viva ™, Evolution in Visual Freedom®, Visian®, Collamer®, CentraFLOW®, and AquaPORT®, are trademarks or registered trademarks of STAAR in the U.S., the European Union, or other countries. The scope and duration of trademark protection varies widely throughout the world.
In March 2022, the FDA granted approval of the EVO and EVO+ Visian® Implantable Collamer® Lens for the correction of myopia and myopia with astigmatism. The Hyperopic ICL, which treats far-sightedness, is sold primarily in countries that require the European Union CE Mark.
In March 2022, the FDA granted approval of the EVO ICL, EVO+ ICL, and the EVO Visian ICL (for the correction of myopia and myopia with astigmatism). The Visian ICL for hyperopia, which treats farsightedness, is sold primarily in countries that require the European Union CE Mark.
STAAR maintains operational and administrative facilities in the U.S., Switzerland, and Japan. Its current global operations are as follows: • United States. STAAR operates its global administrative offices and principal manufacturing facility in Monrovia, California.
STAAR maintains operational and administrative facilities in the U.S., Switzerland, and Japan. Its current global operations are as follows: • United States. STAAR operates its global administrative offices and principal manufacturing facility in Monrovia, California. The Monrovia site is our principal manufacturing facility and currently produces all of our ICLs.
In addition to its own review, the FDA may organize an independent advisory panel of experts to review the PMA whenever a device is the first of its kind or the FDA otherwise determines panel review is warranted.
During the review period, the FDA may request additional information or clarification of information already provided. In addition to its own review, the FDA may organize an independent advisory panel of experts to review the PMA whenever a device is the first of its kind or the FDA otherwise determines panel review is warranted.
We seek employees who reflect the communities where we conduct operations. In the U.S., currently approximately 47% of our employees are female and approximately 53% are male. The gender ratio for our employees globally is approximately 49% female and 51% male. In the U.S., currently approximately 86% of our employees are from underrepresented populations.
We seek employees who reflect the communities where we conduct operations. In the U.S., currently approximately 46% of our employees are female and approximately 54% are male. The gender ratio for our employees globally is approximately 50% female and 50% male. In the U.S., currently approximately 80% of our employees are from underrepresented populations.
STAAR operates an administrative, distribution and operational facility in Brugg, Switzerland under its wholly owned subsidiary, STAAR Surgical AG. We are in the process of expanding our manufacturing capabilities for STAAR’s ICL products in our Nidau, Switzerland facility. • Japan . STAAR operates administrative and distribution facilities in Japan under its wholly owned subsidiary, STAAR Japan Inc.
We are in the process of expanding our manufacturing capabilities for STAAR’s ICL products in our Nidau, Switzerland facility. • Japan . STAAR operates administrative and distribution facilities in Japan under its wholly owned subsidiary, STAAR Japan Inc. STAAR Japan’s administrative facility is in Tokyo and its distribution facility is in Ichikawa City.
In addition, we 13 cannot predict changes in environmental legislation or regulations that may be adopted or enacted in the future and that may adversely affect us. We seek to achieve our corporate goals in an environmentally sustainable manner.
However, environmental problems relating to our properties could develop in the future, and such problems could require significant expenditures. In addition, we cannot predict changes in environmental legislation or regulations that may be adopted or enacted in the future and that may adversely affect us. We seek to achieve our corporate goals in an environmentally sustainable manner.
We strive to make STAAR a diverse, inclusive, safe workplace, with opportunities for employees to grow and develop their careers. We offer competitive compensation and benefits. As of December 30, 2022, we had approximately 964 employees, of which 318 were employed outside the U.S. Of the 964 employees, 882 were regular full-time, 10 were regular part-time and 72 were temporary.
We strive to make STAAR a diverse, inclusive, safe workplace, with opportunities for employees to grow and develop their careers. We offer competitive compensation and benefits. As of December 29, 2023, we had approximately 1,115 employees, of which 347 were employed outside the U.S. Of the 1,115 employees, 1,056 were regular full-time, 1 was regular part-time and 58 were temporary.
The reader may also find it helpful to refer to the discussion of the structure and function of the human eye that begins on page 7. Operations STAAR has significant operations globally.
A glossary explaining many of the technical terms used in this report begins on page 15. The reader may also find it helpful to refer to the discussion of the structure and function of the human eye that begins on page 7. Operations STAAR has significant operations globally.
We have affixed the CE Mark to all our principal products sold in CE Mark jurisdictions including ICLs and delivery systems. In July 2022, our Notified Body in the European Union, DEKRA, certified the CE Marking for our currently certified and commercially available ICLs, delivery systems, and calculation software under the new MDR.
In July 2022, our Notified Body in the European Union, DEKRA, certified the CE Marking for our currently certified and commercially available ICLs, delivery systems, and calculation software under the new MDR.
The ICL folds for minimally invasive implantation behind the iris and in front of the natural crystalline lens, using techniques similar to those used to implant an IOL during cataract surgery, except that the natural lens remains intact in the eye.
During a quick surgical procedure, the ICL will be implanted behind the iris and in front of the natural crystalline lens, using techniques similar to those used to implant an IOL during cataract surgery, except that the natural lens remains intact in the eye.
Sales of Other Surgical Products accounted for approximately 2% of our total sales in fiscal 2022, 2% of our total sales in fiscal 2021 and 5% of our total sales in fiscal 2020. 4 Sources and Availability of Raw Materials STAAR uses a wide range of raw materials in the production of its ICL family of products.
Other Products revenue accounted for approximately 1% of our total sales in fiscal 2023, 5% of our total sales in fiscal 2022 and 8% of our total sales in fiscal 2021. Sources and Availability of Raw Materials STAAR uses a wide range of raw materials in the production of our ICLs.
The ICL is the only foldable, minimally invasive posterior chamber phakic intraocular lens approved for sale in the U.S. In addition, competitors from Asia are beginning to appear in the market with their low-cost version of a posterior chamber implantable contact lens, increasing the level of competition.
In addition, competitors from Asia are beginning to appear in the market with their low-cost version of a posterior chamber implantable contact lens, increasing the level of competition.
The ICL is manufactured to address refractive prescriptions across a broad range of correction, resulting in a large number of Stock Keeping Units (SKUs). The challenge of maintaining inventory in all models can result in a backlog in customer orders.
As we offer different types of ICLs to treat different refractive conditions, and our ICLs are manufactured to address refractive prescriptions across a broad range of correction, we maintain a large number of Stock Keeping Units (SKUs). The challenge of maintaining inventory in all models can result in a backlog in customer orders.
We are not aware of any pending actions, litigation or significant financial obligations arising from current or past environmental practices that are likely to have a material adverse impact on our financial position. However, environmental problems relating to our properties could develop in the future, and such problems could require significant expenditures.
We have no plans to invest in material capital expenditures for environmental control facilities for the remainder of our current fiscal year. We are not aware of any pending actions, litigation or significant financial obligations arising from current or past environmental practices that are likely to have a material adverse impact on our financial position.
Government Contracts No material portion of our business is subject to renegotiation of profits or termination of any particular contract or subcontract at the election of the U.S. Government.
During fiscal 2023, we continued to increase our inventory levels to meet the significant level of anticipated demand for our ICL lenses. Government Contracts No material portion of our business is subject to renegotiation of profits or termination of any particular contract or subcontract at the election of the U.S. Government.
The interior surface of the cornea is lined with a single layer of flat, tile-like endothelial cells, whose function is to maintain the transparency of the cornea.
The cornea is a clear lens at the front of the eye through which light first passes and is focused toward the back of the eye. The interior surface of the cornea is lined with a single layer of flat, tile-like endothelial cells, whose function is to maintain the transparency of the cornea.
In the case of devices subject to pending premarket clearance or approval applications, FDA has broad authority to halt the review of applications and require significant additional data analyses, audits, and other corrective actions where clinical data contained in an application are deemed to be actually or potentially unreliable, inaccurate, or not in compliance with clinical study or good clinical practice requirements. 9 For example, on May 27, 2014, we received a warning letter from the FDA (2014 Warning Letter) citing alleged violations of current good manufacturing practice (cGMP) regulations that were identified by the FDA during an inspection of our manufacturing facility in Monrovia, California between February 10, 2014, and March 21, 2014.
In the case of devices subject to pending premarket clearance or approval applications, FDA has broad authority to halt the review of applications and require significant additional data analyses, audits, and other corrective actions where clinical data contained in an application are deemed to be actually or potentially unreliable, inaccurate, or not in compliance with clinical study or good clinical practice requirements.
Our most recent Sustainability Report, drafted consistent with the Sustainability Accounting Standards Board (SASB) framework of sustainability topics for medical equipment and supplies companies, is available in the Investor Resources section of our website ( www.staar.com ). We established a cross-functional climate risk committee to identify the risks presented by climate change and opportunities to reduce our environmental impact.
Our most recent Sustainability Report, drafted consistent with the Sustainability Accounting Standards Board (SASB) framework of sustainability topics for medical equipment and supplies companies, is available in the Investors section of our website, www.staar.com , under the Sustainability tab.
Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction. We also make lenses for use in surgery that treats cataracts.
Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction. Unless the context indicates otherwise, “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries.
In the refractive market, our ICL technology competes with other elective surgical procedures such as laser vision correction (e.g., LASIK) for those consumers who are looking for an alternative to eyeglasses or contact lenses to correct their vision. In the cataract surgery market, our IOLs primarily compete based on our technology’s quality and value.
Our ICL technology competes with other elective surgical procedures such as laser vision correction (e.g., LASIK) for those consumers who are looking for an alternative to eyeglasses or contact lenses to correct their vision, and to a lesser extent phakic lens implants. 6 We believe our primary competition in selling the ICL to patients seeking surgery to correct refractive conditions lies not in similar products to the ICL, but in laser surgical procedures.
We have started working more closely with leading refractive clinics in the area of training, product awareness and practice development. Our marketing programs seek to position the ICL as a premium and primary option for appropriate patients at the clinic and via digital and social media.
Our marketing programs seek to position our ICL products as a premium and primary option for appropriate patients at the clinic and via digital and social media.
Our ICL is the only posterior chamber phakic IOL (PIOL) approved by the Food and Drug Administration (FDA) for marketing and sale in the U.S., and we believe it is the world’s largest selling phakic IOL. Our biocompatible Collamer material belongs to a family of materials known as collagen copolymers.
Typically, ICL surgery is an elective procedure paid for or financed by the patient. Our EVO ICL is the only posterior chamber phakic IOL approved by the Food and Drug Administration (FDA) for marketing and sale in the U.S., and we believe it is the world’s largest selling phakic IOL.
It is filled with a water-based fluid called aqueous humor and is divided, by the iris, into an anterior chamber and a posterior chamber. The cornea is a clear lens at the front of the eye through which light first passes and is focused toward the back of the eye.
The eye has an anterior segment and a posterior segment that are separated by the natural crystalline lens. The anterior segment consists of the cornea, the iris and ciliary body and the trabecular meshwork. It is filled with a water-based fluid called aqueous humor and is divided, by the iris, into an anterior chamber and a posterior chamber.
The FDA may require that a PMA be supported by, among other things, extensive technical, pre-clinical, clinical testing, manufacturing, and labeling data to demonstrate to the FDA’s satisfaction, the safety and effectiveness of the device.
The FDA may require that a PMA be supported by, among other things, extensive technical, pre-clinical, clinical testing, manufacturing, and labeling data to demonstrate to the FDA’s satisfaction, the safety and effectiveness of the device. 8 After a PMA application is submitted and filed, the FDA begins an in-depth review of the submitted information, which typically takes between six and twelve months, but may take significantly longer depending on the questions received from the FDA regarding the application.
STAAR also operates a Technology Center housing its Research & Development team and labs in Tustin, California. STAAR’s facility in Lake Forest, California serves as our corporate headquarters. It contains executive offices and operational facilities we expect to use for future manufacturing of STAAR’s Presbyopia lenses, EVO Viva . • Switzerland .
STAAR’s facility in Lake Forest, California serves as our corporate headquarters. It contains executive offices and operational facilities, and it is also expected to serve as our future manufacturing site for EVO Viva . • Switzerland . STAAR operates an administrative, distribution and operational facility in Brugg, Switzerland under its wholly owned subsidiary, STAAR Surgical AG.
Code of Ethics STAAR has adopted a revised Code of Business Conduct and Ethics that applies to all its directors, officers, and employees.
Code of Ethics STAAR has adopted a revised Code of Business Conduct and Ethics that applies to all its directors, officers, and employees. The Code of Business Conduct and Ethics is posted in the Investors section of our website, www.staar.com , under the Investor Resources & FAQs tab, as a Corporate Governance Document.
Collagen copolymers are compounds formed by joining molecules of collagen derived from biological sources with synthetic monomer molecules. The proprietary Collamer material is exclusive to us. We believe that the biocompatibility of the Collamer material used for the ICL product line is a significant factor in the ability to place this lens safely in the posterior chamber of the eye.
Our biocompatible Collamer material belongs to a family of materials known as collagen copolymers. Collagen copolymers are compounds formed by joining molecules of collagen derived from biological sources with synthetic monomer molecules. The proprietary Collamer material is exclusive to us.
See Note 17 to the Consolidated Financial Statements for financial information about product lines and operations in geographic areas. Principal Products In designing our products, we seek to delight patients and surgeons by: • Improving patient outcomes; • Minimizing patient risk; and • Simplifying ophthalmic procedures and post-operative care for the surgeon and the patient.
In designing our ICL product offerings, we seek to delight patients and surgeons by: • Improving patient outcomes; • Minimizing patient risk; and • Simplifying ophthalmic procedures and post-operative care for the surgeon and the patient. Refractive surgery corrects visual disorders that have traditionally been treated by eyeglasses or contact lenses.
EVO Visian ICL and EVO Viva ICL. Refractive surgery corrects visual disorders that eyeglasses or contact lenses have traditionally treated (myopia, hyperopia, astigmatism, and presbyopia). The field of refractive surgery includes both lens-based procedures, using products like our ICL, and laser-based procedures like LASIK.
The field of refractive surgery includes both lens-based procedures, using products like our ICLs, and laser-based procedures like LASIK.
The two principal types of phakic IOLs are (1) posterior chamber designs like the ICL, and (2) iris clip anterior chamber PIOLs like the Artisan® and Artiflex® lenses made by Ophtec. We believe the ICL has compelling clinical advantages over the other lenses, which are reflected in our strong market share of the global phakic IOL market.
The two principal types of phakic implantable lenses are (1) posterior chamber designs like the ICL, including lenses made by Biotech Vision Care and Eyebright and (2) iris clip anterior chamber designs, including lenses made by Ophtec.
Sales of ICLs (including EVO+ and TICLs) accounted for approximately 95% of our total sales in fiscal 2022, 92% of our total sales in fiscal 2021 and 87% of our total sales in fiscal 2020. Other Products Intraocular Lenses (IOLs).
Sales of ICLs accounted for approximately 99% of our total sales in fiscal 2023, 95% of our total sales in fiscal 2022 and 92% of our total sales in fiscal 2021. Other Products While STAAR generates worldwide revenue almost exclusively from sales of our ICLs, we also record Other Products revenue.
The ICL product line treats a wide range of refractive errors within commonly known vision disorders such as myopia (nearsightedness), hyperopia (farsightedness), astigmatism and presbyopia.
Our ICL products are designed to treat a wide range of refractive conditions within commonly known vision disorders such as myopia (nearsightedness), hyperopia (farsightedness), astigmatism (blurred vision) and presbyopia (age-related loss of ability to focus). 3 All of our ICLs fold for minimally invasive implantation.
Other countries require registration of trademarks and the payment of registration fees. Trademark registrations are generally for fixed but renewable terms. We protect our proprietary technology, in part, through confidentiality and nondisclosure agreements with employees, consultants, and other parties.
This Annual Report may also include trademarks owned by other parties, and all other such trademarks mentioned in this Annual Report are the property of their respective owners. We protect our proprietary technology, in part, through confidentiality and nondisclosure agreements with employees, consultants, and other parties.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur profitability is challenged by the competitive nature of our industry and the other risks to our business detailed herein. 16 Compliance issues may adversely impact our operations. If we cannot maintain compliance with a particular jurisdiction’s regulatory requirements, it could adversely impact our financial performance/have a material adverse effect on our ongoing business and operations.
Biggest changeIf we cannot maintain compliance with a particular jurisdiction’s regulatory requirements, it could adversely impact our financial performance and have a material adverse effect on our ongoing business and operations. We plan to remain in compliance with regulatory requirements established by applicable global regulatory agencies, however, there can be no guaranty that we will do so.
The impact of COVID-19 and these measures implemented or 19 recommended by governmental authorities and other third parties have had a significant impact on many businesses, including ours. For example, we suspended most of our production on March 17 , 2020 with the exception of continuation of critical late-staged processes.
The impact of COVID-19 and these measures implemented or recommended by governmental authorities and other third parties have had a significant impact on many businesses, including ours. For example, we suspended most of our production on March 17, 2020 with the exception of continuation of critical late-staged processes.
If we were involved in an environmental accident or found to 21 be in substantial non-compliance with applicable environmental laws, it could harm our reputation, and we could be held liable for damages or penalized with fines. Data corruption, cyber-based attacks or network security breaches and/or noncompliance with data protection and privacy regulations could negatively impact our operations.
If we were involved in an environmental accident or found to be in substantial non-compliance with applicable environmental laws, it could harm our reputation, and we could be held liable for damages or penalized with fines. 21 Data corruption, cyber-based attacks or network security breaches and/or noncompliance with data protection and privacy regulations could negatively impact our operations.
In the event of a significant manufacturing challenge, we may experience delays in meeting product demand which could adversely affect our results of operations and financial condition. In addition, the expense associated with increased manufacturing and sales/marketing to meet increased demand may exceed our expectations.
In the event of a significant manufacturing challenge, we may experience delays in meeting product demand which could adversely affect our results of operations and financial condition. In addition, the expense associated with increased manufacturing, sales and marketing to meet increased demand may exceed our expectations.
The commencement and completion of clinical trials may be delayed or prevented by many factors, including, but not limited to: • an inability to reach agreement with regulatory authorities regarding the scope or extent of a proposed clinical trial; • an inability to timely identify and reach agreement on acceptable terms with prospective clinical trial sites and entities involved in the conduct of our clinical trials; 24 • failure by third-party clinical trial managers to comply with applicable regulations or protocols; • flaws in the design of the clinical trials; • slower than expected rates of patient recruitment and enrollment; • periodic amendments to clinical trial protocols to address certain variables which arise during the course of a trial; • lack of effectiveness of our products; or • unforeseen safety issues.
The commencement and completion of clinical trials may be delayed or prevented by many factors, including, but not limited to: • an inability to reach agreement with regulatory authorities regarding the scope or extent of a proposed clinical trial; • an inability to timely identify and reach agreement on acceptable terms with prospective clinical trial sites and entities involved in the conduct of our clinical trials; • failure by third-party clinical trial managers to comply with applicable regulations or protocols; • flaws in the design of the clinical trials; • slower than expected rates of patient recruitment and enrollment; 24 • periodic amendments to clinical trial protocols to address certain variables which arise during the course of a trial; • lack of effectiveness of our products; or • unforeseen safety issues.
Complying with government regulation substantially increases the cost of developing, manufacturing and selling our products. Competing in the ophthalmic products industry requires us to introduce new or improved products and processes continuously, and to submit these to the FDA and other regulatory bodies for clearance or approval.
Complying with government regulation substantially increases the cost of developing, manufacturing and selling our ophthalmic products. Competing in the ophthalmic products industry requires us to introduce new or improved products and processes continuously, and to submit these to the FDA and other regulatory bodies for clearance or approval.
The declaration and payment of any such dividends in the future depends upon our earnings, financial condition, capital needs, and other factors deemed relevant by our Board of Directors, and may be restricted by future agreements with lenders. As a result, the success of an investment in our common stock will depend entirely upon any future appreciation.
The declaration and payment of any such dividends in the future depends upon our earnings, financial condition, capital needs, and other factors deemed relevant by our Board of Directors (Board), and may be restricted by future agreements with lenders. As a result, the success of an investment in our common stock will depend entirely upon any future appreciation.
Our Certificate of Incorporation and Bylaws contain other provisions that could have an anti-takeover effect, including the following: • stockholders cannot act by consent; • stockholders cannot fill vacancies on our Board of Directors; • certain provisions, including those related to changing the number of directors, limiting our stockholders’ ability to fill vacancies on our Board of Directors, prohibiting stockholder action by written consent, and 28 amending such provisions, cannot be altered, amended or repealed, and provisions inconsistent therewith cannot be adopted, without the affirmative vote of holders of at least two-thirds in voting power of our outstanding shares of common stock entitled to vote thereon; and • stockholders must give advance notice to nominate directors or propose other business.
Our Certificate of Incorporation and Bylaws contain other provisions that could have an anti-takeover effect, including the following: • stockholders cannot act by consent; • stockholders cannot fill vacancies on our Board; • certain provisions, including those related to changing the number of directors, limiting our stockholders’ ability to fill vacancies on our Board, prohibiting stockholder action by written consent, and amending such provisions, cannot be altered, amended or repealed, and provisions inconsistent therewith cannot be adopted, without the affirmative vote of holders of at least two-thirds in voting power of our outstanding shares of common stock entitled to vote thereon; and • stockholders must give advance notice to nominate directors or propose other business.
For example, it is uncertain whether physicians in countries that recognize the CE Mark will adopt the EVO Viva lens for use in presbyopic eyes, which our Notified Body approved for marketing and sale in July 2020. Resources devoted to research and development may not yield new products that achieve regulatory approval or commercial success.
For example, it is uncertain whether physicians in countries that recognize the CE Mark will adopt the EVO Viva lens for use in presbyopic eyes, which our Notified Body approved for marketing and sale in July 2020. Resources devoted to research and development may not yield new ophthalmic products that achieve regulatory approval or commercial success.
Also, general political and economic conditions such as a recession or interest rate fluctuations, and public health crises, may adversely affect the market price of our common stock. Because we do not intend to pay dividends, stockholders will benefit from an investment in our common stock only if it appreciates in value.
Also, general political and economic conditions such as a recession or interest rate fluctuations, and public health crises, may adversely affect the market price of our common stock. 28 Because we do not intend to pay dividends, stockholders will benefit from an investment in our common stock only if it appreciates in value.
Any litigation or claims against or instituted by us, whether or not successful, could result in 25 substantial costs, divert resources and the efforts of our personnel away from daily operations, harm our reputation, result in the impairment of our intellectual property rights, limit our ability to pursue future products and/or otherwise materially adversely impact our business.
Any litigation or claims against or instituted by us, whether or not successful, could result in substantial costs, divert resources and the efforts of our personnel away from daily operations, harm our reputation, result in the impairment of our intellectual property rights, limit our ability to pursue future products and/or otherwise materially adversely impact our business.
Also, we are exposed to credit and collectability risk on our trade receivables with customers in certain international markets. There can be no assurance we can effectively limit our credit risk and avoid losses and our ability to transfer foreign earnings to the U.S. may be subject to taxes or restricted or result in incurring substantial costs.
Also, we are exposed to credit and collectability risk on our trade receivables with customers in certain international markets. There can be no assurance we can effectively limit our credit risk and avoid losses and our ability to transfer foreign earnings to the U.S. may be subject to taxes or restricted 18 or result in incurring substantial costs.
These provisions give our Board of Directors the ability to deter, discourage or make more difficult a change in control of our company, even if such a change in control could be deemed in the interest of our stockholders or if such a change in control would provide our stockholders with a substantial premium for their shares over the then-prevailing market price for our common stock.
These provisions give our Board the ability to deter, discourage or make more difficult a change in control of our Company, even if such a change in control could be deemed in the interest of our stockholders or if such a change in control would provide our stockholders with a substantial premium for their shares over the then-prevailing market price for our common stock.
The detail of the proposals is subject to change and the impact to us will need to be determined by reference to the final rules. We are vulnerable to any loss of use of our principal manufacturing facility. We manufacture all of our ICL products at a single facility in Monrovia, California.
The detail of the proposals is subject to change and the impact to us will need to be determined by reference to the final rules. We are vulnerable to any loss of use of our principal manufacturing facility. We currently manufacture all of our ICL products at a single facility in Monrovia, California.
Even when substitute suppliers are available, the need to verify 17 the substitute supplier’s regulatory compliance and the quality standards of the replacement material could significantly delay production and materially reduce our sales. In particular, we manufacture the proprietary collagen-containing raw material used in our ICLs.
Even when substitute suppliers are available, the need to verify the substitute supplier’s regulatory compliance and the quality standards of the replacement material could significantly delay production and materially reduce our sales. In particular, we manufacture the proprietary collagen-containing raw material used in our ICLs.
In addition, having such a concentration of ownership may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from seeking to acquire, a majority of our outstanding common stock or control of our Board of Directors, including through a proxy solicitation.
In addition, having such a concentration of ownership may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from seeking to acquire, a majority of our outstanding common stock or control of our Board, including through a proxy solicitation.
Further, our tax liabilities could be adversely affected by numerous other factors, including income before taxes being lower than anticipated in countries with lower statutory tax rates and higher than anticipated in countries with higher 18 statutory tax rates, changes in the valuation of deferred income tax assets and liabilities, and changes in tax laws and regulations.
Further, our tax liabilities could be adversely affected by numerous other factors, including income before taxes being lower than anticipated in countries with lower statutory tax rates and higher than anticipated in countries with higher statutory tax rates, changes in the valuation of deferred income tax assets and liabilities, and changes in tax laws and regulations.
If we or our distributors are unable to obtain additional clearances or approvals needed to market existing or new products in the United States or elsewhere or obtain these clearances or approvals in a timely fashion or at all, or if our existing clearances or approvals are revoked or restricted, our revenues and profitability may decline.
If we or our distributors are unable to obtain additional clearances or approvals needed to market existing products, new products or modified products in the United States or elsewhere or obtain these clearances or approvals in a timely fashion or at all, or if our existing clearances or approvals are revoked or restricted, our revenues and profitability may decline.
We may not be able to develop and successfully launch more advanced replacement products. While we will continue developing intellectual property protections for our future products, third parties may pursue blocking patents that limit our ability to manufacture such products.
We may not be able to develop and successfully launch more advanced replacement products. 25 While we will continue developing intellectual property protections for our future products, third parties may pursue blocking patents that limit our ability to manufacture such products.
Also, we expect to incur additional costs complying with the European Union’s new Medical Device Regulation (MDR). We depend on proprietary technology but our intellectual property protections may be limited.
Also, we expect to incur additional costs complying with the European Union’s new Medical Device Regulation. We depend on proprietary technology but our intellectual property protections may be limited.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, and our attractiveness as an investment or business partner could be 23 negatively impacted.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, and our attractiveness as an investment or business partner could be negatively impacted.
Our Certificate of Incorporation empowers our Board of Directors to issue one or more series of preferred stock, and to determine the rights of each such series as provided in our Certificate of Incorporation.
Our Certificate of Incorporation empowers our Board to issue one or more series of preferred stock, and to determine the rights of each such series as provided in our Certificate of Incorporation.
For example, we have commenced activities to resume manufacturing ICLs at our Swiss facility, and to commence manufacturing EVO Viva at our Lake Forest facility, but there can be no guaranty whether or when these facilities will be prepared and approved by regulators for manufacturing. Even minor changes in equipment, supplies or processes require validation.
For example, we have commenced activities to allow us to resume manufacturing ICLs at our Swiss facility, and to commence manufacturing EVO Viva at our Lake Forest facility, but there can be no guaranty whether or when these facilities will be prepared and approved by regulators for manufacturing. Even minor changes in equipment, supplies or processes require validation.
Because our business is global our sales and profits may fluctuate or decline in response to changes in foreign currency exchange rates and/or other international risks (including tariffs). Activities outside the U.S. accounted for approximately 95% of our total sales during 2022. Foreign currency fluctuations could result in volatility of our revenue.
Because our business is global our sales and profits may fluctuate or decline in response to changes in foreign currency exchange rates and/or other international risks (including tariffs). Activities outside the U.S. accounted for approximately 95% of our total sales during 2023. Foreign currency fluctuations could result in volatility of our revenue.
If we fail to report MDRs to the FDA or other regulatory bodies within the required timeframes, or at all, or if the FDA or others disagree with any of our determinations regarding the reportability of certain events, the FDA or other regulatory bodies could take enforcement actions against us, which could have an adverse impact on our reputation and financial results.
If we fail to report adverse events to the FDA or other regulatory bodies within the required timeframes, or at all, or if the FDA or other regulatory bodies disagree with any of our determinations regarding the reportability of certain events, the FDA or other regulatory bodies could take enforcement actions against us, which could have an adverse impact on our reputation and financial results.
Furthermore, the products of companies we acquire may overlap with our products or those of our customers, creating conflicts with existing relationships or with other commitments that are detrimental to the integrated businesses. If we are not able to manage growth successfully, this could adversely affect our business, financial condition, and results of operations.
Furthermore, the products of companies we acquire may overlap with our products or those of our customers, creating conflicts with existing relationships or with other commitments that are detrimental to the integrated businesses. If we are not able to manage growth successfully, it could adversely affect our business, financial condition, and results of operations.
Clinical trials are expensive, complex, can take many years to complete, and have highly uncertain outcomes. Delays, setbacks, or failures can occur at any time, or in any phase of the clinical trials, and can result from concerns about safety, a lack of demonstrated efficacy, or poor study or trial design.
Clinical trials are expensive, complex, can take many years to complete, and have highly uncertain outcomes. Delays, setbacks, or failures can occur at any time, or in any phase of the clinical trials, and can result from concerns about safety, a lack of demonstrated effectiveness, or poor study or trial design.
The extent to which the pandemic impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that are uncertain and cannot be predicted, including the following: the duration and scope of the pandemic; the impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on consumer spending; how quickly and to what extent more customary economic and operating conditions can resume; its impact on our customers’ facilities; levels of consumer confidence; whether our COVID-19 preventative measures such as remote working arrangements, changes to manufacturing work areas, such as adherence to social distancing guidelines, and other workforce changes will impact operational efficiency or inventory levels; our ability to obtain supplies from vendors or transport products to customers; or adverse impacts to any other element of our supply chain; the impact on regulatory agencies, including the review and approval process; the impact on clinical studies; the ability of our customers to successfully navigate the impacts of the pandemic such as resuming activities and growing patient interest in our lenses; and actions governments, businesses and individuals take in response to the pandemic.
The extent to which the COVID-19 pandemic or other public health or political crises in the future impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that are uncertain and cannot be predicted, including the following: the duration and scope of the pandemic or crisis; the impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on consumer spending; how quickly and to what extent more customary economic and operating conditions can resume; its impact on our customers’ facilities; levels of consumer confidence; whether our preventative measures such as remote working arrangements, changes to manufacturing work areas, such as adherence to social distancing guidelines, and other workforce changes will impact operational efficiency or inventory levels; our ability to obtain supplies from vendors or transport products to customers; or adverse impacts to any other element of our supply chain; the impact on regulatory agencies, including the review and approval process; the impact on clinical studies; the ability of our customers to successfully navigate the impacts of the pandemic such as resuming activities and growing patient interest in our lenses; and actions governments, businesses and individuals take in response to the pandemic or crisis.
In addition, all manufacturers placing medical devices in international markets, such as European Union and Asian markets, are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the relevant authority in whose jurisdiction the incident occurred.
In addition, all manufacturers placing medical devices in international markets, such as European Union and Asian markets, are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the relevant authority in the jurisdiction where the incident occurred.
Our primary competitors, including Alcon (formally Novartis), Johnson & Johnson (formerly Abbott Medical Optics, or AMO), Bausch Health Companies (formerly Valeant or Bausch & Lomb), and Carl Zeiss Meditec have much greater financial, technical, marketing and distribution resources and brand name recognition than we do and 20 some of them have large international markets for a full suite of ophthalmic products.
Our primary competitors, including Alcon (formally Novartis), Johnson & Johnson (formerly Abbott Medical Optics or AMO), Bausch Health Companies (formerly Valeant, Bausch & Lomb or B+L), and Carl Zeiss Meditec have much greater financial, technical, marketing and distribution resources and brand name recognition than we do and some of them have large international markets for a full suite of ophthalmic products.
ITEM 1A. Risk Factors Investment in our securities involves a high degree of risk. Investors should carefully consider the following risk factors, in addition to other information contained in this report before making a decision to invest in our common stock. These risks are not the only ones we face.
ITEM 1A. R isk Factors Investment in our securities involves a high degree of risk. Investors should carefully consider the following risk factors, in addition to other information contained in this Annual Report before making a decision to invest in our common stock. These risks are not the only ones we face.
We do not actively hedge our exposure to currency rate fluctuations. The continuing strengthening of the U.S. dollar would likely continue to negatively impact our results. We price some of our products in U.S. dollars, and thus changes in exchange rates can make our products more expensive in some offshore markets and reduce our sales.
We do not actively hedge our exposure to currency rate fluctuations. Any strengthening of the U.S. dollar would likely negatively impact our results. We price some of our products in U.S. dollars, and thus changes in exchange rates can make our products more expensive in some offshore markets and reduce our sales.
Our new products, including those currently under development, may fail to become commercially successful. We may be required to conduct extensive clinical trials to demonstrate safety and efficacy of new or enhanced products, such clinical trials are expensive, complex, can take years to complete, and have highly uncertain outcomes.
Our new products, including those currently under development, may fail to become commercially successful. We may be required to conduct extensive clinical trials to demonstrate safety and effectiveness of new or enhanced ophthalmic products, such clinical trials are expensive, complex, can take years to complete, and have highly uncertain outcomes.
In order to further advance the development of, and ultimately receive regulatory approval to manufacture and sell, our new products or product enhancements, we may be required to conduct extensive clinical trials to demonstrate their safety and efficacy to the satisfaction of the FDA or regulatory authorities in other countries.
In order to further advance the development of, and ultimately receive regulatory approval to manufacture and sell, our new ophthalmic products or product enhancements, we may be required to conduct extensive clinical trials to demonstrate their safety and effectiveness to the satisfaction of the FDA or regulatory authorities in other countries.
Due to the COVID-19 pandemic, we have enabled many of our employees to work remotely, which may make us more vulnerable to cyberattacks.
Due to and following the COVID-19 pandemic, we have enabled many of our employees to work remotely, which may make us more vulnerable to cyberattacks.
Failure to receive necessary approvals in foreign jurisdictions on a timely basis, or at all, could harm our business and operating results. In addition, regulations and requirements for approvals can vary in each international country, which can significantly increase the costs to sell our products in these international countries.
Failure to receive necessary approvals in international jurisdictions on a timely basis, or at all, could harm our business and operating results. In addition, regulations and requirements for approvals vary by country, which can significantly increase the costs to sell our products in these international jurisdictions.
Further, any failure by us to forecast demand for or to maintain an adequate supply of, raw material and finished product could result in an interruption in the supply of certain products and a decline in the sales of that product. For example, in 2022 our ICL sales grew 27%.
Further, any failure by us to forecast demand for or to maintain an adequate supply of, raw material and finished product could result in an interruption in the supply of certain products and a decline in the sales of that product. For example, in 2023 our ICL sales grew 18%.
The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of their investment. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties.
The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of their investment. This Annual Report contains forward-looking statements that involve risks and uncertainties.
Also, if China, which accounted for approximately 52% of our fiscal 2022 consolidated net sales, experienced a significant economic downturn or disruption, continued restrictive COVID mitigation efforts, social or political unrest, we may experience a significant reduction in sales.
Also, if China, which accounted for approximately 58% of our fiscal 2023 consolidated net sales, experienced a significant economic downturn or disruption, continued restrictive COVID mitigation efforts, social or political unrest, we may experience a significant reduction in sales.
We have modified some of our 510(k) cleared and PMA approved products and have determined based on our review of the applicable FDA guidance that in certain instances new 510(k) clearances or premarket approvals are not required.
In the past, we have modified some of our 510(k) cleared and PMA approved products and have determined based on our review of the applicable FDA guidance that in certain instances new clearances or approvals were not required.
Failure to do so may adversely affect our results. We do not maintain insurance policies to cover the cost of replacing the services of any of our key employees who may unexpectedly die or become disabled. We compete with much larger companies and low-cost Asian manufacturers.
We do not maintain insurance policies to cover the cost of replacing the services of any of our key employees who may unexpectedly die or become disabled. We compete with much larger companies and low-cost Asian manufacturers.
In 2022, we generated approximately 95% of our total sales outside the U.S.
In 2023, we generated approximately 95% of our total sales outside the U.S.
Except for Japan, Germany, Spain, the U.S., Canada, the U.K. and Singapore, we sell our products through independent distributors who generally control the importation and marketing of our product within their territories.
Outside the U.S., except for our direct commercial operations in Japan, Germany, Spain, Canada, the U.K. and Singapore, we sell our products through independent distributors who generally control the importation and marketing of our product within their territories.
Under the FDA regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury.
Under the FDA regulations, we are required to provide the FDA with a Medical Device Report (MDR) for any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury.
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, and disgorgement, any of which could adversely affect our ability to operate our business and our financial results.
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, and disgorgement, any of which could adversely affect our ability to operate our business and our financial results. 26 If we recall a product, the cost and damage to our reputation could harm our business.
Any adverse event involving our products could result in future voluntary corrective actions, such as product actions or customer notifications, or agency actions, such as inspection, mandatory recall, or other enforcement action.
Any adverse event involving our products, including those requiring an MDR, could result in future voluntary corrective actions, such as product actions or customer notifications, or agency actions, such as inspection, mandatory recall, or other enforcement action.
In addition, the pandemic could adversely impact our ability to recruit and/or retain employees and the continued service and availability of skilled personnel necessary to run our complex production operations, as well as members of our management team, third-party suppliers, distributors and vendors.
In addition, a prolonged public health or political crisis could adversely impact our ability to recruit and/or retain employees and the continued service and availability of skilled personnel necessary to run our complex production operations, as well as members of our management team, third-party suppliers, distributors and vendors.
We have made decisions that certain types of events are not reportable under the MDR and similar regulations; however, there can be no assurance that the FDA or other regulatory bodies will agree with our decisions.
We have made decisions that certain types of events are not reportable to the FDA or other regulatory bodies; however, there can be no assurance that the FDA or other regulatory bodies will agree with our decisions.
If we recall a product, the cost and damage to our reputation could harm our business. We have voluntarily recalled our products in the past and recalls could take place again. We may also be subject to recalls initiated by manufacturers of products we distribute. We cannot eliminate the risk of a material recall in the future.
We have voluntarily recalled our products in the past and recalls could take place again. We may also be subject to recalls initiated by manufacturers of products we distribute. We cannot eliminate the risk of a material recall in the future.
If trade relations with the U.S. were to result in trade restrictions, if COVID-mitigation regulations implemented by the Chinese government, if social or political unrest were to disrupt business in China, or if other events in China significantly reduced or disrupted business activities in China, that may materially and adversely harm our business.
In addition, if COVID-mitigation regulations implemented by the Chinese government, if social or political unrest were to disrupt business in China, or if other events in China significantly reduced or disrupted business activities in China, that may materially and adversely harm our business.
Actual results could differ materially from those anticipated or implied in these forward-looking statements because of factors beyond our control, including the risks faced by us described below. Risks Related to Our Business We may not be able to continue our growth and profitability trajectory. In 2022 our revenue grew by 23% and we achieved $0.78 diluted earnings per share.
Actual results could differ materially from those anticipated or implied in these forward-looking statements because of factors beyond our control, including the risks faced by us described below. Risks Related to Our Business We may not be able to continue our growth and profitability trajectory.
If we fail to adopt ESG standards or practices as quickly as stakeholders desire, report on our ESG efforts or practices accurately, or satisfy the expectations of stakeholders, our reputation, business, financial performance and growth may be adversely impacted. Climate changes could negatively affect our business. Climate changes, such as extreme weather conditions, could create financial risk to our business.
If we fail to adopt ESG 23 standards or practices as quickly as stakeholders desire, report on our ESG efforts or practices accurately, or satisfy the expectations of our various stakeholders and global regulators, our reputation, business, financial performance and growth may be adversely impacted. Climate changes could negatively affect our business.
Unfavorable economic conditions or negative publicity concerning complications of laser eye surgery, or medical devices in general, could hurt sales of our refractive products. Approximately 95% of our revenue was derived from ICL lenses used in refractive procedures. Refractive surgery is an elective procedure generally not covered by health insurance.
Unfavorable economic conditions or negative publicity concerning complications of laser eye surgery, or medical devices in general, could hurt sales of our refractive products. For the year ended December 29, 2023, approximately 99% of our revenue was generated from sales of ICL lenses used in refractive procedures. Refractive surgery is an elective procedure generally not covered by health insurance.
Thus, at this point, the extent to which the coronavirus may impact delayed medical procedures and delayed lens orders, and the related impact on our results is uncertain; however, it could have a material adverse impact on our results of operations, cash flows and financial condition. We monitor such events and take actions that we deem reasonable given the circumstances.
The extent to which COVID-19 and its variants may impact medical procedures and lens orders in the future, and the related impact on our results is uncertain; however, it could have a material adverse impact on our results of operations, cash flows and financial condition. We monitor such events and take actions that we deem reasonable given the circumstances.
If any or a portion of our facilities were to experience a catastrophic loss, or if one of our facilities is found not to be in compliance with regulatory requirements, it could disrupt our operations, delay production and shipments, delay or reduce sales and revenue and result in large expenses to repair or replace the facility, as well as lost customers or sales.
Any sustained interruption in supply could cause us to lose market share and harm our business, financial condition and results of operations. 19 If any or a portion of our facilities were to experience a catastrophic loss, or if one of our facilities is found not to be in compliance with regulatory requirements, it could disrupt our operations, delay production and shipments, delay or reduce sales and revenue and result in large expenses to repair or replace the facility, as well as lost customers or sales.
If we continue to experience rapid growth, this places a significant strain on financial, operational, and managerial resources. We must continue to implement and enhance our managerial, operational and financial systems, expand our operations, and continue to recruit and train qualified personnel.
As we continue to grow and expand, it places a significant strain on our financial, operational, and managerial resources. We must continue to implement and enhance our managerial, operational and financial systems, expand our operations, and continue to recruit and train qualified personnel.
If we determine that certain actions do not require notification of 26 the FDA or others, the FDA or other regulatory bodies may disagree with our determinations and require us to report those actions as recalls.
Companies are required to maintain certain records of actions, even if they determine such actions are not reportable to the FDA or other regulatory bodies. If we determine that certain actions do not require notification of the FDA or others, the FDA or other regulatory bodies may disagree with our determinations and require us to report those actions as recalls.
Risks Related to Ownership of Our Common Stock The market price of our common stock is likely to be volatile. The market price for our common stock has fluctuated widely. The closing price of our common stock ranged from $46.82 to $111.58 per share during the year ended December 30, 2022.
Risks Related to Ownership of Our Common Stock The market price of our common stock is likely to be volatile. The market price for our common stock has fluctuated widely. The closing price of our common stock ranged from $30.60 to $79.34 per share during the year ended December 29, 2023.
If we modify our products, we may have to obtain new marketing clearances or approvals or may have to cease marketing or recall the modified products until clearances or approvals are obtained.
If we modify our products, we may have to obtain new marketing clearances or approvals or may have to cease marketing or recall the modified products until clearances or approvals are obtained. Our ICL products are Class III devices subject to the PMA approval process.
We manufacture in the U.S. and inflation has increased in the U.S. during recent months, and we can expect as a result to experience increased costs in our own supply chain which may be difficult to pass along to our customers. Any inability to successfully manage growth could materially and adversely affect our business, financial condition, and results of operation.
Further, we manufacture our ICLs in the U.S., and inflationary pressures could result in increased costs in our supply chain, which may be difficult to pass along to our customers. Any inability to successfully manage growth could materially and adversely affect our business, financial condition, and results of operation.
We may consider and, as appropriate, make acquisitions of technologies, products, and businesses that we believe are complementary to our business. Acquisitions typically entail many risks and could result in difficulties in integrating the operations, personnel, technologies, and products acquired, and mitigating the risk of unknown liabilities some of which may result in significant payments or charges to earnings.
Acquisitions typically entail many risks and could result in difficulties in 22 integrating the operations, personnel, technologies, and products acquired, and mitigating the risk of unknown liabilities some of which may result in significant payments or charges to earnings.
With respect to our patents, any of them may be challenged, invalidated, circumvented or rendered unenforceable. Any of our pending patent applications may fail to result in an issued patent or fail to provide meaningful protection against competitors or competitive technology.
The ophthalmic industry is competitive, and new products and technologies are regularly being brought to market. With respect to our patents, any of them may be challenged, invalidated, circumvented or rendered unenforceable. Any of our pending patent applications may fail to result in an issued patent or fail to provide meaningful protection against competitors or competitive technology.
Our largest investor beneficially owns approximately 18% of our outstanding common stock, and our largest four investors beneficially own approximately 50% of our outstanding common stock. One of our current six directors was recommended by our investors.
Our largest investor beneficially owns approximately 22% of our outstanding common stock, and our largest four investors beneficially own approximately 59% of our outstanding common stock. Two of our current six directors were recommended by investors.
A product liability claim that exceeds our insurance coverage could materially harm our business, financial condition, and results of operations. Even if an insurance policy covers a product liability loss, we must generally pay for losses until they reach the level of the policy’s stated deductible or retention amount after which the insurer begins paying.
Even if an insurance policy covers a product liability loss, we must generally pay for losses until they reach the level of the policy’s stated deductible or retention amount after which the insurer begins paying.
To the extent our management or other personnel are impacted in significant numbers by the pandemic and are not available to perform their job duties (for example, for health and safety reasons), we could experience delays in, or the suspension of, our manufacturing operations, research and product development activities, regulatory work streams, and other important commercial and operational functions.
To the extent our management or other personnel are impacted in significant numbers and are not available to perform their job duties (for example, for health and safety reasons), we could experience delays in, or the suspension of, our manufacturing operations, research and product development activities, regulatory work streams, and other important commercial and operational functions. 20 The loss of key employees, or our inability to recruit, hire and retain skilled and experienced personnel, could negatively impact our ability to effectively manage and expand our business.
With our increased commercial success with the ICL, additional companies may seek to enter the refractive phakic intraocular lens market. Non-compliance with anti-corruption laws could lead to penalties or harm our reputation . We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (FCPA).
Non-compliance with anti-corruption laws could lead to penalties or harm our reputation . We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (FCPA).
Similarly, our failure or perceived failure to pursue or fulfill certain targets or goals, or to satisfy various reporting standards could also have negative impacts and expose us to government enforcement actions and private litigation. Finally, we expect to incur additional costs and require additional resources to monitor, report, and comply with our various ESG practices.
Similarly, our failure or perceived failure to pursue or fulfill certain targets or goals, or to satisfy various reporting standards could also have negative impacts and expose us to government enforcement actions and private litigation.
We rely on our distributors to obtain regulatory clearances or approvals of our products in certain countries outside of the United States.
Regulatory agencies in other countries similarly require approval or clearance prior to our marketing or selling products in those countries. We rely on our distributors to obtain regulatory clearances or approvals of our products in certain countries outside of the United States.
Also, we have filed a universal shelf registration statement with the Securities and Exchange Commission. The shelf registration statement is available to cover the future public offering and sale of up to approximately $200,000,000 in equity or debt securities or any combination of such securities.
Also, we have filed in the past, and may file in the future, a universal shelf registration statement with the Securities and Exchange Commission to cover the public offering and sale of our equity or debt securities.
We depend on the continued service of our senior management and other key employees. The loss of a key employee could hurt our business. It could be particularly detrimental if any key employee or employees went to work for a competitor. Also, our future success depends on our ability to identify, attract, train, motivate and retain other highly skilled personnel.
Further, it could be particularly detrimental if any key employee or employees went to work for a competitor. Also, our future success depends on our ability to identify, attract, train, motivate and retain other highly skilled personnel. Failure to do so may adversely affect our results.
Sales of our common or preferred stock under the shelf registration or in other transactions could dilute the interest of existing stockholders and reduce the market price of our common stock. Even in the absence of such sales, the perception among investors that additional sales of equity securities may take place could reduce the market price of our common stock.
Sales of our common or preferred stock under the shelf registration or in other transactions could dilute the interest of existing stockholders and reduce the market price of our common stock.
In addition, our employees may use social media tools and mobile technologies inappropriately, which may give rise to liability, or which could lead to the exposure of sensitive information.
In addition, our employees may use social media tools and mobile technologies inappropriately, which may give rise to liability, or which could lead to the exposure of sensitive information. In either case, such uses of social media and mobile technologies could have a material adverse effect on our business, financial condition, and results of operations.
We cannot eliminate the risk of accidental contamination or injury from these materials and equipment. Remedial environmental actions could require us to incur substantial unexpected costs, which could materially and adversely affect our financial condition and results of operations.
Remedial environmental actions could require us to incur substantial unexpected costs, which could materially and adversely affect our financial condition and results of operations.
Our manufacturing, research and development activities involve the use of hazardous materials and equipment and use of an irradiator. Federal, state and local laws and regulations govern the use, manufacturing, storage, handling and disposal of these materials and certain waste products in the places where we have operations.
Federal, state and local laws and regulations govern the use, manufacturing, storage, handling and disposal of these materials and certain waste products in the places where we have operations. We cannot eliminate the risk of accidental contamination or injury from these materials and equipment.
Climate-related transitional risks, such as changing regulations, could also increase our costs and adversely impact our operations or financial performance. Risks Related to the Ophthalmic Products Industry Unless we keep pace with advances in our industry and persuade physicians to adopt our new products, our sales will not grow and may decline.
Risks Related to the Ophthalmic Products Industry Unless we keep pace with advances in our industry and persuade physicians to adopt our new products, our sales will not grow and may decline.
If the supply of these collagen-containing raw materials is disrupted, it could result in our inability to manufacture those products and would have a material adverse effect on STAAR. The loss of our external supply source for silicone material, polymer for injectors, or acrylic lenses, or other components and material could also cause us material harm.
If the supply of these collagen-containing raw materials is disrupted, it could result in our inability to manufacture our ICL products and would have a material adverse effect on STAAR.
Other U.S. companies in the medical device and pharmaceutical field have faced criminal penalties under the FCPA for allowing their employees or agents to deviate from appropriate practices in doing business with such individuals. We could experience losses due to product liability claims.
Other U.S. companies in the medical device and pharmaceutical field have faced criminal penalties under the FCPA for allowing their employees or agents to deviate from appropriate practices in doing business with such individuals. Investigations and allegations, whether or not they lead to enforcement action or litigation, can materially harm our business and our reputation.
Global physical climate changes, including unseasonable weather conditions and earthquakes, could disrupt our operations by impacting the availability and cost of water, energy, or materials within our supply chain, and could also increase insurance and other operating costs. This could in turn put pressure on our manufacturing costs and result in reduced profit margins associated with certain of our products.
Climate changes, such as extreme weather conditions, could create financial risk to our business. Global physical climate changes, including unseasonable weather conditions and earthquakes, could disrupt our operations by impacting the availability and cost of water, energy, or materials within our supply chain, and could also increase insurance and other operating costs.
For example, if Shanghai Lansheng, which accounted for approximately 52% of our fiscal 2022 consolidated net sales, ceased to serve as our distributor, or significantly underperformed our expectations, we may experience a substantial reduction in sales. We rely on sales in China for over 50% of our 2022 net sales.
For example, if Shanghai Lansheng, which accounted for approximately 58% of our fiscal 2023 consolidated net sales, ceased to serve as our distributor, or significantly underperformed our expectations, we may experience a substantial reduction in sales. A slowdown or disruption to the Chinese economy could materially impact our business and results of operations.
We have been subject to product liability claims in the past and may experience such claims in the future. Product liability claims against us may not be covered, may exceed the coverage limits of our insurance policies or cause us to record a loss in excess of our deductible.
Product liability claims against us may not be covered, may exceed the coverage limits of our insurance policies or cause us to record a loss in excess of our deductible. A product liability claim that exceeds our insurance coverage could materially harm our business, financial condition, and results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties Our operations are conducted in leased facilities throughout the world. Our global administrative offices, principal manufacturing, warehouse and distribution, are in Monrovia, California. STAAR Surgical AG maintains administrative offices, manufacturing capabilities, warehouse and distribution facilities in Nidau and Brügg, Switzerland.
Biggest changeITEM 2. P roperties Our operations are conducted in leased facilities throughout the world. STAAR maintains operational and administrative facilities in the U.S., Switzerland, and Japan. Our global administrative offices, principal manufacturing, warehouse and distribution, are located in Monrovia, California. Our facility in Lake Forest, California serves as our corporate headquarters.
Removed
Our facility in Lake Forest, California serves as our corporate headquarters and is expected to handle manufacturing of the EVO Viva to correct or reduce presbyopia after the facility’s approval. The Company leases a research and development facility in Tustin, California and a facility in Aliso Viejo, California for raw material production and research and development activities.
Added
The Company leases a facility in Tustin, California, that houses our research and development team, and a facility in Aliso Viejo, California, where we manufacture the raw material for Collamer lenses and conduct research and development activities. STAAR Surgical AG maintains administrative offices, manufacturing capabilities, warehouse and distribution facilities in Nidau and Brügg, Switzerland.
Removed
STAAR Japan maintains executive offices in Shin-Urayasu, Japan and a final packaging and inspection and distribution facility in Ichikawa City, Japan. We believe our operating facilities in the U.S., Switzerland and Japan are suitable and adequate for our current requirements. The Company could increase capacity as needed.
Added
STAAR Japan maintains executive offices in Tokyo, Japan and a distribution facility in Ichikawa City, Japan. We also maintain commercial offices in China, Germany, Spain, India, Singapore, and the U.K. We believe our existing properties are well maintained, in good operating condition and are adequate to support our present level of operations.
Added
We also believe that we could increase capacity as needed. The Company is in the process of qualifying its Lake Forest, California facility to manufacture the EVO Viva . In addition, the Company is in the process of qualifying its Nidau, Switzerland facility to manufacture various ICL products.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. Legal Proceedings Certain of the legal proceedings in which we are involved are discussed under “Litigation and Claims” in Note 13, “Commitments and Contingencies,” to our Consolidated Financial Statements in this Annual Report on Form 10-K and are hereby incorporated by reference. 29 ITEM 4. Mine Saf ety Disclosures None. PART II
Biggest changeITEM 3. Legal Proceedings See Note 13 to the Consolidated Financial Statements in this Annual Report on Form 10-K for information about Litigation and Claims, which is hereby incorporated by reference. ITEM 4. Mine Saf ety Disclosures None. PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Performance Graph This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference into any filing of STAAR Surgical Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Biggest changeThe declaration and payment of any such dividends depends upon the Company’s earnings, financial condition, capital needs, and other factors deemed relevant by the Board and may be restricted by future agreements with lenders. 31 Stock Performance Graph This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of STAAR Surgical Company under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Market (NASDAQ) under the symbol “STAA.” Holders As of February 17, 2023, there were approximately 281 record holders of our Common Stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Market (NASDAQ) under the symbol “STAA.” Holders As of February 21, 2024, there were approximately 265 holders of record of our common stock.
Dividends We have not paid any cash dividends on our Common Stock since our inception. We currently expect to retain any earnings for use to further develop our business and not to declare cash dividends on our Common Stock in the foreseeable future.
We currently expect to retain any earnings for use to further develop our business and not to declare cash dividends in the foreseeable future.
The data assumes $100 was invested on December 29 , 201 7 in STAAR common stock and in each of the composite indices, and that dividends (if any) were reinvested. We have never paid dividends on our common stock and have no present plans to do so. Prepared by Zacks Investment Research, Inc. Used with Permission. All rights reserved.
The graph assumes that $100 was invested at the closing price of our common stock on the last trading day of fiscal year 2018 and all dividends (if any) were reinvested. We have never paid dividends on our common stock and have no present plans to do so.
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The declaration and payment of any such dividends in the future depends upon the Company’s earnings, financial condition, capital needs, and other factors deemed relevant by the Board of Directors and may be restricted by future agreements with lenders.
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The number of beneficial owners of our common stock is substantially greater than the number of record holders, because a large portion of our common stock is held in street name by brokers and other nominees. Dividends We have not paid any cash dividends on our common stock since our inception.
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The following graph shows a comparison from December 29, 2017 to December 30, 2022 of the total performance of the following: • STAAR Surgical Company; • The NASDAQ Composite Index; • a peer group we have selected based on data and advice provided by the Radford Group, consisting of the following 16 companies: Angio Dynamics (ANGO) Inogen (INGN) Anika Therapeutics (ANIK) LeMaitre Vascular (LMAT) AtriCure (ATRC) Merit Medical Systems (MMSI) Atrion (ATRI) Nevro (NVRO) AxoGen (AXGN) Penumbra (PEN) Cardiovascular Systems (CSII) Surmodics (SRDX) CryoLife (CRY) Tactile Systems Technology (TCMD) Glaukos (GKOS) Tandem Diabetes Care (TNDM) In 2022, we revised our peer group to a standard major market and industry index peer group to better reflect our current company profile and market capitalization.
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The following graph and table show the cumulative total stockholder return during the last five years in (i) our common stock, (ii) the NASDAQ Composite Index and (iii) the S&P 400 Health Care Index.
Removed
The new peer group is the S&P 400 Health Care Index. The chart below shows our performance compared to both the prior peer group and the new peer group. 30 Returns in the graph below reflect historical results; we do not intend to suggest they predict future performance.
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Stockholder returns over the indicated period should not be considered indicative of future performance. Prepared by Zacks Investment Research, Inc. Used with Permission. All rights reserved.
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Total Returns Index for Fiscal Years: 2017 2018 2019 2020 2021 2022 STAAR Surgical Company 100.00 201.68 221.81 511.10 589.03 313.12 The Nasdaq Composite Index 100.00 96.41 133.54 192.47 235.15 158.65 Old Peer Group 100.00 116.50 135.49 164.85 175.91 116.28 New Peer Group - S&P 400 Health Care Index 100.00 104.58 129.19 170.22 189.55 151.53 ITEM 6. [Reserved] 31
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Total Returns Index for Fiscal Years: 2018 2019 2020 2021 2022 2023 STAAR Surgical Company $ 100.00 $ 109.98 $ 253.42 $ 292.07 $ 155.26 $ 99.82 The Nasdaq Composite Index 100.00 138.52 199.64 243.92 164.56 238.01 S&P 400 Health Care Index 100.00 123.53 162.76 181.24 144.89 145.64 ITEM 6. [Res erved] 32

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe table below summarizes the year over year changes in other income (expense), net (in thousands): Favorable (Unfavorable) 2022 vs. 2021 2021 vs. 2020 Interest income (expense), net $ 2,486 $ (276 ) Foreign exchange 1,257 (3,828 ) Royalty income (211 ) 575 Other 253 (4 ) Net change in other income (expense), net $ 3,785 $ (3,533 ) Provision for Income Taxes The following table presents our provision for income taxes for the fiscal years presented (in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Provision for income taxes $ 6,797 $ 6,803 $ 2,354 (0.1 )% —* Effective tax rate 14.9 % 21.7 % 28.5 % * Denotes change is greater than + 100%.
Biggest changeThe table below summarizes the year over year changes in other income (expense), net (in thousands): Favorable (Unfavorable) 2023 vs. 2022 2022 vs. 2021 Interest income (expense), net $ 4,538 $ 2,486 Foreign exchange (202 ) 1,257 Royalty income (730 ) (211 ) Other 243 253 Net change in other income (expense), net $ 3,849 $ 3,785 Provision for Income Taxes The following table presents our provision for income taxes for the fiscal years presented (in thousands): Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Provision for income taxes $ 12,349 $ 5,887 $ 3,793 — * 55.2 % Effective tax rate 36.6 % 12.9 % 12.1 % * Denotes change is greater than + 100%. 37 Our effective tax rates differ from the U.S. federal statutory rate of 21% for 2023, 2022 and 2021, respectively, primarily due to the income taxes generated in foreign jurisdictions and realizability of deferred tax assets.
Sales Return Reserves We provide allowances for sales returns such that returns are matched against the sales from which they originated. While such allowances have historically been within our expectations, we cannot guarantee that we will 38 continue to experience the same return rates that we have in the past.
Sales Return Reserves We provide allowances for sales returns such that returns are matched against the sales from which they originated. While such allowances have historically been within our expectations, we cannot guarantee that we will continue to experience the same return rates that we have in the past.
In particular, these include statements about any of the following: any projections of or guidance as to earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, product mix, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally), the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of a new or improved products; commercialization of new or improved products; future economic conditions or size of market opportunities; expected costs of operations; statements of belief, including as to achieving 2023 business plans; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.
In particular, these include statements about any of the following: any projections of or guidance as to future earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, product mix, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally); the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of a new or improved products; commercialization of new or improved products; future economic conditions or size of market opportunities; expected costs of operations; statements of belief, including as to achieving business plans for 2024 and beyond; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.
For those awards which contain a performance condition, stock-based compensation cost will be recognized when it is probable that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures, over the requisite service period based on the grant-date fair value of the stock.
For those awards which contain a performance condition, stock-based compensation expense will be recognized when it is probable that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures, over the requisite service period based on the grant-date fair value of the stock.
For 2022, net cash used in investment activities of $156.4 million resulted from $155.7 million in purchases of investments available for sale and $18.1 million in purchases of property, plant and equipment, partially offset by $17.5 million of proceeds from the maturity of investments available for sale.
For 2022, net cash used in investment activities resulted from $155.7 million in purchases of investments available for sale and $18.1 million in purchases of property, plant and equipment, partially offset by $17.5 million of proceeds from the maturity of investments available for sale.
The change in other income (expense), net for 2022 was due to increased interest income, as a result of our investments held available for sale and higher interest rates and decreased foreign exchange losses (primarily euro). The change in other income (expense), net for 2021 was due primarily to increased foreign exchange losses (primarily euro).
The change in other income, net for 2023 was due to increased interest income as a result of higher interest rates during 2023. The change in other income (expense), net for 2022 was due to increased interest income, as a result of our investments held available for sale and higher interest rates and decreased foreign exchange losses (primarily euro).
We consider all available information in our quarterly assessments of the adequacy of the allowance for sales returns. Stock-Based Compensation We account for the issuance of stock awards by estimating the fair value of awards issued using the Black-Scholes pricing model.
We consider all available information in our quarterly assessments of the adequacy of the allowance for sales returns. Stock-Based Compensation We account for the issuance of stock options by estimating the fair value using the Black-Scholes pricing model.
We reassess the probability of vesting at each reporting period and adjust stock-based compensation cost based on our probability assessment.
We reassess the probability of vesting at each reporting period and adjust stock-based compensation expense based on our probability assessment.
Gross profit margin increased to 78.5% of revenue for 2022 compared to 77.5% of revenue for 2021, due to geographic sales mix and an increased mix of ICL sales which carry a higher margin, partially offset by increased period costs associated with manufacturing expansion projects. Gross profit for 2021 increased 50.9% from 2020.
Gross profit margin increased to 78.5% of revenue for 2022 compared to 77.5% of revenue for 2021, due to geographic sales mix and an increased mix of ICL sales, which carry a higher margin, partially offset by increased period costs associated with manufacturing expansion projects.
In projecting future taxable income, we begin with historical results and incorporate assumptions including overall current and projected business and industry conditions, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the successful implementation of feasible and prudent tax-planning strategies.
In projecting future taxable income, we begin with historical results and incorporate assumptions including overall current and projected business and industry conditions, projected sales growth, margins, costs and income by jurisdiction, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the successful implementation of feasible and prudent tax-planning strategies.
Research and development expense consist primarily of compensation and related costs for personnel responsible for the research and development of new and existing products, the regulatory and clinical activities required to acquire and maintain product approvals globally and medical affairs expenses.
Research and development expense consist primarily of compensation and related costs for personnel responsible for the research and development of new and existing products, the regulatory and clinical activities required to acquire and maintain product approvals globally and medical affairs expenses. These costs are expensed as incurred.
Although we believe that the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risks and we can give no assurance that our expectations will prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond our control.
Although we believe that the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risks and we can give no assurance that our expectations will prove to be correct. Actual results could differ materially from those expressed or implied by such forward-looking statements because of numerous factors, many of which are beyond our control.
Research and development expenses for 2021 increased 6.1% from 2020 due to increased bonus and stock-based compensation expenses and salary-related and payroll tax expenses, partially offset by decreased clinical expenses associated with our U.S. EVO clinical trial.
Research and development expenses for 2022 increased 6.3% from 2021 due to increased salary-related and payroll tax expenses and bonus and stock-based compensation expenses, partially offset by decreased clinical expenses associated with our U.S. EVO clinical trials.
Other product sales for 2022 decreased 16% from 2021, mainly due to decreased sales of cataract IOLs. Changes in foreign currency unfavorably impacted other product sales by $2.6 million. Other product sales represented 5.2% of our total sales for fiscal year 2022.
Changes in foreign currency unfavorably impacted other product sales by $0.3 million. Other product sales represented 1.0% of our total sales for fiscal year 2023. Other product sales in 2022 decreased 16% from 2021, mainly due to decreased cataract IOL sales. Changes in foreign currency unfavorably impacted other product sales by $2.6 million.
Inflation Management believes inflation has not had a significant impact on our net sales and revenues and on income from continuing operations during the past three years. Recent Accounting Pronouncements None.
Inflation Management believes inflation has not had a significant impact on our net sales and revenues and on income from continuing operations during the past three years. Recent Accounting Pronouncements See “ Part II. Item 8.
For 2021, net cash provided by operating activities consisted of $24.5 million in net income and $21.9 million in non-cash items, offset by $2.4 million in working-capital changes.
For 2022, net cash provided by operating activities consisted of $39.7 million in net income and $24.9 million in non-cash items, offset by $28.9 million in working-capital changes. For 2021, net cash provided by operating activities consisted of $27.5 million in net income and $18.8 million non-cash items, offset by $2.4 million in working-capital changes.
Percentage of Net Sales 2022 2021 2020 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 21.5 % 22.5 % 27.6 % Gross profit 78.5 % 77.5 % 72.4 % General and administrative 19.2 % 19.1 % 20.7 % Selling and marketing 31.2 % 29.2 % 28.0 % Research and development 12.7 % 14.7 % 19.6 % Total selling, general and administrative 63.1 % 63.0 % 68.3 % Operating income 15.4 % 14.5 % 4.1 % Total other income (expense), net 0.6 % (0.9 )% 0.9 % Income before income taxes 16.0 % 13.6 % 5.0 % Provision for income taxes 2.4 % 3.0 % 1.4 % Net income 13.6 % 10.6 % 3.6 % Net Sales The following table presents our net sales, by product for the fiscal years presented (dollars in thousands): 2022 2021 2020 % of Total Sales % of Total Sales % of Total Sales ICLs 94.8 % $ 269,712 92.4 % $ 212,905 86.5 % $ 141,407 Other product sales Cataract IOLs 3.4 % 9,638 5.4 % 12,519 8.3 % 13,574 Other surgical products 1.8 % 5,041 2.2 % 5,048 5.2 % 8,479 Total other product sales 5.2 % 14,679 7.6 % 17,567 13.5 % 22,053 Net sales 100.0 % $ 284,391 100.0 % $ 230,472 100.0 % $ 163,460 Net sales for 2022 increased 23% from 2021.
Percentage of Net Sales 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 21.6 % 21.5 % 22.5 % Gross profit 78.4 % 78.5 % 77.5 % General and administrative 22.4 % 19.2 % 19.2 % Selling and marketing 33.4 % 31.2 % 29.2 % Research and development 13.8 % 12.7 % 14.7 % Total selling, general and administrative 69.6 % 63.1 % 63.1 % Operating income 8.8 % 15.4 % 14.4 % Total other income (expense), net 1.7 % 0.6 % (0.9 )% Income before income taxes 10.5 % 16.0 % 13.5 % Provision for income taxes 3.8 % 2.1 % 1.6 % Net income 6.7 % 13.9 % 11.9 % 34 Net Sales The following table presents our net sales, by product for the fiscal years presented (dollars in thousands): 2023 2022 2021 % of Total Sales % of Total Sales % of Total Sales ICLs 99.1 % $ 319,427 94.8 % $ 269,712 92.4 % $ 212,905 Other product sales Cataract IOLs 0.3 % 1,139 3.4 % 9,638 5.4 % 12,519 Other surgical products 0.6 % 1,849 1.8 % 5,041 2.2 % 5,048 Total other product sales 0.9 % 2,988 5.2 % 14,679 7.6 % 17,567 Net sales 100.0 % $ 322,415 100.0 % $ 284,391 100.0 % $ 230,472 Net sales for 2023 increased 13% from 2022.
For 2020, net cash provided by financing activities consisted of $20.6 million of proceeds from the exercise of stock options, partially offset by $0.6 million repayment of finance lease obligations and a $0.5 million repayment on the Japan line of credit. Accounts receivable, net was $62.4 million and $43.5 million at December 30, 2022 and December 31, 2021, respectively.
For 2021, net cash provided by financing activities consisted of $19.4 million of proceeds from the exercise of stock options, partially offset by $1.3 million repayment on the Japan line of credit and $0.3 million repayment of finance lease obligations. Accounts receivable, net was $94.7 million and $62.4 million at December 29, 2023 and December 30, 2022, respectively.
General and administrative expenses for 2021 increased 30.2% from 2020, due to increased bonus and stock-based compensation expenses, salary-related and payroll tax expenses, outside services, facilities costs and corporate insurance.
General and administrative expenses for 2022 increased 24.0% from 2021, due to increased facilities costs, bonus and stock-based compensation expenses, outside services and salary-related and payroll tax expenses.
These costs are expensed as incurred. 35 Other Income (Expense) , Net The following table presents our other income (expense), net for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Other income (expense), net $ 1,750 $ (2,035 ) $ 1,498 —* —* Percentage of sales 0.6 % (0.9 )% 0.9 % * Denotes change is greater than + 100%.
Other Income (Expense), Net The following table presents our other income (expense), net for the fiscal years presented (dollars in thousands): Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Other income (expense), net $ 5,599 $ 1,750 $ (2,035 ) — * — * Percentage of sales 1.7 % 0.6 % (0.9 )% * Denotes change is greater than + 100%.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The matters addressed in this Item 7 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The matters addressed in this Item 7 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created therein.
The increase in net sales was due to increased ICL sales of $56.8 million, partially offset by a decrease in other product sales of $2.9 million. Changes in foreign currency unfavorably impacted net sales by $12.9 million. 33 Net sales for 2021 increased 41 % from 2020 .
The increase in net sales was due to increased ICL sales of $56.8 million, partially offset by a decrease in other product sales of $2.9 million. Changes in foreign currency unfavorably impacted net sales by $12.9 million. Total ICL sales for 2023 increased 18% from 2022, with unit growth up 19%.
STAAR employs a commercialization strategy that strives for increased share of the refractive market and sustainable profitable growth. Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction.
Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction.
Selling and Marketing Expense The following table presents our marketing and selling expense for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Selling and marketing expenses $ 88,856 $ 67,294 $ 45,764 32.0 % 47.0 % Percentage of sales 31.2 % 29.2 % 28.0 % Selling and marketing expenses for 2022 increased 32.0% from 2021, due to increased advertising and promotional activities, trade shows and sales meetings expense, travel expenses and bonus and stock-based compensation expenses.
Selling and Marketing Expense The following table presents our selling and marketing expense for the fiscal years presented (dollars in thousands): Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Selling and marketing expenses $ 107,834 $ 88,856 $ 67,294 21.4 % 32.0 % Percentage of sales 33.4 % 31.2 % 29.2 % Selling and marketing expenses for 2023 increased 21.4% from 2022, due to increased advertising and promotional activities, salary-related payroll tax expenses, sales commission expenses and travel expenses, partially offset by bonus and stock-based compensation expenses.
For example, COVID-19 impacted certain of our Chinese customers and, in the U.S., STAAR’s manufacturing operations. Results of Operations The following table sets forth the percentage of total sales represented by certain items reflected in the Company’s Consolidated Statement of Income for the period indicated.
Results of Operations The following table sets forth the percentage of total sales represented by certain items reflected in the Company’s Consolidated Statement of Income for the period indicated.
Changes in foreign currency favorably impacted ICL sales by $0.8 million. ICL sales represented 92.4% of our total sales for fiscal year 2021. Other product sales, includes cataract IOLs, delivery systems and normal recurring sales adjustments such as sales return allowances.
ICL sales represented 94.8% of our total sales for fiscal year 2022. Other product sales, includes cataract IOLs, delivery systems and normal recurring sales adjustments such as sales return allowances.
A summary of cash flows for the fiscal years presented (dollars in thousands): 2022 2021 2020 Cash flows from: Operating activities $ 35,715 $ 43,962 $ 20,951 Investing activities (156,376 ) (13,645 ) (8,404 ) Financing activities 8,297 17,793 19,571 Effect of exchange rate changes (862 ) (857 ) 367 Net increase (decrease) in cash and cash equivalents (113,226 ) 47,253 32,485 Cash and cash equivalents, at beginning of year 199,706 152,453 119,968 Cash and cash equivalents, at end of year $ 86,480 $ 199,706 $ 152,453 37 For 2022, net cash provided by operating activities consisted of $38.8 million in net income and $25.8 million in non-cash items, offset by $28.9 million in working-capital changes.
The following table presents a summary of cash flows for the fiscal years presented (dollars in thousands): 2023 2022 2021 Cash flows from: Operating activities $ 14,594 $ 35,715 $ 43,962 Investing activities 74,347 (156,376 ) (13,645 ) Financing activities 7,415 8,297 17,793 Effect of exchange rate changes 202 (862 ) (857 ) Net change in cash and cash equivalents 96,558 (113,226 ) 47,253 Cash and cash equivalents, at beginning of year 86,480 199,706 152,453 Cash and cash equivalents, at end of year $ 183,038 $ 86,480 $ 199,706 For 2023, net cash provided by operating activities consisted of $34.1 million in non-cash items and $21.3 million in net income, offset by $40.8 million in working-capital changes.
Gross Profit The following table presents our gross profit and gross profit margin for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Gross profit $ 223,383 $ 178,637 $ 118,362 25.0 % 50.9 % Gross margin 78.5 % 77.5 % 72.4 % Gross profit for 2022 increased 25.0% from 2021.
Other product sales represented 5.2% of our total sales for fiscal year 2022. 35 Gross Profit The following table presents our gross profit and gross profit margin for the fiscal years presented (dollars in thousands): Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Gross profit $ 252,651 $ 223,383 $ 178,637 13.1 % 25.0 % Gross profit margin 78.4 % 78.5 % 77.5 % Gross profit for 2023 increased 13.1% from 2022.
Our financial condition at December 30, 2022, December 31, 2021 and January 1, 2021 included the following (in thousands): 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Cash and cash equivalents $ 86,480 $ 199,706 $ 152,453 $ (113,226 ) $ 47,253 Investments available for sale 139,061 — — 139,061 — Total $ 225,541 $ 199,706 $ 152,453 $ 25,835 $ 47,253 Current assets $ 311,723 $ 271,411 $ 216,418 $ 40,312 $ 54,993 Current liabilities 51,716 48,802 41,236 2,914 7,566 Working capital $ 260,007 $ 222,609 $ 175,182 $ 37,398 $ 47,427 Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions.
Our financial condition at December 29, 2023, December 30, 2022 and December 31, 2021 included the following (in thousands): 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Cash and cash equivalents $ 183,038 $ 86,480 $ 199,706 $ 96,558 $ (113,226 ) Investments available for sale 49,391 139,061 — (89,670 ) 139,061 Total $ 232,429 $ 225,541 $ 199,706 $ 6,888 $ 25,835 Current assets $ 365,269 $ 311,723 $ 271,411 $ 53,546 $ 40,312 Current liabilities $ 65,036 $ 51,716 $ 48,802 $ 13,320 $ 2,914 Working capital $ 300,233 $ 260,007 $ 222,609 $ 40,226 $ 37,398 Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions.
Employee Defined Benefit Plans - Pension The liabilities and annual income or expense of our pension plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, expected years of service, salary increases and the expected long-term rate of asset return.
While such inventory losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same loss rates that we have in the past. 40 Employee Defined Benefit Plans - Pension The liabilities and annual income or expense of our pension plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, expected years of service, salary increases and the expected long-term rate of asset return.
Research and Development Expense The following table presents our research and development expense for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Research and development expense $ 35,983 $ 33,862 $ 31,918 6.3 % 6.1 % Percentage of sales 12.7 % 14.7 % 19.6 % Research and development expenses for 2022 increased 6.3% from 2021 due to increased salary-related and payroll tax expenses and bonus and stock-based compensation expenses, partially offset by decreased clinical expenses associated with our clinical trials.
Selling and marketing expenses for 2022 increased 32.0% from 2021, due to increased advertising and promotional activities, trade shows and sales meetings expense, travel expenses and bonus and stock-based compensation expenses. 36 Research and Development Expense The following table presents our research and development expense for the fiscal years presented (dollars in thousands): Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Research and development expense $ 44,401 $ 35,983 $ 33,862 23.4 % 6.3 % Percentage of sales 13.8 % 12.7 % 14.7 % Research and development expenses for 2023 increased 23.4% from 2022 due to increased salary-related and payroll tax expenses and clinical expenses associated with our U.S. post-approval clinical trials.
Gross profit margin increased to 77.5% of revenue for 2021 compared to 72.4% of revenue for 2020, due to higher mix of ICL sales, geographic sales mix, a decreased mix of injector part sales which carry a lower margin, partially offset by increased period costs associated with manufacturing expansion projects.
Gross profit margin decreased to 78.4% of revenue for 2023 compared to 78.5% of revenue for 2022, due to reserves related to cataract IOLs and increased period costs associated with manufacturing expansion projects, offset by an increased mix of ICL sales, which carry a higher margin. Gross profit for 2022 increased 25.0% from 2021.
The North America region sales increased 51%, with unit increase of 47%, due to sales growth in the U.S. up 59% and Canada up 10%. Changes in foreign currency unfavorably impacted ICL sales by $10.3 million, which impacted our Japan and Europe, Middle East and Africa markets. ICL sales represented 94.8% of our total sales for fiscal year 2022.
The Americas region sales increased 11%, with unit increase of 9%, due to sales growth in the U.S. up 14% and Canada up 5%, partially offset by a sales decrease in our Latin America distributor markets down 3%. Changes in foreign currency unfavorably impacted ICL sales by $1.8 million, which impacted our Japan and Europe, Middle East and Africa markets.
The increase in net sales was due to increase d ICL sales of $ 71.5 million , partially offset by a decrease in other product sales of $ 4.5 million. Changes in foreign currency favorably impacted net sales by $ 0 . 5 million. Total ICL sales for 2022 increased 27% from 2021, with unit growth up 33%.
The increase in net sales was due to increased ICL sales of $49.7 million, partially offset by a decrease in other product sales of $11.7 million. Changes in foreign currency unfavorably impacted net sales by $2.1 million. Net sales for 2022 increased 23% from 2021.
Also contributing to the increase in gross profit margin for 2021, was $1.2 million in non-recurring expenses incurred related to the COVID-19 manufacturing pause from March 17 through April 27, 2020. 34 General and Administrative Expense The following table presents our general and administrative expense for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 General and administrative expense $ 54,742 $ 44,142 $ 33,911 24.0 % 30.2 % Percentage of sales 19.2 % 19.1 % 20.7 % General and administrative expenses for 2022 increased 24.0% from 2021, due to increased facilities costs, bonus and stock-based compensation expenses, outside services, and salary-related and payroll tax expenses.
General and Administrative Expense The following table presents our general and administrative expense for the fiscal years presented (dollars in thousands): Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 General and administrative expense $ 72,319 $ 54,742 $ 44,142 32.1 % 24.0 % Percentage of sales 22.4 % 19.2 % 19.2 % General and administrative expenses for 2023 increased 32.1% from 2022, due to increased salary-related and payroll tax expenses, outside services, facilities costs, bonus and stock-based compensation expenses and Japan one-time employee benefits.
Total ICL sales for 2021 increased 51% from 2020, with unit growth up 48%. The sales increase was driven by the APAC region, which grew 51% with unit growth of 47%, primarily due to sales growth in India up 123%, Japan up 56%, China up 50%, other APAC Distributors up 50% and Korea up 36%.
The sales increase was driven by the APAC region, which grew 21% with unit growth of 22%, primarily due to sales growth in China up 25%, India up 14%, other APAC Distributors up 13%, Japan up 11% and Korea up 11%.
Our current liquidity and capital resources, as discussed above, will enable us to meet our known contractual obligations as of December 30, 2022 (in thousands): Payments Due by Period Contractual Obligations Total 1 Year 2 – 3 Years 4 – 5 Years More than 5 Years Finance lease obligations (Note 9)* $ 397 $ 182 $ 215 $ — $ — Operating lease obligations (Note 9)* 36,002 5,222 9,543 7,972 13,265 Pension benefit payments (Note 11)* 1,935 214 590 640 491 Severance (Note 13)* 410 410 — — — Asset retirement obligation (Note 13)* 220 220 — — — Open purchase orders (Note 13)* 17,623 17,149 471 3 — Total $ 56,587 $ 23,397 $ 10,819 $ 8,615 $ 13,756 * Refer to the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K Overview of changes in cash and cash equivalents and other working capital accounts.
Our current liquidity and capital resources, as discussed above, will enable us to meet our known contractual obligations as of December 29, 2023 (in thousands): 38 Payments Due by Period Contractual Obligations Total 1 Year 2 – 3 Years 4 – 5 Years More than 5 Years Finance lease obligations (Note 9)* $ 213 $ 171 $ 42 $ — $ — Operating lease obligations (Note 9)* 45,868 6,247 10,829 11,087 17,705 Pension benefit payments (Note 11)* 5,055 236 383 4,214 222 Asset retirement obligation (Note 13)* 103 — 103 — — Open purchase orders (Note 13)* 18,199 16,452 1,260 487 — Total $ 69,438 $ 23,106 $ 12,617 $ 15,788 $ 17,927 * Refer to the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K Overview of changes in cash and cash equivalents and other working capital accounts.
During 2022, 2021 and 2020, there were no unrecognized benefits related to uncertain tax positions taken by us. 36 Liquidity and Capital Resources We believe that current cash, cash equivalents, investments available for sale and future cash flow from operating activities will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the financial statements included in this Annual Report.
We believe these sources of liquidity will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the financial statements included in this Annual Report.
The Europe, Middle East, Africa and Latin America region sales decreased 1.0% with unit increase of 15%, due to sales decreases in our direct markets down 8%, offset by sales growth in our distributor markets up 9%.
The Europe, Middle East and Africa region sales decreased 2% with unit increase of 16%, due to sales decrease in our direct markets down 8%, partially offset by sales growth in our distributor markets of 9%. Changes in foreign currency unfavorably impacted ICL sales by $10.3 million, which impacted our Japan and Europe, Middle East and Africa markets.
The Europe, Middle East, Africa and Latin America region sales increased 46% with unit increase of 48%, due to sales growth in our distributor markets of 59% and our direct markets of 38%. The North America region sales increased 57%, with unit increase of 61%, due to sales growth in the U.S. up 58% and Canada up 53%.
The Americas region sales increased 43%, with unit increase of 35%, due to sales growth in the U.S. up 59%, Latin America distributor markets up 11% and Canada up 10%.
The increase in investment in property, plant and equipment during 2022, relative to 2021, and the increase during 2021, relative to 2020, was primarily due to an increased in investments in manufacturing facilities. For 2022, net cash provided by financing activities of $8.3 million consisted primarily of proceeds from the exercise of stock options.
For 2021, cash used in investing activities resulted from $13.6 million in purchases of property, plant and equipment. Our investment in property, plant and equipment during 2023 and 2022, and the increase during 2022, relative to 2021, was primarily due to investments in manufacturing facilities.
Several factors may influence the realizability of our inventories, including significant changes in demand, decisions to exit a product line, technological change, and new product development. While such inventory losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same loss rates that we have in the past.
Several factors may influence the realizability of our inventories, including significant changes in demand, decisions to exit a product line, technological change, and new product development.
Readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “should,” “forecast” and similar expressions in connection with any discussion of future operating or financial performance.
In some cases readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “believe,” “will,” “should,” “could,” “forecast,” “potential,” “continue,” “ongoing” (or the negative of those words and similar words or expressions), although not all forward-looking statements contain these words.
Also impacting our effective tax rates was a release of $0.8 million of our U.S. valuation allowance in 2022, a recapture of our U.S. valuation allowance of $0.8 million in 2021 and a release of $0.5 million of our U.S. valuation allowance in 2020.
Also impacting our effective tax rates was a $3.3 million recapture of our U.S. valuation allowance in 2023 and a $0.9 million and $3.4 million release of our U.S. valuation allowance in 2022 and 2021, respectively. During 2023, 2022 and 2021, there were no unrecognized benefits related to uncertain tax positions taken by us.
These factors include, without limitation, those described in this Annual Report in “Item 1A. Risk Factors.” We undertake no obligation to update these forward-looking statements after the date of this report to reflect future events or circumstances or to reflect actual outcomes.
These factors include, without limitation, those described in this Annual Report in “Item 1A. Risk Factors.” We disclaim any intention or obligation to update or review any financial projections or forward-looking statements due to new information or other events except as required by law.
Inventories, net was $24.2 million and $17.2 million at December 30, 2022 and December 31, 2021, respectively. Days’ Inventory on Hand (DOH) was 94 and 79 days for 2022 and 2021, respectively, for finished goods, including consignment inventory. The increase in DOH is due to increased production to support sales growth of ICL products.
Days’ Inventory on Hand (DOH) was 142 and 94 days for 2023 and 2022, respectively, for finished goods, including consignment inventory. The increase in DOH was due to a planned increase of production to support sales growth of ICL products. 39 Critical Accounting Estimates Our accounting policies are more fully described in Note 1 of the Consolidated Financial Statements.
For 2021, net cash provided by financing activities consisted of $19.4 million of proceeds from the exercise of stock options, partially offset by $1.3 million repayment on the Japan line of credit and $0.3 million repayment of finance lease obligations.
For 2023, net cash provided by financing activities of $7.4 million consisted primarily from the exercise of stock options of $9.7 million, partially offset by $2.1 million to repurchase employee common stock for taxes withheld. For 2022, net cash provided by financing activities of $8.3 million consisted primarily of proceeds from the exercise of stock options.
As a result of third-party materials and supply chain challenges that affect our cataract IOLs and associated delivery devices, we will no longer manufacture cataract IOLs, though we will continue to support these products through the end of 2023, as supplies permit. We do not expect this decision to have a significant impact to revenue growth in future years.
As a result of third-party materials and supply chain challenges that affected our cataract IOLs and associated delivery devices, we have phased out sales of our cataract IOLs as we focus on growing our ICL business. During 2023, we stopped manufacturing cataract IOLs, and we do not plan to sell cataract IOLs in 2024.
The following discussion should be read in conjunction with the audited consolidated financial statements of STAAR, including the related notes, provided in this report. Overview STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and companion delivery systems used to deliver the lenses into the eye.
Overview STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. We are the leading manufacturer of lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 40 years.
We are the world’s leading manufacturer of intraocular lenses for patients seeking lens-based refractive vision correction, and we also make lenses for use in surgery to treat cataracts. All the lenses we make are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery.
All of our ICLs are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery. Further, while ICLs are intended to be permanent, our ICLs are reversible lens implants, meaning they can be removed by a doctor if desired.
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Refractive surgery is performed to treat the type of visual disorders that have traditionally been corrected using eyeglasses or contact lenses. We refer to our lenses used in refractive surgery as “implantable Collamer® lenses” or “ICLs.” The field of refractive surgery includes both lens-based procedures, using products like our ICL family of products, and laser-based procedures like LASIK.
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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to promote understanding of our financial condition and results of operations. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the Consolidated Financial Statements and the Notes to those statements included in this Annual Report.
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Successful refractive surgery can correct common vision disorders such as myopia, hyperopia, and astigmatism. Cataract surgery is a common outpatient procedure where the eye’s natural lens that has become cloudy with age is removed and replaced with an artificial lens called an intraocular lens (IOL) to restore the patient’s vision.
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STAAR generates worldwide revenue almost exclusively from sales of our implantable Collamer lenses, or “ICLs.” Our ICLs are made from Collamer, which is a proprietary collagen copolymer material created and exclusively used by STAAR to make our lenses soft, flexible and biocompatible with the eye.
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We position our IOL lenses used in surgery that treats cataracts based on quality and value. See Item 1.
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Our ICLs are phakic lenses, meaning that they are implanted into the eye without removing the eye’s natural crystalline lens. This distinguishes an ICL procedure from other refractive procedures, as it does not involve the removal of corneal eye tissue.
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“Business,” for a discussion of: • Operations • Principal Products • Distribution and Customers • Competition • Regulatory Matters • Research and Development 32 Strategic Imperatives for 2023 For 2023 we will focus on the following strategic imperatives: • Position EVO Implantable Lenses as the Most Desirable Pathway to Visual Freedom ; • Innovate and Develop a Pipeline of Next Generation Premium Collamer-Based Intraocular Lenses; • Accelerate the Transition in Refractive Surgery to Lens-Based through Clinical Validation and Medical Affairs Excellence; • Achieve our corporate imperatives in alignment with our Environmental, Social and Governance commitments; • Continue our Focus on and Commitment to STAAR’s Culture of Quality ; and • Delight Shareholders.
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We market and sell our ICLs for refractive surgery to treat myopia (nearsightedness) as our “EVO” family of lenses. We believe our EVO lenses are an “Evolution in Visual Freedom” designed to provide premium refractive outcomes while optimizing patient comfort. Our EVO family of lenses includes our EVO ICL, EVO+ ICL, and EVO Visian ICL.
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Finally, we will continue to evaluate opportunities to acquire new product lines, technologies, and companies. We continue to monitor the commercial and operational impact of new variants of COVID-19 in our markets, which remains uncertain at this time and may adversely affect our financial results.
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Our newest offering, EVO Viva, has an extended depth of focus (EDoF) optic, which is designed to treat myopia with presbyopia (age-related loss of ability to focus). We also market and sell an ICL lens to treat hyperopia (farsightedness), which we call our Visian ICL.
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Other product sales in 2021 decreased 20% from 2020, mainly due to product yield issues requiring rework related to preloaded injector parts manufactured on our behalf by a third-party manufacturer then sold by us to a third-party manufacturer for product they sell to their customers, as well as decreased cataract IOL sales.
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We make our ICL product offerings available in multiple models, powers and lengths, including some with toric ICL (TICL) versions to correct for astigmatism (blurred vision). Not all of our products are currently available in all markets where we sell ICLs today.
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Changes in foreign currency unfavorably impacted other product sales by $0.3 million. Other product sales represented 7.6% of our total sales for fiscal year 2021.
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Our growth strategy includes making our complete ICL product line available in our existing geographic markets and expanding into attractive markets where we do not sell our products today.
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Selling and marketing expenses for 2021 increased 47.0% from 2020, due to increased advertising and promotional activities, salary-related and payroll tax expenses, trade shows expense, commission expense, and bonus and stock-based compensation expenses.
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In addition, we are focused on driving 33 awareness of the ICL procedure and the clinical benefits of our ICLs, and providing surgeon training, support and education, particularly in our newer markets. Historically, the Company also manufactured and sold intraocular lenses (or IOLs) for use in surgery to treat cataracts.
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Our effective tax rates differ from the U.S. federal statutory rate of 21% for 2022, 2021 and 2020, respectively, primarily due to the income taxes generated in foreign jurisdictions.
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As the Company has focused its business and strategy on its ICL product offerings, we have phased out our cataract IOL product line. For the year ended December 29, 2023, the Company reported worldwide revenue of $322.4 million, 99% of which was generated from sales of ICLs. See Item 1.
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For 2020, net cash provided by operating activities consisted of $17.8 million in non-cash items and $5.9 million in net income, offset by $2.7 million in working-capital changes For 2022 we decided to invest our cash in slightly higher yielding securities.
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“Business,” for a discussion of: • Operations • Principal Products • Distribution and Customers • Competition • Regulatory Matters • Research and Development Strategic Imperatives for 2024 We believe we have a significant opportunity to fundamentally transform how myopia and other refractive conditions are treated.
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Days’ Sales Outstanding (DSO) was 89 and 67 days, respectively for 2022 and 2021. The increase in DSO in 2022 is temporary and was due to decreased customer collections of receivables in the fourth quarter of 2022 primarily from payment delays from customers where there was a surge in COVID-19 cases, resulting from lifting COVID-19 restrictions.
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We want to be the first choice for doctors and for patients seeking visual freedom from wearing eyeglasses or contact lenses. As more patients look to ICLs as a potential treatment option, we recognize the need to further educate and train ophthalmic surgeons about our ICLs and our ICL procedure.
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Shelf Registration On May 6, 2020, STAAR filed a universal shelf registration statement with the SEC covering the future public offering and sale of up to $200 million in equity or debt securities or any combination of such securities. The shelf registration statement became effective on February 22, 2021 and expires on February 22, 2024.
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In 2024, we intend to increase the number of strategic collaborations with leading refractive surgeons and practices in the U.S. to collaborate on marketing, training and education activities. In addition, we are investing in enhanced systems and tools to make ordering and fulfillment faster and easier.
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Among the purposes for which STAAR could use the proceeds of securities sold in the future under the shelf registration statement are working capital, capital expenditures, expansion of sales and marketing, and continuing research and development.
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In 2024, we will also continue to drive awareness of the ICL procedure to reach even more potential patients and effectively communicate the clinical benefits of our ICLs. While we work to launch our existing product portfolio in attractive global markets, we are also investing in product innovation.
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STAAR could also use a portion of the net proceeds to acquire or invest in businesses, assets, products, and technologies that are complementary to our own, although we are not currently contemplating or negotiating any such acquisitions or investments.
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In 2024, a key focus will be on our new lens delivery devices, as well continuing to develop our next generation lens technologies. Finally, we will continue to evaluate opportunities to acquire new product lines, technologies, and companies.
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The availability of financing in the public capital markets through the shelf registration statement depends on several factors in place at the time of financing, including the strength of STAAR’s business performance, general economic conditions and investment climate, and investor perceptions of those factors.
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The Europe, Middle East and Africa region sales increased 7% with units similar to prior year, due to sales increases in our distributor markets up 8% and direct markets up 7%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur international subsidiaries operate in and are net recipients of currencies other than the U.S. dollar and, as a result, our sales benefit from a weaker dollar and are reduced by a stronger dollar relative to major currencies worldwide (primarily, the euro and the Japanese yen).
Biggest changeWe do not actively hedge our exposure to currency rate fluctuations. As our international subsidiaries operate in and are net recipients of currencies other than the U.S. dollar our sales benefit from a weaker dollar and are reduced by a stronger dollar relative to major currencies worldwide (primarily, the euro and the Japanese yen).
The Company manages its risks based on management’s judgment of the appropriate trade-off between risks, opportunity, and costs and does not generally enter into interest rate or foreign exchange rate hedge instruments. Foreign currency risk Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies in which we transact business could adversely affect our financial results.
The Company manages its risks based on management’s judgment of the appropriate trade-off between risks, opportunity, and costs and does not generally enter into interest rate or foreign exchange rate hedge instruments. Foreign Currency Exchange Risk Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies in which we transact business could adversely affect our financial results.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, our operations are exposed to risks associated with fluctuations in interest rates and foreign currency exchange rates.
ITEM 7A. Quantitative and Qualita tive Disclosures About Market Risk In the normal course of business, our operations are exposed to risks associated with fluctuations in interest rates and foreign currency exchange rates.
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Such risks include those set forth in “ Item 1A. Risk Factors .” 40
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Activities outside the U.S. accounted for approximately 95% of our total sales during 2023. The results of operations and the financial position of our Japanese subsidiary are reported in Japanese yen and then translated into U.S. dollars at the applicable exchange rates for inclusion in our Consolidated Financial Statements, exposing us to translation risk.
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In addition, we are exposed to transaction risk because we incur some of our sales and expenses in currencies other than the U.S. dollar. Our most significant currency exposures are to the Japanese yen, the euro, and the Swiss franc, and the exchange rates between these currencies and the U.S. dollar may fluctuate substantially.
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Such risks include those set forth in “ Item 1A. Risk Factors .” We price some of our products in U.S. dollars, and thus changes in exchange rates can make our products more expensive in some offshore markets and reduce our sales. Our sales in China, for example, are denominated in U.S. dollars.
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During 2023, foreign currency exchange rates between the U.S. dollar and the Chinese yuan experienced volatility. As the U.S. dollar strengthened relative to the Chinese yuan, it became more expensive for our China distributor to purchase ICLs and to pay prior accounts receivable balances.
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Our China distributor, who sells into China and Hong Kong, accounted for approximately 58% of our consolidated net sales during fiscal 2023. Given the volatility in exchange rates, the Company agreed to extend payment terms to the distributor, which had a solid and lengthy relationship with the Company, and for which collectability was reasonably assured.
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In the event of significant foreign exchange volatility in the future, the Company may extend or modify payment or other terms with its customers to mitigate the potential impact on our sales. 41

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