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What changed in STAAR SURGICAL CO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of STAAR SURGICAL CO's 2023 and 2024 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 2024 report.

+332 added−284 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-27)

Top changes in STAAR SURGICAL CO's 2024 10-K

332 paragraphs added · 284 removed · 232 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

78 edited+18 added−19 removed136 unchanged
Biggest changeThe 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.
Biggest changeAfter 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. During the review period, the FDA may request additional information or clarification of information already provided.
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.
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 U.S. 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.
These third-party payers may deny coverage or reimbursement for a medical device if they determine that the product or procedure using the product was not medically appropriate or necessary and are increasingly challenging the price of medical devices and services.
These third-party payers may deny coverage or reimbursement for a medical device if they determine that the product or procedure using the product was not medically appropriate or necessary, and they are increasingly challenging the price of medical devices and services.
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.
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. 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.
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.
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.
Under the United States Federal Food, Drug & Cosmetic Act, as amended (the Act), the FDA has the authority to regulate, among other things, the design, development, manufacturing, preclinical and clinical testing, labeling, product safety, marketing, sales, distribution, premarket clearance and approval, recordkeeping, reporting, advertising, promotion, post-market surveillance, and import and export of medical devices.
Under the United States Federal Food, Drug & Cosmetic Act, as amended (the Act), the FDA has the authority to regulate, among other things, the design, development, manufacturing, preclinical and clinical testing, labeling, 8 product safety, marketing, sales, distribution, premarket clearance and approval, recordkeeping, reporting, advertising, promotion, post-market surveillance, and import and export of medical devices.
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.
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.
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.
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.
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.
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 phakic implantable lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 40 years.
Failure to comply with the conditions of approval can result in materially adverse enforcement action, including the loss or withdrawal of the approval. If a manufacturer plans to make significant modifications to the manufacturing process, labeling, or design of an approved PMA device, the manufacturer must submit an application called a “PMA Supplement” regarding the change.
Failure 9 to comply with the conditions of approval can result in materially adverse enforcement action, including the loss or withdrawal of the approval. If a manufacturer plans to make significant modifications to the manufacturing process, labeling, or design of an approved PMA device, the manufacturer must submit an application called a “PMA Supplement” regarding the change.
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.
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.
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.
Our ICLs are phakic lenses, meaning that they are implanted into the eye without removing the eye’s natural crystalline lens. This 2 distinguishes an ICL procedure from other refractive procedures, as it does not involve the removal of corneal eye tissue.
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.
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 the major markets where we sell medical devices.
The independent Notified Bodies perform, on a privatized basis, functions similar to the FDA in the U.S. and the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan. Our facilities in the United States and Switzerland are subject to regular inspection by a designated Notified Body.
The independent Notified Bodies perform, on a privatized basis, functions similar to the FDA in the U.S. and the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan. 11 Our facilities in the United States and Switzerland are subject to regular inspection by a designated Notified Body.
QSR - the FDA’s Quality System Regulation, or current Good Manufacturing Practice (cGMP) regulation, includes requirements related to the methods used in, and the facilities and controls used for, designing, manufacturing, packaging, labeling, storing, installing, and servicing of medical devices intended for human use.
FDA’s Quality System Regulation, or current Good Manufacturing Practice (cGMP) regulation, includes requirements related to the methods used in, and the facilities and controls used for, designing, manufacturing, packaging, labeling, storing, installing, and servicing of medical devices intended for human use.
Our intellectual property generally relates to the design, production, and manufacture of the Collamer lens material and related materials, ICLs and related lenses, and lens delivery systems for folding intraocular lenses (injectors and cartridges, both stand-alone and preloaded) used with ICLs.
Our intellectual property generally relates to the design, production, and manufacture of the Collamer lens material and related materials, ICLs and related lenses, and lens delivery systems for folding intraocular lenses 5 (injectors and cartridges, both stand-alone and preloaded) used with ICLs.
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.
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 Evaluation (NIFDS) oversee the evaluation and research of medical devices. Medical devices require registration and/or approval prior to commercialization.
The regulation sets forth the framework for medical device manufacturers to follow in achieving quality requirements, including requirements related to complaint handling and control of purchased or supplied services, components, and materials bearing on the quality of medical devices.
The regulation sets 16 forth the framework for medical device manufacturers to follow in achieving quality requirements, including requirements related to complaint handling and control of purchased or supplied services, components, and materials bearing on the quality of medical devices.
Acrylic materials used in IOLs have been both water repelling ( hydrophobic ) and water-absorbing ( hydrophilic ). aspheric – aspheric lenses are lenses that are designed in a shape that creates a more clearly focused image than traditional spheric lenses.
Acrylic materials used in IOLs have been both water repelling ( hydrophobic ) and water-absorbing ( hydrophilic ). 15 aspheric – aspheric lenses are lenses that are designed in a shape that creates a more clearly focused image than traditional spheric lenses.
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.
The two principal types of phakic implantable lenses are (1) posterior chamber designs like the ICL, including lenses made by Biotech Vision Care, Care Group, and Eyebright and (2) iris clip anterior chamber designs, including lenses made by Ophtec.
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 7 appear in the market with their low-cost version of a posterior chamber implantable contact lens, increasing the level of competition.
We may be subject to healthcare fraud and abuse and patient privacy regulation by the federal government, the states and the international jurisdictions in which we conduct our business.
We may be subject to healthcare fraud and abuse and patient 10 privacy regulation by the federal government, the states and the international jurisdictions in which we conduct our business.
After the application is submitted, the manufacturing site undergoes either a paper audit or an onsite inspection/audit by an authorized third party and MFDS. Medical device registration licenses do not expire, but the KGPM certificate must be renewed every three years.
After the application is submitted, the manufacturing site undergoes either a paper audit or an onsite inspection/audit by an authorized third party and MFDS. Medical device registration licenses do not expire, but the KGMP certificate must be renewed every three years.
We are authorized to sell the EVO+ in the following regions: the approximately 31 countries that require the European Union CE Mark, Korea, Japan, India, Canada, the U.S., Hong Kong, Turkey, and several countries in the Middle East.
We are authorized to sell the EVO+ in the following regions: the approximately 31 countries that require the European Union CE Mark, Korea, Japan, India, Canada, the U.S., Hong Kong, Turkey, and several countries in the Middle East. In March 2022, the U.S.
In Korea, medical device classification closely follows the Global Harmonization Task Force (GHTF) Classification guidelines, with Class I, II, III and IV designation ranked from low to high risk categorization. The registration review route depends on the risk classification of the device. Typically, the MFDS requires similar documentation as required to obtain a CE Mark.
In Korea, medical device classification closely follows the Global Harmonization Task Force (GHTF) Classification guidelines, with Class I, II, III and IV designations being ranked from low- to high-risk categorization. The registration review route depends on the risk classification of the device. Typically, the MFDS requires similar documentation as required to obtain a 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.
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.
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.
Surgeons have published hundreds of 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.
See Note 17 to the Consolidated Financial Statements for financial information about product lines and operations in geographic areas. Principal Products STAAR’s principal products are ICLs used in refractive surgery, including our EVO family of lenses.
See Note 16 to the Consolidated Financial Statements for financial information about product lines and operations in geographic areas. 3 Principal Products STAAR’s principal products are ICLs used in refractive surgery, including our EVO family of lenses.
Even though we do not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, certain federal, state and international healthcare laws and regulations pertaining to fraud and abuse and patients’ rights may be applicable to our business.
Healthcare Fraud and Abuse Laws and Regulations in the United States. Even though we do not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, certain federal, state and international healthcare laws and regulations pertaining to fraud and abuse and patients’ rights may be applicable to our business.
In some countries, trademark protection continues only as long as the mark is used. Other countries require registration of trademarks and the payment of registration fees. Trademark registrations are generally for fixed but renewable terms. This Annual Report and the documents incorporated by reference into this Annual Report may refer to these and other trademarks and tradenames.
In some countries, trademark protection continues only as long as the mark is used. Other countries require registration of trademarks and the payment of registration fees. Trademark registrations are generally for fixed but renewable terms. This Annual Report may refer to these and other trademarks and tradenames.
Working Capital Requirements There are no special inventory requirements or credit terms extended to customers that have a material adverse effect on our working capital. Distribution and Customers We market our products to a variety of health care providers, including ophthalmic surgeons, vision centers, surgical centers, hospitals, government facilities, and distributors. The primary user of our products is an ophthalmologist.
Working Capital Requirements There are no special inventory requirements or credit terms extended to customers that have a material adverse effect on our working capital. Distribution and Customers We market our products to a variety of health care providers, including ophthalmic surgeons, vision centers, surgical centers, hospitals, government facilities, and distributors. Ophthalmologists are the primary users of our products.
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.
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.
People who have had normal vision will typically begin to need eyeglasses for reading or other close tasks at some point after age 40 due to presbyopia.
People who have had normal vision will typically begin to need eyeglasses for reading or other close tasks at some point after age 40 due to presbyopia. QSR - the U.S.
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.
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 27, 2024, we owned approximately 66 United States and foreign patents and had 21 patent applications pending.
As the Company has focused its business and strategy on its ICL product offerings, we have phased out sales of our cataract IOLs and other surgical products. We do not expect to record revenue from cataract IOL or other surgical products sales in fiscal 2024 or thereafter.
As the Company has focused its business and strategy on its ICL product offerings, we have phased out sales of our cataract IOLs and other surgical products. We did not record revenue from cataract IOL sales in fiscal 2024, and we do not expect such sales in the future.
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.
Other Products revenue accounted for less than 1% of our total sales in fiscal 2024, and approximately 1% of our total sales in fiscal 2023, and approximately 5% of our total sales in fiscal 2022. Sources and Availability of Raw Materials STAAR uses a wide range of raw materials in the production of our ICLs.
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.
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.
STAAR has several projects underway designed to reduce energy and waste, such as our investment in solar photovoltaic panels at three locations in California (our primary manufacturing facility in Monrovia, our precision manufacturing center of excellence facility/corporate headquarters in Lake Forest, and our Technology Center in Tustin).
STAAR has undertaken several projects designed to reduce energy and waste, such as our investment in solar photovoltaic panels at three locations in California (our principal manufacturing facility in Monrovia, our precision manufacturing center of excellence facility in Lake Forest, and our technology center in Tustin).
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.
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), and STAAR has sold more than 3,000,000 ICLs to date.
Environmental Matters We are subject to federal, state, local and foreign environmental laws, and regulations. We believe that our operations comply in all material respects with applicable environmental laws and regulations in each country where we do business. We do not expect compliance with these laws to affect materially our capital expenditures, earnings, or competitive position.
We believe that our operations comply in all material respects with applicable environmental laws and regulations in each country where we do business. We do not expect compliance with these laws to affect materially our capital expenditures, earnings, or competitive position.
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.
All of our ICLs fold for minimally invasive implantation. 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.
Third Party Coverage and Reimbursement. Health care providers generally rely on third-party payers, including governmental payers such as Medicare and Medicaid, private insurance plans and workers’ compensation plans, to cover and reimburse the cost of medical devices and related services.
FDA, which could have a material and negative impact on the Company. Third-Party Coverage and Reimbursement. Health care providers generally rely on third-party payers, including governmental payers such as Medicare and Medicaid, private insurance plans and workers’ compensation plans, to cover and reimburse the cost of medical devices and related services.
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.
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. STAAR employs a commercialization strategy that strives for sustainable, profitable growth.
The manufacturer submits a renewal application before the license expiration date to renew a medical device’s registration. After approval, in case of substantial changes to the design, raw materials, manufacturing process, and indications, among other things, that may affect the medical device's safety and effectiveness, the manufacturer applies to NMPA for approval of such registration changes.
After approval, in case of substantial changes to the design, raw materials, manufacturing process, and indications, among other things, that may affect the medical device's safety and effectiveness, the manufacturer applies to NMPA for approval of such registration changes.
If the NMPA or MFDS were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, they could take a variety of regulatory or legal actions in their respective countries, similar to the FDA, which could have a material and negative impact on the Company.
If the NMPA or MFDS were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, they could take a variety of 13 regulatory or legal actions in their respective countries, similar to the U.S.
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.
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.
If the PMDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, they could take a variety of regulatory or legal actions, similar to the FDA, which could have a material and negative impact on the Company.
If the PMDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, they could take a variety of regulatory or legal actions, similar to the U.S.
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.
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. Two customers, our China distributors who sell into China and Hong Kong, accounted for approximately 51% of our consolidated net sales during fiscal 2024.
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.
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 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.
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 27, 2024, we had approximately 1,211 employees, of which 404 were employed outside the U.S. Of the 1,211 employees, 1,157 were regular full-time, and 54 were temporary.
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.
STAAR operates an administrative, distribution and operational facility in Brügg, 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. (STAAR Japan).
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.
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.
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.
The field of refractive surgery includes both lens-based procedures, using products like our ICLs, and laser-based procedures like LASIK. 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).
In December 2015, we received the CE Mark for EVO+, an ICL with CentraFLOW technology and an expanded optical zone of up to 20%. We believe the expanded optical zone may further improve certain patients’ visual experience, thus making the ICL increasingly desirable for both patients and ophthalmic surgeons.
We believe the expanded optical zone may further improve certain patients’ visual experience, thus making the ICL increasingly desirable for both patients and ophthalmic surgeons.
We invest in our employees by offering numerous training opportunities, such as to teach new skills, provide career development opportunities and communicate expectations regarding business conduct and ethics.
The health and safety of our employees is a top priority. We created and we follow various safety policies and procedures, and we offer health insurance and wellness programs. We invest in our employees by offering numerous training opportunities, such as to teach new skills, provide career development opportunities and communicate expectations regarding business conduct and ethics.
National Medical Products Administration (NMPA) is the governmental authority principally responsible for the supervision and administration of medical devices in China. Each medical device intended for commercial distribution in China is subject to a mandatory filing or registration regime regulated by the NMPA. The classification of such devices mainly determines the filing pathways.
Each medical device intended for commercial distribution in China is subject to a mandatory filing or registration regime regulated by the NMPA. The classification of such devices mainly determines the filing pathways. China has a three-class classification system, from Class I (lowest risk) to Class III (highest risk).
Medical Device Regulation in China and Korea. Sales of our products in China and Korea, as in other countries, are also subject to regulatory requirements. In China, medical devices such as our ICLs are mainly regulated by Regulations on the Supervision and Administration of Medical Device (Decree No. 739) promulgated by the State Council.
In China, medical devices such as our ICLs are mainly regulated by Regulations on the Supervision and Administration of Medical Device (Decree No. 739) promulgated by the State Council. National Medical Products Administration (NMPA) is the governmental authority principally responsible for the supervision and administration of medical devices in China.
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.
During 2025, we intend to continue our focus on research and development in the following areas: • Development of new presbyopia-correcting phakic intraocular lenses that simultaneously correct sphere and cylinder (i.e., astigmatism); • Development of preloaded injector systems for ophthalmic medical devices; and • Development of a new generation of ophthalmic medical devices and materials. 14 Environmental Matters We are subject to federal, state, local and foreign environmental laws, and regulations.
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.
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. In addition, we are focused on driving awareness of the ICL procedure and the clinical benefits of our ICLs, and providing surgeon training, support and education, particularly in our newer markets.
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.
Backlog We generally keep sufficient inventory on hand to ship product immediately or shortly after receipt of an order. 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).
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.
STAAR maintains operational and administrative facilities in the U.S., Switzerland, and Japan. An overview of STAAR’s current global operations and key facilities is as follows: • United States. STAAR’s global administrative offices, principal manufacturing, warehouse, and distribution facilities are located in Monrovia, California. We manufacture the raw material for Collamer lenses in our facility in Aliso Viejo, California.
We believe that the biocompatibility of the Collamer material used for our ICL product line is a significant factor in the ability to place this lens safely in the posterior chamber of the eye. As of December 29, 2023, STAAR has sold more than 2,500,000 ICLs worldwide.
We believe that the biocompatibility of the Collamer material used for our ICL product line is a significant factor in the ability to place this lens safely in the posterior chamber of the eye. STAAR began selling the ICL for myopia for use outside the U.S. in 1997. U.S. sales commenced in 2006.
Because a key element of our growth strategy is to drive awareness of the ICL procedure and the clinical benefits of our ICLs, limitations on our ability to advertise and promote our ICL products could harm our business. 13 In addition, we are subject to U.S. federal and state and foreign data privacy, security and data breach notification laws governing the collection, use, disclosure and protection of health-related and other personal information.
In addition, we are subject to U.S. federal and state and foreign data privacy, security and data breach notification laws governing the collection, use, disclosure and protection of health-related and other personal information.
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.
We are investing in our manufacturing and operations capabilities to be able to meet forecasted demand and further shorten lead times. 4 According to Market Scope, LLC a publisher of ophthalmic industry data, approximately 5.2 million refractive procedures, primarily laser vision procedures, were expected to be performed worldwide in 2024.
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.
We have started working more closely with leading refractive clinics to drive awareness of the ICL procedure and the clinical benefits of our ICLs and to enhance education and practice development. 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.
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.
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 port is of a size intended to optimize the flow of fluid within the eye without affecting the quality of vision.
We believe the EVO Viva lens will assist certain patients with eliminating the burdens of reading glasses or frequent replacement contact lenses. We make our ICL product offerings available in multiple models, powers and lengths, including some with toric ICL (TICL) versions to correct for astigmatism. As a result, we manufacture hundreds of different types of lenses.
We make our ICL product offerings available in multiple models, powers and lengths, including some with toric ICL (TICL) versions to correct for astigmatism. As a result, we manufacture hundreds of different types of lenses. This requires us to carry a significant amount of inventory to meet customer preference for rapid delivery.
The PTR, test reports, quality system documents, labeling information, together with other registration documents, are submitted to the Center for Medical Device Evaluation (CMDE) division of the NMPA for technical evaluation. If approved, NMPA issues the medical device a registration license valid for five years.
Also, applicants must have samples of the device tested in a government-recognized lab or submit in-house or qualified third-party testing results. The PTR, test reports, quality system documents, labeling information, together with other registration documents, are submitted to the Center for Medical Device Evaluation (CMDE) division of the NMPA for technical evaluation.
For the year ended December 29, 2023, the Company generated 95% of its reported worldwide revenue from product sales outside the United States.
For the fiscal year ended December 27, 2024, approximately 100% of our net sales were generated from sales of ICLs. Operations STAAR has significant operations globally. For the fiscal year ended December 27, 2024, the Company generated 94% of its reported worldwide revenue from product sales outside the United States.
Applicants are required to submit a product technical requirements (PTR) document, which shall mainly include the performance indicators and testing methods of the medical device. Also, applicants must have samples of the device tested in a government-recognized lab or submit in-house or qualified third-party testing results.
Most of STAAR’s medical devices are Class II and Class III devices and are subject to a restricted registration pathway. Applicants are required to submit a product technical requirements (PTR) document, which shall mainly include the performance indicators and testing methods of the medical device.
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.
Sales of ICLs accounted for approximately 100% of our total sales in fiscal 2024, approximately 99% of our total sales in fiscal 2023, and approximately 95% of our total sales in fiscal 2022.
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.
Net sales to our China distributors during each of the last three fiscal years were as follows: Net Sales to China Distributors Fiscal Year Net Sales ($, in thousands) Net Sales as Percentage of Consolidated Net Sales 2024 $ 161,321 51.4 % 2023 $ 185,554 57.6 % 2022 $ 148,167 52.1 % 6 Our agreements with our distributors in China provide for minimum inventory requirements based on forecasted demand.
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, which includes information about our approach to environmental, social and governance (or “ESG”) at STAAR, is available in the Investors section of our website, www.staar.com , under the Sustainability tab. We established a cross-functional climate risk committee to identify the risks presented by climate change and opportunities to reduce our environmental impact.
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.
In fiscal year 2024, we added approximately 262 employees (including 54 temporary employees). Our global overall turnover rate in fiscal year 2024 was approximately 7.6% (excluding temporary employees), below the overall turnover rate of approximately 18.9% in the medical device industry. Management periodically provides human capital management updates and data to our Board of Directors.
The port is of a size intended to optimize the flow of fluid within the eye without affecting the quality of vision. The central port also eliminates the need for the surgeon to perform a YAG peripheral iridotomy procedure days before the ICL implant.
The central port also eliminates the need for the surgeon to perform a YAG peripheral iridotomy procedure days before the ICL implant. The CentraFLOW technology makes the visual outcomes of the ICL available through a relatively quick and comfortable surgical implantation experience.
The CentraFLOW technology makes the visual outcomes of the ICL available through a relatively quick and comfortable surgical implantation experience. We are authorized to sell the EVO ICL in all countries where we sell our ICL family of lenses.
We are authorized to sell the EVO ICL in all countries where we sell our ICL family of lenses. In December 2015, we received the CE Mark for EVO+, an ICL with CentraFLOW technology and an expanded optical zone of up to 20%.
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.
As of December 27, 2024, finished goods inventory, net was $43.3 million, or 194 Days’ Inventory on Hand (DOH), including consignment inventory. 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.
In addition, we are focused on driving 2 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.
Historically, the Company also manufactured and sold intraocular lenses (or “IOLs”) for use in surgery to treat cataracts. As the Company has focused its business and strategy on its ICL product offerings, we have phased out our cataract IOL product line.
Removed
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.
Added
STAAR also operates a technology center housing its research and development (R&D) team and labs in Tustin, California. Our corporate headquarters, including our executive offices, our EVO Experience Center, and additional operational facilities, are located in Lake Forest, California. • Switzerland .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

85 edited+36 added−15 removed116 unchanged
Biggest changeOur 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.
Biggest changeEach of these companies has 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. Their greater resources for research, development and marketing, and their greater capacity to offer comprehensive products and equipment to providers, makes for intense competition.
Depending on the nature and severity of any future negative publicity about refractive surgery, the growth of ICL sales could be limited or sales could decline due to decreased patient interest in all refractive surgery, including our ICL. Disruptions in our supply chain or failure to adequately forecast product demand could result in significant delays or lost sales.
Depending on the nature and severity of any future negative publicity about refractive surgery, the growth of ICL sales could be limited or could decline due to decreased patient interest in all refractive surgery, including our ICL. Disruptions in our supply chain or failure to adequately forecast product demand could result in significant delays or lost sales.
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.
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.
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.
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 29 upon any future appreciation.
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.
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. 23 If we are not able to manage growth successfully, it could adversely affect our business, financial condition, and results of operations.
However, we may not be able to obtain licenses on reasonable terms, if at all, which could limit our ability to manufacture our future products and operate our business. Risks Related to Regulatory and Compliance We are subject to extensive government regulation worldwide, which increases our costs and could prevent us from selling our products.
However, we may not be able to obtain licenses on reasonable terms, if at all, which could limit our ability to manufacture our future products and operate our business. 26 Risks Related to Regulatory and Compliance We are subject to extensive government regulation worldwide, which increases our costs and could prevent us from selling our products.
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.
In addition, a prolonged pandemic, 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 generally grant exclusive rights to these distributors and rely on them to understand local market conditions, to diligently sell our products and to comply with local laws and regulations. Our agreements with distributors and local laws can make it difficult for us to quickly change from a distributor who we feel is underperforming.
We generally grant exclusive rights to these distributors and rely on them to understand local market conditions, to diligently sell our products, and to comply with local laws and regulations. Our agreements with distributors and local laws can make it difficult for us to quickly change from a distributor who we 17 feel is underperforming.
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.
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 the FDA were to disagree with our determination and require us to submit new clearances or approvals, we could be required to cease marketing and/or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.
If the FDA were to disagree with our determination and require us to submit new clearances or approvals, we could be required to cease marketing and/or 28 to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.
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.
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.
With our increased commercial success with the ICL, additional companies may seek to enter the refractive phakic intraocular lens market. We could experience losses due to product liability claims. We have been subject to product liability claims in the past and may experience such claims in the future.
With our commercial success with the ICL, additional companies may seek to enter the refractive phakic intraocular lens market. We could experience losses due to product liability claims. We have been subject to product liability claims in the past and may experience such claims in the future.
Further, trade disputes between the United States and its significant trading partners may adversely affect our sales, including as a result of the imposition of tariffs or other barriers or restrictions on trade, or increase our costs.
Further, trade disputes or tensions between the United States and its significant trading partners may adversely affect our sales, including as a result of the imposition of tariffs or other barriers or restrictions on trade, or increase our costs.
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.
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.
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.
The extent to which a pandemic, public health or political crisis 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, public health or political 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, public health or political crisis, such as resuming activities and growing patient interest in our lenses; and actions governments, businesses and individuals take in response to the pandemic, public health or political crisis.
Recalls may also damage our professional reputation and the reputation of our products. The inconvenience caused by recalls and related interruptions in supply, the underlying causal issues, and the damage to our reputation, could cause professionals to discontinue using our products.
Recalls may also damage our professional reputation and the reputation of our products. The 27 inconvenience caused by recalls and related interruptions in supply, the underlying causal issues, and the damage to our reputation, could cause professionals to discontinue using our products.
In addition, the FDA and other regulatory authorities may change their clearance and approval policies, adopt additional regulations, or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development, cause the loss of previously received approvals or clearances or impact our ability to modify our currently cleared products on a timely basis.
FDA and other regulatory authorities may change their clearance and approval policies, adopt additional regulations, or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development, cause the loss of previously received approvals or clearances or impact our ability to modify our currently cleared products on a timely basis.
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.
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 U.S. FDA or regulatory authorities in other countries.
Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner. Changes in FDA or international regulations related to product approval, including those that apply retroactively, could make us less competitive and harm our business.
Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner. Changes in U.S. FDA or international regulations related to product approval, including those that apply retroactively, could make us less competitive and harm our business. U.S.
Even if the FDA or another regulatory agency clears or approves a product, the clearance or approval may limit the indicated patient populations or uses of the product, or may otherwise limit our ability to promote, sell and distribute the product, or may require expensive post-marketing studies or surveillance.
FDA or another regulatory agency clears or approves a product, the clearance or approval may limit the indicated patient populations or uses of the product, or may otherwise limit our ability to promote, sell and distribute the product, or may require expensive post-marketing studies or surveillance.
For example, patients, competitors, or others may use these channels to comment on the safety or effectiveness of a product and to report an alleged adverse event. Negative posts or comments about us or our business on any social networking web site could harm our reputation.
For example, patients, surgeons, competitors, or others may use these channels to comment on our products, including the safety or effectiveness of a product and to report an alleged adverse event. Negative posts or comments about us or our business on any social networking web site could harm our reputation.
Any significant modification to a PMA approved device, including modifications to the manufacturing process, labeling or design, requires a PMA 27 Supplement. FDA guidelines establish different types of PMA Supplements depending on the type of modification, with different data and information requirements and different timelines for FDA review and approval.
Any significant modification to a PMA approved device, including modifications to the manufacturing process, labeling or design, requires a PMA Supplement. U.S. FDA guidelines establish different types of PMA Supplements depending on the type of modification, with different data and information requirements and different timelines for FDA review and approval.
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.
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 94% of our total sales during 2024. Foreign currency fluctuations could result in volatility of our revenue.
Our failure to comply with the requirements of the FDA or other regulators can result in civil and criminal fines, the recall of products, the total or partial suspension of manufacturing or distribution, seizure of products, injunctions, lawsuits, failure to obtain approval of pending product applications, withdrawal of existing product approvals, exclusion from participation in government healthcare programs and other sanctions.
FDA or other regulators can result in civil and criminal fines, the recall of products, the total or partial suspension of manufacturing or distribution, seizure of products, injunctions, lawsuits, failure to obtain approval of pending product applications, withdrawal of existing product approvals, exclusion from participation in government healthcare programs and other sanctions.
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.
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 in the United States.
If our suppliers or we are unable or our suppliers are unwilling to meet our increased manufacturing requirements, we may not be able to produce enough materials or products in a timely manner, which could cause a decline in our sales.
If our suppliers or we are unable or our suppliers are unwilling to meet our increased manufacturing requirements, we may not be able to produce enough materials or products in a timely manner, which could impact our sales.
Our ability to achieve any goal, including with respect to ESG-related initiatives, is subject to numerous risks, many of which are outside of our control. Certain shareholders may reduce or eliminate their holdings of our stock based on ESG issues.
Our pursuit of certain practices, as well as our ability to achieve any goal, including with respect to ESG-related initiatives, is subject to numerous risks, many of which are outside of our control. Certain shareholders may reduce or eliminate their holdings of our stock based on ESG issues.
If we cannot obtain timely regulatory clearance or approval of our new products, or if the clearance or approval is too narrow, we will not be able to successfully market these products, which would eliminate or reduce our potential sales and earnings.
If we cannot obtain timely regulatory clearance or approval of our new products, or if the clearance or approval is too narrow, we will not be able to successfully market these products, which would eliminate or reduce our potential sales and earnings. In addition, the U.S.
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.
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 27, 2024, approximately 100% 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.
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 do not expect 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 do not expect to declare cash dividends on our common stock in the foreseeable future.
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.
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; • 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. 25 Complying with government regulation substantially increases the cost of developing, manufacturing and selling our ophthalmic products.
If we do terminate an independent distributor, we may lose customers who have been dealing with that distributor and may be required to compensate the distributor for termination. Because these distributors are independent, it may be difficult for us to detect failures in our distributors’ performance or compliance.
When we do terminate an independent distributor, which occurs from time to time, we may lose customers who have been dealing with that distributor and may be required to compensate the distributor for termination. Because these distributors are independent, it may be difficult for us to detect failures in our distributors’ performance or compliance.
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.
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 products cause or contribute to a death or a serious injury, we may face voluntary corrective actions, agency enforcement actions and harm to our results.
If our products cause or contribute to a death or a serious injury, we may face voluntary corrective actions, agency enforcement actions and harm to our results. Under the U.S.
Our pension plans taken together are underfunded by approximately $5.1 million ($0.5 million for the Japan Plan and $4.6 million for the Swiss Plan) as of December 29, 2023. If our cash flow from operations is insufficient to fund our worldwide pension obligations, as well as other cash requirements, we may have to seek additional capital.
Our pension plans taken together are underfunded by approximately $6.7 million ($0.4 million for the Japan Plan and $6.3 million for the Swiss Plan) as of December 27, 2024. If our cash flow from operations is insufficient to fund our worldwide pension obligations, as well as other cash requirements, we may have to seek additional capital.
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.
Our largest investor beneficially owns approximately 22% of our outstanding common stock, and our largest three investors beneficially own approximately 51% of our outstanding common stock. Two of our current six directors were recommended by investors.
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 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.
Companies that do not adapt to or comply with the evolving investor or stakeholder expectations and standards, as well as the evolving international regulations relating to ESG matters, or which are perceived to have not responded appropriately, may suffer from reputational damage and result in the business, financial condition and/or stock price of a company being materially and adversely affected.
Companies that do not adapt to or comply with the evolving regulations, requirements, expectations and standards, or which are perceived to have not responded appropriately, may suffer from reputational damage and result in the business, financial condition and/or stock price of a company being materially and adversely affected.
In response to stakeholder expectations, we have commenced reporting of our sustainability endeavors and future plans. These disclosures reflect our current aspirations and are not guarantees that we will be able to achieve them. Our efforts to accomplish and accurately report on these plans present numerous risks, any of which could have a material negative impact on us.
These disclosures reflect our current aspirations and are not guarantees that we will be able to achieve them. Our efforts to accomplish and accurately report on these plans present numerous risks, any of which could have a material negative impact on us.
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.
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.
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.
Our reliance on independent distributors in international markets exposes us to commercial and other risks . 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 products within their territories.
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 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.
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.
In addition, 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.
New technologies are increasingly used to communicate about our products and the health conditions they are intended to treat. The use of these media poses risks to our business and requires specific attention and monitoring.
Social media platforms and mobile technologies are increasingly being used to communicate about our products and the health conditions they are intended to treat. Their use poses risks to our business and requires specific attention and monitoring.
China accounted for approximately 58% of our fiscal 2023 consolidated net sales. After a robust start to fiscal 2023, China experienced slowing growth in 2023, which some analysts believe may continue into 2024. A significant or prolonged slowdown in the Chinese economy could materially impact our business and results of operations.
A slowdown or disruption to the Chinese economy or worsening trade relations between the U.S. and China could materially impact our business and results of operations. China accounted for approximately 51% of our fiscal 2024 consolidated net sales. After a robust start to fiscal 2024, China experienced slowing growth in 2024, which some analysts believe may continue into 2025.
To satisfy our own quality standards as well as regulations, we must follow strict protocols to confirm that products and materials made at a new site are equivalent to those made at the currently approved site.
To satisfy our own quality standards as well as regulations, we must follow strict protocols to confirm that products and materials made at a new site are equivalent to those made at the currently approved site. Even minor changes in equipment, supplies or processes require validation.
In 2023, we generated approximately 95% of our total sales outside the U.S.
In 2024, we generated approximately 94% of our total sales outside the U.S.
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.
If we fail to adopt ESG standards or practices as quickly as some stakeholders desire, report on our efforts or practices accurately, or satisfy the expectations of our various stakeholders who have varied perspectives on sustainability practices and global regulators, our reputation, business, financial performance and growth may be adversely impacted.
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.
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.
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%.
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, which could impact sales of that product.
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.
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 and other filings that we make from time to time with the SEC, before making a decision to invest in our common stock.
The institution of trade tariffs both globally and between the U.S. and China specifically could negatively impact the overall economic condition in our markets, including China, which could have a negative effect on our sales. In addition, new laws or regulations in China or elsewhere applicable to foreign medical device companies could negatively impact our business.
The institution of trade tariffs both globally and between the U.S. and China specifically could negatively impact the overall economic condition in our markets, including China, which could have a negative effect on our sales.
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.
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.
Our California and Japanese facilities are in areas where earthquakes could cause catastrophic loss. In our major markets, regulatory approval to manufacture materials and sell our products is generally limited to the current manufacturing site, and changing the site requires applications to and approval from regulatory bodies prior to commercialization.
In our major markets, regulatory approval to manufacture materials and sell our products is generally limited to the current manufacturing site, and changing the site requires applications to and approval from regulatory bodies 20 prior to commercialization.
Furthermore, there is no assurance that clearance or approval will be granted. If a regulatory authority delays or does not grant approval of a potentially significant product, the potential sales of the product and its value to us can be substantially reduced.
If a regulatory authority delays or does not grant approval of a potentially significant product, the potential sales of the product and its value to us can be substantially reduced. Even if the U.S.
Further, this increased focus on ESG issues may result in significant increase in additional expenses (e.g., direct or indirect cost of energy, materials, manufacturing, distribution, packaging and other operating costs) to comply with evolving regulations and/or third-party requirements that could adversely impact our business or profitability.
This may result in a significant increase in additional expenses (e.g., direct or indirect cost of energy, materials, manufacturing, distribution, packaging and other operating costs) to comply with evolving regulations and/or third-party requirements that could adversely impact our business or profitability. In response to certain stakeholder expectations, we have commenced reporting of our sustainability endeavors and future plans.
Obtaining clearance or approval can be a long and expensive process, and clearance or approval is never certain. For example, the FDA or another country’s regulatory agency, could require us to conduct an additional clinical trial prior to granting clearance or approval of a product and such clinical trial could take a long time and have substantial expense.
FDA or another country’s regulatory agency, could require us to conduct an additional clinical trial prior to granting clearance or approval of a product and such clinical trial could take a long time and have substantial expense. Furthermore, there is no assurance that clearance or approval will be granted.
If we experience difficulties acquiring sufficient quantities of required materials or products from our existing suppliers, or if our suppliers are found to be non-compliant with the FDA’s QSR, other applicable laws, or STAAR’s requirements, then qualifying and obtaining the required regulatory approvals to use alternative suppliers may be a lengthy and uncertain process during which production could be delayed and we could lose sales.
FDA’s QSR, other applicable laws, or STAAR’s requirements, then qualifying and obtaining the required 18 regulatory approvals to use alternative suppliers may be a lengthy and uncertain process during which production could be delayed and we could lose sales.
Addressing applicable and evolving security and privacy regulations may increase our operating costs or adversely affect our business operations. Certain of our employees, contractors and vendors have access to and use personal information in the ordinary course of our business. The secure processing, maintenance and transmission of this information is critical to our operations.
Certain of our employees, contractors and vendors have access to and use personal information in the ordinary course of our business. The secure processing, maintenance and transmission of this information is critical to our 22 operations.
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.
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.
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.
If our sustainability practices do not meet evolving investor or other stakeholder expectations and standards or if we are unable to satisfy all stakeholders, our reputation, our ability to attract or retain employees, our sales and our attractiveness as an investment or business partner could be negatively impacted.
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.
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.
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.
In the event of a slower-than-planned manufacturing output, we may be unable to quickly meet customer demand. 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.
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.
Risks Related to Ownership of Our Common Stock The market price of our common stock has been and will likely continue to be volatile. The market price for our common stock has fluctuated widely. The closing price of our common stock ranged from $23.93 to $52.25 per share during the year ended December 27, 2024.
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.
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.
Our success depends on the skills, experience and performance of our senior management and other key employees. The loss or incapacity of existing members of our executive management team could negatively impact our operations, particularly if we experience difficulties in hiring qualified successors.
The loss or incapacity of existing members of our executive management team could negatively impact our operations, particularly if we experience difficulties in hiring qualified successors. Further, it could be particularly detrimental if any key employee or employees went to work for a competitor.
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.
For example, if our China distributors, which accounted for approximately 51% of our fiscal 2024 consolidated net sales, ceased to serve as our distributors, or significantly underperformed our expectations, we may experience a substantial reduction in sales.
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.
Many of our employees currently work remotely, which may make us more vulnerable to cyberattacks.
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.
Also, general political and economic conditions such as a recession or interest rate fluctuations, public health crises, geopolitical tensions or conflicts, may adversely affect the stock market in general, and, in turn, the market price of our common stock.
Economic stagnation, lack of consumer confidence or a recession in any of our larger markets could slow ICL sales growth or, if severe, cause declines in sales, which could materially harm our business. 17 We believe that negative publicity in the past regarding the potential complications of refractive surgery and potential patient dissatisfaction, in particular because of LASIK and other corneal laser-based procedures, decreased patient interest in LASIK as well as all other refractive procedures.
We believe that negative publicity in the past regarding the potential complications of refractive surgery and potential patient dissatisfaction, in particular because of LASIK and other corneal laser-based procedures, decreased patient interest in LASIK as well as all other refractive procedures.
The loss of a material supplier could significantly disrupt our business. In some cases, we obtain components used in certain of our products from single sources.
The loss of a material supplier could significantly disrupt our business. In some cases, we obtain components used in certain of our products from single sources. If we experience difficulties acquiring sufficient quantities of required materials or products from our existing suppliers, or if our suppliers are found to be non-compliant with the U.S.
These risks and uncertainties, as well as other risks that we cannot foresee at this time, have the potential to affect our business, financial condition, results of operations, cash flows, strategies and prospects in a material and adverse manner.
Any of the following risks, as well as other risks that we cannot foresee at this time or that we currently view to be immaterial, could materially and adversely affect our business, financial condition, results of operations or cash flows.
Corporate responsibility, specifically related to environmental, social and governance (ESG) matters, may impose additional costs, expose us to reputational and emerging areas of risks, and could negatively affect our business. Investors, stockholders, customers, suppliers and other third parties are increasingly focusing on ESG and corporate responsibility practices and reporting.
Any inability to successfully manage growth could materially and adversely affect our business, financial condition, and results of operation. Corporate responsibility, specifically related to environmental, social and governance (ESG) matters, may impose additional costs, expose us to reputational and emerging areas of risks, and could negatively affect our business.
Unanticipated delays with a transferred process or difficulties in manufacturing a transferred material could interrupt our supply of products.
Unanticipated delays with a transferred process or difficulties in manufacturing a transferred material could interrupt our supply of products. Any sustained interruption in supply could cause us to lose market share and harm our business, financial condition and results of operations.
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.
In addition, the expense associated with increased manufacturing, sales and marketing to meet increased demand may exceed our expectations. 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.
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.
Remedial environmental actions could require us to incur substantial unexpected costs, which could materially and adversely affect our financial condition and results of 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.
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.
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. 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.
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.
Competing in the ophthalmic products industry requires us to introduce new or improved products and processes continuously, and to submit these to the U.S. FDA and other regulatory bodies for clearance or approval. Obtaining clearance or approval can be a long and expensive process, and clearance or approval is never certain. For example, the U.S.
Further, if relations between China and the U.S. were to deteriorate or otherwise result in trade restrictions, or if other geopolitical events resulted in sanctions, intervention or conflict, it would adversely impact our sales and operations in the region.
Further, changes in trade restrictions or new or increased tariffs or quotas, embargoes, sanctions, countersanctions, customs restrictions, or other interventions or geopolitical conflicts resulting from deteriorating relations between China and the U.S. would adversely impact our sales and operations in the region.
There can be no assurance that our strategic and operational planning will allow us to adequately manage anticipated growth. Factors such as a failure to follow specific internal practices and procedures, equipment malfunction, environmental factors or damage to one or more of our facilities could adversely affect our ability to manufacture our products.
Factors such as a failure to follow specific internal practices and procedures, equipment malfunction, environmental factors or damage to one or more of our facilities could adversely affect our ability to manufacture our products. For example, in the second half of 2021, as we increased production to meet increased demand, we experienced a decline in product yield.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have not identified any risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Biggest changeBased on the information available to us as of the date of this Annual Report, we believe that risks from cybersecurity threats, including as a result of any prior cybersecurity incidents, have not materially affected us, including our business strategy, results of operations, or financial condition, and as of the date of this Annual Report, we are not aware of any material risks from cybersecurity threats that are reasonably likely to do so.
Our cybersecurity risk management program includes: • periodic risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader enterprise information technology environment; • skilled internal information security and data privacy personnel, who support our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; • external service providers, where appropriate, to monitor, assess, test, or otherwise assist with aspects of our security controls, and to support risk mitigation efforts; • training for our employees on cybersecurity awareness and the importance of protecting information assets, including “phishing” tests; • periodic reviews of key cybersecurity policies, and updating as needed; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
Our cybersecurity risk management program includes: • periodic risk assessments designed to help identify material cybersecurity risks to our critical systems, information, and our broader enterprise information technology (IT) environment; • skilled internal information security (IS) and data privacy personnel, who support our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; • external service providers, where appropriate, to monitor, assess, test, or otherwise assist with aspects of our security controls, and to support risk mitigation efforts; • training for our employees on cybersecurity awareness and the importance of protecting information assets, including “phishing” tests; • periodic reviews of key cybersecurity policies, and updating as needed; • information governance policy and a cybersecurity incident response plan that includes procedures for monitoring data use and responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors.
The Company’s internal information security and data privacy specialists have certifications from various organizations, including ISC2 (Certified Information Security Systems Professional or CISSP), Global Information Assurance (GIAC), the Computing Technology Industry Association (CompTIA) and International Association of Privacy Professionals (IAPP). 30 Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include threat briefings from internal personnel and external service providers, as well as alerts and reports produced by security tools deployed in the information technology environment.
Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include threat briefings from internal personnel and external service providers, as well as alerts and reports produced by security tools deployed in the information technology environment. STAAR utilizes internal personnel and external service providers to support the Company’s cybersecurity efforts.
In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents. Our management team is responsible for assessing and managing our material risks from cybersecurity threats.
Our management team is responsible for assessing and managing our material risks from cybersecurity threats and reporting on such risks to the Audit Committee .
STAAR’s Chief Information Officer leads a team of information security professionals who have primary responsibility for our overall cybersecurity risk management program and supervises both our internal personnel and our retained external cybersecurity consultants. This team collaborates with STAAR’s legal and internal audit functions to address cybersecurity and data privacy risks.
Our Chief Information Officer (CIO) leads a team of IS professionals who have primary responsibility for our overall cybersecurity risk management program and supervises both our internal personnel and our retained external 31 cybersecurity consultants. Our CIO has over two decades of experience, including experience building IT and IS functions and teams, as well as cybersecurity programs.
Added
However, we cannot eliminate all risks from cybersecurity threats or provide assurances that the Company will not be materially affected by such risks in the future. Additional information on cybersecurity risks we face can be found in Item 1A, Risk Factors, which should be read in conjunction with the foregoing information.
Added
In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents. The Audit Committee regularly updates the Board on such matters ,and the Board also periodically receives presentations from management directly on our cybersecurity risk management.
Added
Our CIO holds an M.B.A. in management, has an audit and accounting background, and serves on the SoCalCIO Board, a Southern California organization developing and supporting local CIOs. The CIO and IS team collaborate closely with STAAR’s legal, privacy, and internal audit functions to address cybersecurity and data privacy risks.
Added
The Company’s internal IS and data privacy specialists have certifications from various organizations, including ISC2 (Certified Information Security Systems Professional or CISSP), Global Information Assurance (GIAC), the Computing Technology Industry Association (CompTIA) and International Association of Privacy Professionals (IAPP).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSTAAR 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.
Biggest changeWe are in the process of expanding our manufacturing capabilities for STAAR’s ICL products in our Nidau, Switzerland facility. STAAR Japan maintains administrative offices in Tokyo and Osaka, Japan and a distribution facility in Musashino City, in greater Tokyo, Japan. We also maintain commercial offices in China, Germany, Spain, India, Singapore, and the U.K.
ITEM 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.
ITEM 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 facilities are located in Monrovia, California. We manufacture the raw material for Collamer lenses in our facility in Aliso Viejo, California.
Removed
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.
Added
STAAR also operates a technology center housing its research and development (R&D) team and labs in Tustin, California. Our corporate headquarters, including our executive offices, our EVO Experience Center, and additional operational facilities, are located in Lake Forest, California. STAAR Surgical AG maintains administrative offices, warehouse and distribution facilities in Nidau and Brügg, Switzerland.
Removed
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.
Added
We believe our existing properties are well maintained, in good operating condition and are adequate to support our present level of operations. We also believe that we could increase capacity as needed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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
Biggest changeITEM 3. Legal Proceedings See Note 12 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 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.
Biggest changeStock 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.
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.
The graph assumes that 32 $100 was invested at the closing price of our common stock on the last trading day of fiscal year 2019 and all dividends (if any) were reinvested. We have never paid dividends on our common stock and have no present plans to do so.
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.
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 18, 2025, there were approximately 245 holders of record of our common stock.
We currently expect to retain any earnings for use to further develop our business and not to declare cash dividends 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 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.
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
Total Returns Index for Fiscal Years: 2019 2020 2021 2022 2023 2024 STAAR Surgical Company $ 100.00 $ 230.42 $ 265.56 $ 141.17 $ 90.76 $ 70.39 The Nasdaq Composite Index 100.00 144.12 176.09 118.80 171.83 227.37 S&P 400 Health Care Index 100.00 131.76 146.72 117.30 117.90 125.56 ITEM 6. [Res erved] 33

Item 7. Management's Discussion & Analysis

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

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Biggest changeSelling 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.
Biggest changeGeneral 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. 37 Selling and Marketing Expense The following table presents our selling and marketing expense for the fiscal years presented (dollars in thousands): Percentage Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Selling and marketing expense $ 108,322 $ 107,834 $ 88,856 0.5 % 21.4 % Percentage of sales 34.5 % 33.4 % 31.2 % Selling and marketing expenses for 2024 increased 0.5% from 2023, due to increased salary-related payroll tax expenses, trade shows and sales meeting expenses, costs and charges associated with the opening of our new EVO Experience Center, sales commission expenses and travel expenses, offset by decreased advertising and promotional activities.
Other income (expense), net generally relates to interest income earned on cash, cash equivalents and investments available for sale, interest expense on finance lease obligations, gains or losses on foreign currency transactions, and royalty income.
Other income, net generally relates to interest income earned on cash, cash equivalents and investments available for sale, interest expense on finance lease obligations, gains or losses on foreign currency transactions, and royalty income.
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.
In projecting future taxable income, we begin with historical results and incorporate assumptions including overall current and projected business and industry 41 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.
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.
For 2023, 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, cash provided by financing activities of $8.3 million consisted primarily of proceeds from the exercise of stock options.
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.
For 2022, 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.
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 Operations for the period indicated.
“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.
“Business,” for a discussion of: • Operations • Principal Products • Distribution and Customers • Competition • Regulatory Matters • Research and Development Strategic Imperatives for 2025 We believe we have a significant opportunity to fundamentally transform how myopia and other refractive conditions are treated.
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.
Gross profit margin increased 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.
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.
In 2025, 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 also intend to continue to invest in product innovation in 2025.
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.
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. STAAR employs a commercialization strategy that strives for sustainable, profitable growth.
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.
General and Administrative Expense The following table presents our general and administrative expense for the fiscal years presented (dollars in thousands): Percentage Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 General and administrative expense $ 89,898 $ 72,319 $ 54,742 24.3 % 32.1 % Percentage of sales 28.6 % 22.4 % 19.2 % General and administrative expenses for 2024 increased 24.3% from 2023, due to increased outside services, facilities costs, salary-related and payroll tax expenses and bonus and stock-based compensation expenses.
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%.
Other Income, Net The following table presents our other income, net for the fiscal years presented (dollars in thousands): Percentage Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Other income, net $ 3,559 $ 5,599 $ 1,750 (36.4 )% — * Percentage of sales 1.0 % 1.7 % 0.6 % * Denotes change is greater than + 100%.
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.
Percentage of Net Sales 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 23.7 % 21.6 % 21.5 % Gross profit 76.3 % 78.4 % 78.5 % General and administrative 28.6 % 22.4 % 19.2 % Selling and marketing 34.5 % 33.4 % 31.2 % Research and development 17.2 % 13.8 % 12.7 % Total selling, general and administrative 80.3 % 69.6 % 63.1 % Operating income (loss) (4.0 )% 8.8 % 15.4 % Total other income, net 1.0 % 1.7 % 0.6 % Income (loss) before income taxes (3.0 )% 10.5 % 16.0 % Provision for income taxes 3.6 % 3.8 % 2.1 % Net income (loss) (6.6 )% 6.7 % 13.9 % Net Sales The following table presents our net sales, by product for the fiscal years presented (dollars in thousands): 2024 2023 2022 % of Total Sales % of Total Sales % of Total Sales ICLs 99.6 % $ 312,543 99.1 % $ 319,427 94.8 % $ 269,712 Other product sales Cataract IOLs 0.0 % — 0.3 % 1,139 3.4 % 9,638 Other surgical products 0.4 % 1,358 0.6 % 1,849 1.8 % 5,041 Total other product sales 0.4 % 1,358 0.9 % 2,988 5.2 % 14,679 Net sales 100.0 % $ 313,901 100.0 % $ 322,415 100.0 % $ 284,391 Net sales for 2024 decreased 3% from 2023.
We do not believe the temporary increase in net accounts receivable reflected a trend, nor that it would have a material impact on cash flows as our available liquidity and capital resources had sufficient working capital despite the increase in net accounts receivable. Inventories, net was $35.1 million and $24.2 million at December 29, 2023 and December 30, 2022, respectively.
We do not believe the increases in net accounts receivable reflect a trend, nor that it would have a material impact on cash flows as our available liquidity and capital resources had sufficient working capital despite the increases in net accounts receivable. Inventories, net was $43.3 million and $35.1 million at December 27, 2024 and December 29, 2023, respectively.
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.
We do not currently hedge transactions to offset changes in foreign currency. 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.
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).
The change in other income, net for 2024 was due to increased foreign exchange losses (primarily Japanese Yen and euro) and lower interest income as a result of lower balances of investments available for sale. The change in other income, net for 2023 was due to increased interest income as a result of higher interest rates during 2023.
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.
Also impacting our effective tax rates was a $4.5 million recapture of our U.S. valuation allowance in 2024, $3.3 million recapture of our U.S. valuation allowance in 2023 and a $0.9 million release of our U.S. valuation allowance in 2022. Also during 2024, we recognized $1.5 million of unrecognized benefits, including interest, related to uncertain tax positions taken by us.
The fair values of plan assets are determined based on prevailing market prices. Foreign Exchange Management does not believe that the fluctuation in the value of the dollar in relation to the currencies of its suppliers or customers in the last three fiscal years has adversely affected our ability to purchase or sell products at agreed upon prices.
Foreign Exchange Rate Impact Management does not believe that the fluctuation in the value of the dollar in relation to the currencies of its suppliers or customers in the last three fiscal years has materially adversely affected our ability to purchase or sell products at agreed upon prices.
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.
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. This discussion includes forward-looking statements that involve risks and uncertainties.
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.
Other product sales represented less than 1.0% of our total sales for fiscal year 2024. Other product sales in 2023 decreased 80% from 2022, mainly due to decreased sales of cataract IOLs and cataract IOL injector parts and increased sales returns reserves related to cataract IOLs. Changes in foreign currency unfavorably impacted other product sales by $0.3 million.
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.
The decrease in net sales was due to decreased ICL sales of $6.9 million and decreased other product sales of $1.6 million. Net sales for 2023 increased 13% from 2022. 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.
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.
Our financial condition at December 27, 2024, December 29, 2023 and December 30, 2022 included the following (in thousands): 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Cash and cash equivalents $ 144,159 $ 183,038 $ 86,480 $ (38,879 ) $ 96,558 Investments available for sale 86,335 49,391 139,061 36,944 (89,670 ) Total $ 230,494 $ 232,429 $ 225,541 $ (1,935 ) $ 6,888 Current assets $ 367,940 $ 365,269 $ 311,723 $ 2,671 $ 53,546 Current liabilities $ 70,306 $ 65,036 $ 51,716 $ 5,270 $ 13,320 Working capital $ 297,634 $ 300,233 $ 260,007 $ (2,599 ) $ 40,226 Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions.
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 Americas region sales increased 36 11%, with unit increase of 9%, due primarily to sales growth in the U.S. Changes in foreign currency unfavorably impacted ICL sales by $1.8 million, which impacted our Japan and Europe, Middle East and Africa markets. ICL sales represented 99.1% of our total sales for fiscal year 2023.
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 leading manufacturer of phakic implantable lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 40 years.
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.
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.
The maturity of individual investments may not extend 24 months from the date of purchase. There are also limits to the amount of credit exposure in any given security type. Additionally, during 2021 we fully repaid and cancelled our Japan line of credit and cancelled our Swiss framework agreement given our current cash resources.
The maturity of individual investments may not extend 24 months from the date of purchase. There are also limits to the amount of credit exposure in any given security type.
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.
Gross Profit The following table presents our gross profit and gross profit margin for the fiscal years presented (dollars in thousands): Percentage Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Gross profit $ 239,582 $ 252,651 $ 223,383 (5.2 )% 13.1 % Gross profit margin 76.3 % 78.4 % 78.5 % Gross profit for 2024 decreased 5.2% from 2023.
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.
Overview of changes in cash and cash equivalents and other working capital accounts The following table presents a summary of cash flows for the fiscal years presented (dollars in thousands): 2024 2023 2022 Cash flows from: Operating activities $ 15,725 $ 14,594 $ 35,715 Investing activities (59,217 ) 74,347 (156,376 ) Financing activities 5,724 7,415 8,297 Effect of exchange rate changes (1,111 ) 202 (862 ) Net change in cash and cash equivalents (38,879 ) 96,558 (113,226 ) Cash and cash equivalents, at beginning of year 183,038 86,480 199,706 Cash and cash equivalents, at end of year $ 144,159 $ 183,038 $ 86,480 For 2024, cash provided by operating activities consisted of $41.3 million in non-cash items primarily related to stock-based compensation expenses, partially offset by a $20.2 million net loss and $5.4 million in working-capital changes primarily related to the capitalization of cloud-based software and changes in inventories, partially offset by changes in accounts receivable.
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%.
The sales increase was driven by the APAC region, which grew 21% with unit growth of 22%, primarily due to sales growth in China, other APAC Distributors, India, Japan and Korea. The Europe, Middle East and Africa region sales increased 7% with units similar to prior year, due to sales growth in our distributor markets and direct markets.
The 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.
The table below summarizes the year over year changes in other income, net (in thousands): 38 Favorable (Unfavorable) 2024 vs. 2023 2023 vs. 2022 Interest income, net $ (1,075 ) $ 4,538 Foreign exchange (1,766 ) (202 ) Royalty income 434 (730 ) Other 367 243 Net change in other income, net $ (2,040 ) $ 3,849 Provision for Income Taxes The following table presents our provision for income taxes for the fiscal years presented (in thousands): Percentage Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Provision for income taxes $ 11,156 $ 12,349 $ 5,887 (9.7 )% — * Effective tax rate (123.2 )% 36.6 % 12.9 % * Denotes change is greater than + 100%.
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.
Other product sales include cataract IOLs, delivery systems and normal recurring sales adjustments such as sales return allowances. 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.
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.
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. In addition, we are focused on driving awareness of the ICL procedure and the clinical benefits of our ICLs, and providing surgeon training, support and education, particularly in our newer markets.
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 Europe, Middle East and Africa region sales increased 10% with unit growth up 17%, due primarily to sales increases in our distributor markets. The Americas region sales increased 16%, with unit increase of 17%, due primarily to sales growth in the U.S.
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.
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.
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.
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.
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.
Research and Development Expense The following table presents our research and development expense for the fiscal years presented (dollars in thousands): Percentage Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Research and development expense $ 53,973 $ 44,401 $ 35,983 21.6 % 23.4 % Percentage of sales 17.2 % 13.8 % 12.7 % Research and development expenses for 2024 increased 21.6% from 2023 due to increased salary-related and payroll tax expenses, purchases of in-process research and development related to external AI tools for measurement and lens size selection and outside services related to professional and medical education, partially offset by decreased clinical expenses associated with our U.S. post-approval clinical trials.
Liquidity and Capital Resources Our principal sources of liquidity are cash, cash equivalents, investments available for sale and cash flow from operating activities.
There were no unrecognized benefits related to uncertain tax positions taken by us in 2023 or 2022. Liquidity and Capital Resources Our principal sources of liquidity are cash, cash equivalents, investments available for sale and cash flow from operating activities.
No assurance can be given, however, that adverse currency exchange rate fluctuations will not occur in the future, which could significantly affect our operating results. We do not currently hedge transactions to offset changes in foreign currency.
However, currency exchange fluctuations do impact our net sales and results of operations as discussed under Item 7A. Quantitative and Qualitative Disclosures About Market Risk. No assurance can be given that adverse currency exchange rate fluctuations will not occur in the future, which could significantly affect our operating results.
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.
We do not have any off-balance sheet arrangements. 39 Our current liquidity and capital resources, as discussed above, will enable us to meet our known contractual obligations as of December 27, 2024 (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 8)* $ 42 $ 42 $ — $ — $ — Operating lease obligations (Note 8)* 51,301 6,449 11,533 14,076 19,243 Pension benefit payments (Note 10)* 6,737 137 353 4,171 2,076 Asset retirement obligation (Note 12)* 42 28 — 14 — Open purchase orders (Note 12)* 12,948 11,536 1,148 264 — Total $ 71,070 $ 18,192 $ 13,034 $ 18,525 $ 21,319 * Refer to the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K.
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.
For 2022, cash provided by operating activities consisted of $39.7 million in net income and $24.9 million in non-cash items primarily related to stock-based compensation expenses, offset by $28.9 million in working-capital changes primarily related to changes in accounts receivable. Since 2022 we decided to invest our cash in investments available for sale, in accordance with our investment policy.
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.
Across our markets, we 35 recognize the need to further educate and train ophthalmic surgeons about our ICLs and our ICL procedure. In 2025, 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.
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.
Historically, the Company also manufactured and sold intraocular lenses (or IOLs) for use in surgery to treat cataracts. 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 fiscal year ended December 27, 2024, approximately 100% our net sales were generated from sales of ICLs.
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.
Our investment in property, plant and equipment during 2024, 2023 and 2022, was primarily due to investments in manufacturing facilities. For 2024, cash provided by financing activities of $5.7 million consisted primarily from the exercise of stock options of $7.4 million, partially offset by $1.5 million to repurchase employee common stock for taxes withheld.
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.
Days’ Inventory on Hand (DOH) was 194 and 142 days for 2024 and 2023, respectively, for finished goods, including consignment inventory. In fiscal 2023 and fiscal 2024, we increased our production and inventory to support anticipated sales growth of ICL products and to support quick and efficient delivery and fulfillment for surgical procedures.
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%.
Changes in foreign currency unfavorably impacted ICL sales by $2.7 million, which impacted our Japan and Europe, Middle East and Africa markets. ICL sales represented 99.6% of our total sales for fiscal year 2024. Total ICL sales for 2023 increased 18% from 2022, with unit growth up 19%.
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.
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.
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.
We want to be the first choice for doctors and for patients seeking visual freedom from wearing eyeglasses or contact lenses. A key focus in 2025 will be supporting our business in China as we work to navigate the macroeconomic challenges and position the Company for growth once the market recovers.
ICL sales represented 99.1% of our total sales for fiscal year 2023. Total ICL sales for 2022 increased 27% from 2021, with unit growth up 33%.
Other product sales represented 1.0% of our total sales for fiscal year 2023.
The sales increase was driven by the APAC region, which grew 32% with unit growth of 36%, primarily due to sales growth in other APAC Distributors up 43%, China up 38%, India up 37%, Korea up 18% and Japan up 14%.
The decrease in the APAC region was driven by decreased sales in China, primarily related to the $27.5 million order in December 2024 for which we did not recognize revenue discussed above, partially offset by sales growth in India, other APAC Distributors, Japan and Korea.
We do not expect this decision to have a significant impact to revenue growth in future years. Other product sales for 2023 decreased 80% from 2022, mainly due to decreased sales of cataract IOLs, decreased sales of cataract IOL injector parts and increased sales return reserves related to cataract IOLs.
During 2023, we stopped manufacturing cataract IOLs, and we did not sell any cataract IOLs in 2024. Other product sales for 2024 decreased 55% from 2023, mainly due to decreased sales of cataract IOLs and cataract IOL injector parts, partially offset by increased sales of delivery systems. Changes in foreign currency unfavorably impacted other product sales by $0.1 million.
Removed
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.
Added
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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.
Removed
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.
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Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including those described in this Annual Report in Item 1A. “Risk Factors.” 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.
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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.
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Business Environment and Factors Affecting Comparability Given the size of the Company’s business in China relative to its net sales in the rest of the world, macroeconomic conditions in China have a significant impact on the Company’s business, operations, and financial results.
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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.
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For the fiscal year ended December 27, 2024, we reported $313.9 million of net sales, a decrease of 3% compared to $322.4 million in fiscal 2023, and we incurred a net loss of $20.2 million compared to net income of $21.3 million in fiscal 2023.
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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.
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Prior to fiscal 2024, we had reported over ten years of annual net sales growth, and we had delivered net income profitability since 2018.
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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 results in fiscal 2024 were negatively impacted by a significant decline in ICL sales in China in the fourth quarter ended December 27, 2024, where the sluggish economy and weak consumer consumption contributed to fluctuating demand for ICL procedures.
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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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During the fourth quarter ended December 27, 2024, we shipped a $27.5 million order of ICLs to one of our distributors in China. After the shipment was received, the distributor raised concerns about the ongoing fluctuations in procedural volumes in China and forecasted demand for fiscal 2025.
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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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Following discussions with the distributor, the distributor requested extended payment terms for the order, and we agreed. From time to time, we agree to extended 34 payment terms with our distributors, but given that these payment terms were significantly longer than the terms included in our distributor agreement, we determined that under accounting principles generally accepted in the U.S.
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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.
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(“GAAP”), collectability was not probable, and we did not recognize the revenue associated with the shipment in the quarter ended December 27, 2024. As the shipment was received by the distributor, and control of the product passed to the distributor, the product is no longer recorded in our inventory.
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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.
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Ordinarily, we recognize revenue upon shipment of product, and we record cost of sales when we recognize revenue based on the matching principle under GAAP.
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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.
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In this instance, we did not recognize the revenue, but we did recognize costs of sales associated with this order of $3.9 million, which had a negative impact on our gross profit and gross profit margin for the fourth quarter and fiscal year ended December 27, 2024.
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We do not have any off-balance sheet arrangements.
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As the control of the inventory transferred to the distributor, accounting rules require us to record the costs of sales upon such transfer, even if revenue is not recognized until a future period. Under the extended payment terms, the distributor agreed to pay for the $27.5 million order by the end of the quarter ending September 26, 2025.
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Since 2022 we decided to invest our cash in investments available for sale, in accordance with our investment policy.
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Revenue for the order will not be recognized until payments are received from the distributor, at which point the collectability concern is alleviated.
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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.
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Because the cost of sales associated with this order was recognized in the quarter ended December 27, 2024, there will be no associated cost of sales for this order when the revenue is recognized, resulting in a 100% gross profit in the period payments are received.
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Days’ Sales Outstanding (DSO) was 113 and 89 days, respectively for 2023 and 2022. The increase in DSO in 2023 was temporary and was due to extended payment terms to our largest customer outside of the U.S. due to unfavorable foreign currency conditions. We have a solid and lengthy relationship with this customer, for which collectability is reasonably assured.
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While we did not recognize revenue on this order upon shipment, we believe that having these ICLs in-country in China can help address challenges and delays associated with importation and logistics and can mitigate potential impacts from geopolitical risk and tariff changes. Our agreements with our distributors in China provide for minimum inventory requirements based on forecasted demand.

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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 changeDuring 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.
Biggest changeOur China distributors, who sell into China and Hong Kong, collectively accounted for approximately 51% of our consolidated net sales during fiscal 2024. If the U.S. dollar strengthens relative to the Chinese yuan, it becomes more expensive for our China distributor to purchase ICLs and to pay prior accounts receivable balances.
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.
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 42 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.
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
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.
Fluctuations during any given reporting period result in the re-measurement of our foreign currency denominated cash, receivables, and payables, generating currency transaction gains or losses and are reported in total other income (expense), net in our Consolidated Statements of Income. In the normal course of business, we also face risks that are either non-financial or non-quantifiable.
Fluctuations during any given reporting period result in the re-measurement of our foreign currency denominated cash, receivables, and payables, generating currency transaction gains or losses and are reported in total other income, net in our Consolidated Statements of Operations. In the normal course of business, we also face risks that are either non-financial or non-quantifiable.
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.
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.
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.
Activities outside the U.S. accounted for approximately 94% of our total sales during 2024. 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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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.

Other STAA 10-K year-over-year comparisons