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STAAR SURGICAL CO

STAAR SURGICAL COSTAA決算レポート

Nasdaq · ヘルスケア · 眼科用品

STAAR Surgical Co is a global ophthalmic medical device firm. It designs, makes and sells implantable collamer lenses (ICLs) for minimally invasive vision correction, plus supporting surgical products for ophthalmologists across North America, Europe, Asia Pacific and other key regional markets.

What changed in STAAR SURGICAL CO's 10-K — 2021 vs 2022

Top changes in STAAR SURGICAL CO's 2022 10-K

218 paragraphs added · 223 removed · 174 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

61 edited+12 added−11 removed148 unchanged
STAAR sells its products in more than 75 countries, with direct distribution (i.e., via STAAR representatives) in Japan, Germany, Spain, the U.S., Canada, the U.K. and Singapore, with a combination of direct distribution and independent distribution (i.e., via distributors and STAAR representatives) in China, Korea, India, France, Benelux, and Italy, and with independent distribution in the remainder of the countries where we sell.
STAAR sells its products in more than 75 countries, with direct distribution (i.e., via STAAR representatives) in Japan, the U.S., Germany, Spain, Singapore, Canada, and the U.K., with a combination of direct distribution and independent distribution (i.e., via distributors and STAAR representatives) in China, Korea, India, France, Benelux, and Italy, and with independent distribution in the remainder of the countries where we sell.
We sell our products directly through our own sales representatives in Japan, Germany, Spain, the U.S., Canada, the U.K. and Singapore. We sell through a combination of our own representatives and independent distributors in China, Korea, India, France, Benelux, and Italy. We sell through independent distributors in other countries. Our products are sold in more than 75 countries worldwide.
We sell our products directly through our own sales representatives in Japan, the U.S., Germany, Spain, Singapore, Canada, and the U.K. We sell through a combination of our own representatives and independent distributors in China, Korea, India, France, Benelux, and Italy. We sell through independent distributors in other countries. Our products are sold in more than 75 countries worldwide.
For example, STAAR Japan conducted a separate clinical trial in Japan for the shonin application for the ICL. Also, approval for a new 11 medical device will require the manufacturer to undertake to reexamine the safety and efficacy of the device with a review of post-market data gathered within a certain period - normally four years - after approval.
For example, STAAR Japan conducted a separate clinical trial in Japan for the shonin application for the ICL. Also, approval for a new medical device will require the manufacturer to undertake to reexamine the safety and efficacy of the device with a 11 review of post-market data gathered within a certain period - normally four years - after approval.
Our distributor in Korea is contractually required to obtain, with our assistance, the necessary health registrations, governmental approvals, or 12 clearances to import, market and sell our products. In Korea, we provide our distributor with information and data to obtain appropriate registrations and approvals, and the distributor obtains such registrations.
Our distributor in Korea is contractually required to obtain, with our assistance, the necessary health registrations, governmental approvals, or clearances to import, market and sell our products. In Korea, we provide our distributor with information and data 12 to obtain appropriate registrations and approvals, and the distributor obtains such registrations.
A person with myopia cannot clearly see distant objects without eyeglasses or contact lenses. ophthalmologist – a surgeon who specializes in the diseases and disorders of the eye and the related visual pathway. ophthalmic – of or related to the eye. optic – the central part of an IOL or ICL, the part that functions as a lens and focuses images on the retina.
A person with myopia cannot clearly see distant objects without eyeglasses or contact lenses. ophthalmologist – a surgeon who specializes in the diseases and disorders of the eye and the related visual pathway. ophthalmic – of or related to the eye. 15 optic – the central part of an IOL or ICL, the part that functions as a lens and focuses images on the retina.
We maintain a global marketing team, as well as regional marketing personnel to support the promotion and sale of our products. The global marketing 5 department supports selling efforts by developing and providing promotional materials, speakers’ programs, digital and social media sites, participation in trade shows and technical presentations.
We maintain a global marketing team, as well as regional marketing personnel to support the promotion and sale of our products. The global marketing department supports selling efforts by developing and providing promotional materials, speakers’ programs, digital and social media sites, participation in trade shows and technical presentations.
Globally, the ICL is available for myopia and hyperopia and is available in multiple models, powers and lengths totaling hundreds of different types of inventoried lenses. This requires us to carry a significant amount of inventory to meet customer preference for rapid delivery.
Globally, the ICL is available for myopia and hyperopia and is available in multiple models, powers and lengths totaling hundreds of different types of inventoried lenses. This requires us to carry a significant amount of inventory 3 to meet customer preference for rapid delivery.
Our ICLs and IOLs are Class III devices subject to the PMA approval process and not 510(k) clearance. The more rigorous PMA process requires us to demonstrate that a new medical device is safe and effective for its intended use.
Our ICLs are Class III devices subject to the PMA approval process and not 510(k) clearance. The more rigorous PMA process requires us to demonstrate that a new medical device is safe and effective for its intended use.
The Toric ICL (TICL), which also corrects for astigmatism, is 3 available for myopia in the same powers and lengths and carries additional parameters of cylinder and axis. The EVO Viva lens is available for myopia in the same powers and lengths and carries additional parameters relating to presbyopia correction.
The Toric ICL (TICL), which also corrects for astigmatism, is available for myopia in the same powers and lengths and carries additional parameters of cylinder and axis. The EVO Viva lens is available for myopia in the same powers and lengths and carries additional parameters relating to presbyopia correction.
In Korea, a registration of medical devices such as our ICLs and IOLs is overseen by the Ministry of Food and Drug Safety (MFDS) pursuant to the Medical Device Act.
In Korea, a registration of medical devices such as our ICLs is overseen by the Ministry of Food and Drug Safety (MFDS) pursuant to the Medical Device Act.
ITEM 1. Business STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and delivery systems used to deliver the lenses into the eye. We are the leading manufacturer of lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 30 years.
ITEM 1. Business STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and delivery systems used to deliver the lenses into the eye. We are the leading manufacturer of lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 40 years.
During 2022, we intend to continue our focus on research and development in the following areas: • Development of presbyopia-correcting ophthalmic medical devices, including models that correct cylinder (i.e., astigmatism), including clinical trials of the same; • Development of preloaded injector systems for ophthalmic medical devices; and • Development of a new generation of ophthalmic medical devices and materials.
During 2023, we intend to continue our focus on research and development in the following areas: • Development of presbyopia-correcting ophthalmic medical devices, including models that correct cylinder (i.e., astigmatism), including clinical trials of the same; • Development of preloaded injector systems for ophthalmic medical devices; and • Development of a new generation of ophthalmic medical devices and materials.
We believe it would require extensive time and effort for a competitor to duplicate our intellectual property and processes to develop a product with comparable capabilities to our ICL product lines. Worldwide, we sell all of our major products under trademarks we consider to be important to our business.
We believe it would require extensive time and effort for a competitor to duplicate our intellectual property and processes to develop a product with comparable capabilities to our ICL family of products. Worldwide, we sell all of our major products under trademarks we consider to be important to our business.
Unless the context indicates otherwise, “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries. A glossary explaining many of the technical terms used in this report begins on page 14.
Unless the context indicates otherwise, “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries. A glossary explaining many of the technical terms used in this report begins on page 15.
Our intellectual property generally relates to the design, production, and manufacture of the Collamer lens material and related materials, ICLs and related lenses, cataract IOLs, and lens delivery systems for folding intraocular lenses (injectors and cartridges, both stand-alone and preloaded) used with ICLs and cataract IOLs.
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.
Refractive surgery corrects visual disorders that eyeglasses or contact lenses have traditionally treated (myopia, hyperopia, astigmatism, and presbyopia). The field of refractive surgery includes both lens-based procedures, using products like our ICL, and laser-based procedures like LASIK.
EVO Visian ICL and EVO Viva ICL. Refractive surgery corrects visual disorders that eyeglasses or contact lenses have traditionally treated (myopia, hyperopia, astigmatism, and presbyopia). The field of refractive surgery includes both lens-based procedures, using products like our ICL, and laser-based procedures like LASIK.
The local agent helps manage AEsin case of device malfunction. The license holder and local agent are responsible for carrying out self-inspection of the quality management system periodically. They are also responsible for identifying, monitoring, and trending adverse events related to the medical device.
The local agent helps manage AEs in case of device malfunction. The license holder and local agent are responsible for carrying out self-inspection of the quality management system periodically. They are also responsible for identifying, monitoring, and trending adverse events related to the medical device.
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 1,000,000 ICLs implanted to date.
We believe this will result in a significantly increased number of patients seeking refractive procedures. We believe that over the past decade negative publicity regarding LASIK has reduced patient interest in the LASIK procedure. The ICL is a lens-based refractive procedure (unlike LASIK) with over 2,000,000 ICLs sold to date.
Sales of cataract IOLs accounted for approximately 6% of our total sales in fiscal 2021, 8% of our total sales in fiscal 2020 and 11% of our total sales in fiscal 2019. Other Surgical Products. We sell injector parts to our acrylic lens supplier for their preloaded acrylic cataract IOL that they sell under their own brand.
Sales of cataract IOLs accounted for approximately 3% of our total sales in fiscal 2022, 6% of our total sales in fiscal 2021 and 8% of our total sales in fiscal 2020. Other Surgical Products. We sell injector parts to our acrylic lens supplier for their preloaded acrylic cataract IOL that they sell under their own brand.
In response to the COVID-19 pandemic, we implemented numerous changes that we determined were in the best interest of our employees and other stakeholders, and which followed guidelines and regulations of the applicable health authorities. For example, the majority of our employees continue to work from home.
Also, we offer health insurance and wellness programs. In response to the COVID-19 pandemic, we implemented numerous changes that we determined were in the best interest of our employees and other stakeholders, and which followed guidelines and regulations of the applicable health authorities. For example, the majority of our employees continue to work from home.
Activities outside the United States (U.S.) accounted for 96% of our total sales in fiscal year 2021, primarily due to the pacing of product approvals and commercialization that tend to occur first outside the United States.
Activities outside the United States (U.S.) accounted for 95% of our total sales in fiscal year 2022, primarily due to the pacing of product approvals and commercialization that tend to occur first outside the United States.
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.
Sales of ICLs (including EVO+ and TICLs) accounted for approximately 92% of our total sales in fiscal 2021, 87% of our total sales in fiscal 2020 and 86% of our total sales in fiscal 2019. Other Products Intraocular Lenses (IOLs).
Sales of ICLs (including EVO+ and TICLs) accounted for approximately 95% of our total sales in fiscal 2022, 92% of our total sales in fiscal 2021 and 87% of our total sales in fiscal 2020. Other Products Intraocular Lenses (IOLs).
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 2021 $ 107,333 46.6 % 2020 $ 71,692 43.9 % 2019 $ 64,820 43.2 % Backlog We generally keep sufficient inventory on hand to ship product immediately or shortly after receipt of an order.
Net sales to Shanghai Lansheng during each of the last three fiscal years were as follows: Net Sales to Shanghai Lansheng Fiscal Year Net Sales ($, in thousands) Net Sales as Percentage of Consolidated Net Sales 2022 $ 148,167 52.1 % 2021 $ 107,333 46.6 % 2020 $ 71,692 43.9 % Backlog We generally keep sufficient inventory on hand to ship product immediately or shortly after receipt of an order.
Additional Information We make available free of charge through our website, www.staar.com , our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to any reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as soon as reasonably practicable, after those reports are filed with or furnished to the Securities and Exchange Commission (“SEC”).
The Code of Business Conduct and Ethics is posted on our website, www.staar.com — Investor Information: Corporate Governance. 14 Additional Information We make available free of charge through our website, www.staar.com , our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to any reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as soon as reasonably practicable, after those reports are filed with or furnished to the Securities and Exchange Commission (“SEC”).
Sales of other surgical products accounted for approximately 2 % of our total sales in fiscal 2021 , 5 % of our total sales in fiscal 2020 and 3 % of our total sales in fiscal 2019 . Sources and Availability of Raw Materials STAAR uses a wide range of raw materials in the production of its products.
Sales of Other Surgical Products accounted for approximately 2% of our total sales in fiscal 2022, 2% of our total sales in fiscal 2021 and 5% of our total sales in fiscal 2020. 4 Sources and Availability of Raw Materials STAAR uses a wide range of raw materials in the production of its ICL family of products.
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 31, 2021, we owned approximately 65 United States and foreign patents and had 27 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 30, 2022, we owned approximately 61 United States and foreign patents and had 19 patent applications pending.
According to Market Scope, LLC a publisher of ophthalmic industry data, approximately 4.2 million refractive procedures, primarily laser vision procedures, were performed worldwide in 2021.
According to Market Scope, LLC a publisher of ophthalmic industry data, approximately 4.7 million refractive procedures, primarily laser vision procedures, were expected to be performed worldwide in 2022.
In fiscal year 2021, we added approximately 206 employees (including temporary employees) to help keep pace with the growth of our business. Our U.S. overall turnover rate in fiscal year 2021 was approximately 9% (excluding temporary employees), below the overall turnover rate of approximately 17% in the medical device industry.
In fiscal year 2022, we added approximately 401 employees (including temporary employees) to help keep pace with the growth of our business. Our U.S. overall turnover rate in fiscal year 2022 was approximately 11% (excluding temporary employees), below the overall turnover rate of approximately 18% in the medical device industry.
We seek employees who reflect the communities where we conduct operations. In the U.S., currently approximately 50% of our employees are female and approximately 50% are male. The gender ratio for our employees globally is approximately 48% female and 52% male. In the U.S., currently approximately 81% of our employees are from underrepresented populations.
We seek employees who reflect the communities where we conduct operations. In the U.S., currently approximately 47% of our employees are female and approximately 53% are male. The gender ratio for our employees globally is approximately 49% female and 51% male. In the U.S., currently approximately 86% of our employees are from underrepresented populations.
We are authorized to sell the EVO+ in the following ex-U.S. regions: the approximately 31 countries that require the European Union CE Mark, Korea, Japan, India, Canada, Hong Kong, Turkey, and several countries in the Middle East. The Hyperopic ICL, which treats far-sightedness, is sold primarily in countries that require the European Union CE Mark.
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 sell in parts of Asia and parts of Europe a “Preloaded Injector” with an acrylic IOL packaged and shipped in a pre-sterilized, disposable injector ready for use in cataract surgery. We also sell a silicone lens-based Preloaded Injector in Japan. We believe the Preloaded Injector offers surgeons improved convenience and reliability.
We sell in parts of Asia and parts of Europe a “Preloaded Injector” with an acrylic IOL packaged and shipped in a pre-sterilized, disposable injector ready for use in cataract surgery. We also sell a silicone lens-based Preloaded Injector in Japan. The acrylic lens-based Preloaded Injector uses a lens supplied by a third party.
The ICL has been implanted into more than 1,000,000 eyes worldwide. STAAR began selling the ICL for myopia for use outside the U.S. in 1997. U.S. sales commenced in 2006. In September 2011, STAAR launched the ICL with CentraFLOW technology, which uses a port in the center of the ICL optic in markets outside the U.S.
STAAR has sold more than 2,000,000 ICLs worldwide. STAAR began selling the ICL for myopia for use outside the U.S. in 1997. U.S. sales commenced in 2006. In September 2011, STAAR launched the ICL with CentraFLOW technology, commonly known as EVO ICL, which uses a port in the center of the ICL optic in markets outside the U.S.
In April 2020, the European Parliament postponed implementation of MDR to May 2021 due to the COVID pandemic. The exit of the UK from the European Union (BREXIT) has resulted in the requirement to re-certify our preloaded acrylic IOL under a non-UK Notified Body, and to separately register our CE Marked products for sale in the UK.
The exit of the UK from the European Union (BREXIT) has resulted in the requirement to re-certify our preloaded acrylic IOL under a non-UK Notified Body, and to separately register our CE Marked products for sale in the UK.
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 31, 2021, we had approximately 806 employees, of which 278 were employed outside the U.S. Of the 806 employees, 692 were regular full-time, 9 were regular part-time and 105 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 30, 2022, we had approximately 964 employees, of which 318 were employed outside the U.S. Of the 964 employees, 882 were regular full-time, 10 were regular part-time and 72 were temporary.
We have affixed the CE Mark to all our principal products sold in CE Mark jurisdictions including ICLs, IOLs and injector systems. In July 2017, our Notified Body in the European Union, DEKRA, re-certified the CE Marking for all our currently certified and commercially available medical devices.
We have affixed the CE Mark to all our principal products sold in CE Mark jurisdictions including ICLs and delivery systems. In July 2022, our Notified Body in the European Union, DEKRA, certified the CE Marking for our currently certified and commercially available ICLs, delivery systems, and calculation software under the new MDR.
Acrylic materials used in IOLs have been both water repelling ( hydrophobic ) and water-absorbing ( hydrophilic ). The most popular IOLs in the U.S., Europe and Japan are made of a flexible, water-repellent acrylic material. 14 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 ). aspheric – aspheric lenses are lenses that are designed in a shape that creates a more clearly focused image than traditional spheric lenses.
In addition, we 13 cannot predict changes in environmental legislation or regulations that may be adopted or enacted in the future and that may adversely affect us.
In addition, we 13 cannot predict changes in environmental legislation or regulations that may be adopted or enacted in the future and that may adversely affect us. We seek to achieve our corporate goals in an environmentally sustainable manner.
In July 2020, we received the CE Mark for EVO Viva , a presbyopia-correcting ICL with an aspheric EDOF optic. We commenced a limited launch of the EVO Viva lens in Spain, Belgium and Germany. The EVO Viva lens adds near and intermediate vision correction for patients with presbyopia.
In July 2020, we received the CE Mark for EVO Viva , a presbyopia-correcting ICL with an aspheric EDOF optic. We commenced certifying surgeons located in countries that recognize the CE Mark to implant the EVO Viva lens. The EVO Viva lens adds near and intermediate vision correction for patients with presbyopia.
For example, during the fourth quarter of 2019, we decided to phase out our nanoFLEX IOL, a single piece aspheric cataract IOL and to only sell our silicone lens-based Preloaded Injector in Japan.
For example, during the fourth quarter of 2019, we decided to phase out our nanoFLEX IOL, a single piece aspheric cataract IOL and to only sell our silicone lens-based Preloaded Injector in Japan. Also, as a result of third-party materials and supply chain challenges that affect our Preloaded Injectors, we will no longer be able to manufacture that device.
Medical devices generally must undergo thorough safety examinations and demonstrate medical efficacy before the MHLW grants shonin (premarket device approval) or ninsho (premarket certification). Manufacturers and resellers (referred to as Marketing Authorization Holders or MAHs) must also satisfy certain requirements before the MHLW grants a business license, or kyoka .
Manufacturers and resellers (referred to as Marketing Authorization Holders or MAHs) must also satisfy certain requirements before the MHLW grants a business license, or kyoka .
Principal Products In designing our products, we seek to delight patients and surgeons by: • Improving patient outcomes; • Minimizing patient risk; and • Simplifying ophthalmic procedures and post-operative care for the surgeon and the patient. EVO Visian ICL, EVO Viva ICL, and Visian ICL.
See Note 17 to the Consolidated Financial Statements for financial information about product lines and operations in geographic areas. Principal Products In designing our products, we seek to delight patients and surgeons by: • Improving patient outcomes; • Minimizing patient risk; and • Simplifying ophthalmic procedures and post-operative care for the surgeon and the patient.
The acrylic lens-based Preloaded Injector uses a lens supplied by a third party. The supplier also assembles and sells the acrylic Preloaded Injector under its own brand, using injector parts purchased from us. The silicone lens-based Preloaded Injector uses a lens produced and marketed by STAAR.
The supplier also assembles and sells the acrylic Preloaded Injector under its own brand, using injector parts purchased from us. The silicone lens-based Preloaded Injector uses a lens produced and marketed by STAAR. In most of the countries where STAAR sells cataract IOLs, government agencies reimburse most or all of the cost of cataract surgery and IOLs.
Code of Ethics STAAR has adopted a revised Code of Business Conduct and Ethics that applies to all its directors, officers, and employees. The Code of Business Conduct and Ethics is posted on our website, www.staar.com — Investor Information: Corporate Governance.
Code of Ethics STAAR has adopted a revised Code of Business Conduct and Ethics that applies to all its directors, officers, and employees.
Also, we sell other related instruments and devices that we manufacture, or 4 that are manufactured by others. Generally, these products have lower overall gross profit margins relative to our ICLs and cataract IOLs.
Also, we sell other related instruments and devices that we manufacture, or that are manufactured by others. Generally, these products have lower overall gross profit margins relative to our ICLs and cataract IOLs. As noted above, as a result of third-party materials and supply chain challenges, we will no longer be able to manufacture certain Other Products.
The cornea is a clear lens at the front of the eye through which light first passes and is focused towards the back of the eye. The interior surface of the cornea is lined with a single layer of flat, tile-like endothelial cells, whose function is to maintain the transparency of the cornea.
The interior surface of the cornea is lined with a single layer of flat, tile-like endothelial cells, whose function is to maintain the transparency of the cornea.
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. 15 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.
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.
As used in this report, the term does not include sales of non-surgical products like eyeglasses and contact lenses. silicone – a type of plastic often used in implantable devices that is inert, generally flexible and water-repelling. single-piece IOL – in a single piece IOL the haptics and the optic are fashioned from a single piece of lens material. spheric lenses – a spheric lens has surfaces that are shaped like sections of a sphere. three-piece IOL – a three-piece IOL has a central, disk-shaped optic and two spring-like haptics attached at either side.
As used in this report, the term does not include sales of non-surgical products like eyeglasses and contact lenses. silicone – a type of plastic often used in implantable devices that is inert, generally flexible and water-repelling. spheric lenses – a spheric lens has surfaces that are shaped like sections of a sphere. toric – refers to the shape of a lens designed to correct astigmatism, which has greater refractive power in some sections of the lens than others.
In 2021, COVID-19 related issues and production output challenges impacted us and resulted in backlog of over 20,000 lenses at the end of the fourth quarter. We continue to focus on meeting the significant level of demand for our ICL lenses and achieving standard inventory level requirements in 2022.
In 2022, COVID-19 related issues and other production output challenges had a less significant impact than in prior years and we did not incur any significant backlog for any quarter during 2022. We continue to focus on meeting the significant level of demand for our ICL lenses and achieving standard inventory level requirements in 2023.
The excimer laser is used during LASIK and PRK surgery. foldable IOL – an intraocular lens made of flexible material, which can be inserted with an injector system through a small incision in minimally invasive cataract surgery. haptic – the part of an IOL that contacts the structures of the eye and holds the IOL in place.
The excimer laser is used during LASIK and PRK surgery. foldable IOL – an intraocular lens made of flexible material, which can be inserted with an injector system through a small incision in minimally invasive cataract surgery. hyperopia – the refractive disorder commonly known as farsightedness, which occurs when the eye’s lens focuses images behind the plane of the retina rather than on the retinal surface.
The eye has an anterior segment and a posterior segment that are separated by the natural crystalline lens. The anterior segment consists of the cornea, the iris and ciliary body and the trabecular meshwork. It is filled with a water-based fluid called aqueous humor and is divided, by the iris, into an anterior chamber and a posterior chamber.
It is filled with a water-based fluid called aqueous humor and is divided, by the iris, into an anterior chamber and a posterior chamber. The cornea is a clear lens at the front of the eye through which light first passes and is focused toward the back of the eye.
In most of the countries where STAAR sells cataract IOLs, government agencies reimburse most or all of the cost of cataract surgery and IOLs. Government agencies continue to reduce the reimbursement rates for cataract surgery and IOLs. In response, we continue to assess and rationalize our low margin cataract IOLs.
Government agencies continue to reduce the reimbursement rates for cataract surgery and IOLs. In response, over the past several years we have rationalized our low margin cataract IOLs.
STAAR Japan’s administrative facility is in Shin-Urayasu and its distribution facility is in Ichikawa City.
STAAR Japan’s administrative facility is in Shin-Urayasu and its distribution facility is in Ichikawa City. STAAR performs final packaging of its silicone preloaded IOL injectors and final inspection of its acrylic preloaded cataract IOL injectors at the Ichikawa City facility.
In March 2018, DEKRA performed audits of our US and Swiss facilities certifying them to EN ISO 13485:2016 as well as to the “Medical Device Single Audit Program” (MDSAP). MDSAP provides for a single audit recognized by Australia, Brazil, Canada, Japan and the United States demonstrating routine compliance with QSR/GMP requirements.
During the fourth quarter of 2021 and the first quarter of 2022, DEKRA performed audits of our US and Swiss facilities certifying them to the MDR requirements, EN ISO 13485:2016 as well as to the “Medical Device Single Audit Program” (MDSAP).
Where we distribute products directly, we rely on local sales representatives to help generate sales by promoting and demonstrating our products with physicians. In the U.S., we also rely on independent sales representatives to sell our products under the supervision of directly employed sales managers. Our clinical affairs personnel provide training and educational courses globally.
Where we distribute products 5 directly, we rely on local sales representatives to help generate sales by promoting and demonstrating our products with physicians. Our clinical affairs personnel provide training and educational courses globally. One customer, Shanghai Lansheng, our China distributor who sells into China and Hong Kong, accounted for approximately 52% of our consolidated net sales during fiscal 2022.
Medical Device Regulation in Japan. The Japanese Ministry of Health, Labor, and Welfare (MHLW) regulates the sale of medical devices under Japan’s Pharmaceuticals and Medical Devices Act (PMD Act). The Pharmaceuticals and Medical Devices Agency (PMDA), a quasi-governmental organization, performs many of the medical device review functions for MHLW.
MDSAP provides for a single audit recognized by Australia, Brazil, Canada, Japan and the United States demonstrating routine compliance with QSR/GMP requirements. Medical Device Regulation in Japan. The Japanese Ministry of Health, Labor, and Welfare (MHLW) regulates the sale of medical devices under Japan’s Pharmaceuticals and Medical Devices Act (PMD Act).
STAAR performs final packaging of its silicone preloaded IOL injectors and final inspection of its acrylic preloaded cataract IOL injectors at the Ichikawa City facility. 2 Financial Information about Segments and Geographic Areas 100% of the Company’s sales are generated from the ophthalmic surgical product segment and, therefore, the Company operates as one operating segment for financial reporting purposes.
We also maintain commercial offices in China, Germany, Spain, India, Singapore, and the U.K. 2 Financial Information about Segments and Geographic Areas 100% of the Company’s sales are generated from the ophthalmic surgical product segment and, therefore, the Company operates as one operating segment for financial reporting purposes. The Company’s principal products are ICLs used in refractive surgery.
In 2021, we formalized a global ESG Steering Committee consisting of cross-functional employees to address environmental, social, and governance issue at STAAR. Among our Board of Directors, three directors are female and four directors are male. Two of the directors on our Board of Directors self-identify as members of underrepresented populations.
In 2021, we formalized a global ESG Steering Committee consisting of cross-functional employees to address environmental, social, and governance issue at STAAR. In addition, we created a cross-functional Diversity, Equity and Inclusion Committee, and a cross-functional Climate Risk Committee. The health and safety of our employees is a top priority. We created and we follow various safety policies and procedures.
In 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. 6 The global cataract IOL market is highly concentrated, with the top five competitors ( Alcon , Johnson & Johnson , Hoya, Bausch & Lomb and Carl Zeiss Meditec ) combined accounting for approximately 6 7 % of total mar ket revenue, according to a 20 2 1 report by Market Scope.
The global cataract IOL market is highly concentrated, with the top five competitors (Alcon, Johnson & Johnson, Hoya, Bausch & Lomb and Carl Zeiss Meditec) combined accounting for approximately 66% of total market revenue, according to Market Scope reports. 6 The Human Eye The following discussion provides background information on the structure, function, and some of the disorders of the human eye to enhance the reader’s understanding of our products described in this report.
The CentraFLOW technology makes the visual outcomes of the ICL available through a simpler and more comfortable surgical implantation experience. We are authorized to sell the ICL with CentraFLOW technology in the following ex-U.S. regions: the approximately 31 countries that require the European Union CE Mark, China, Canada, Korea, Japan, India, Argentina, Singapore, and several countries in the Middle East.
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.
The Human Eye The following discussion provides background information on the structure, function, and some of the disorders of the human eye to enhance the reader’s understanding of our products described in this report. The human eye is a specialized sensory organ capable of receiving visual images and transmitting them to the visual center in the brain.
The human eye is a specialized sensory organ capable of receiving visual images and transmitting them to the visual center in the brain. The eye has an anterior segment and a posterior segment that are separated by the natural crystalline lens. The anterior segment consists of the cornea, the iris and ciliary body and the trabecular meshwork.
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The Company’s principal products are ICLs used in refractive surgery and IOLs used in cataract surgery. See Note 17 to the Consolidated Financial Statements for financial information about product lines and operations in geographic areas.
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In March 2022, the FDA granted approval of the EVO and EVO+ Visian® Implantable Collamer® Lens for the correction of myopia and myopia with astigmatism. The Hyperopic ICL, which treats far-sightedness, is sold primarily in countries that require the European Union CE Mark.
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In September 2018, the FDA granted approval of our PMA Supplement for the Visian Toric ICL for the correction of myopia with astigmatism for marketing and sale in the United States.
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Since the second half of 2022, we have announced our partnerships with singer, songwriter, and actor, Joe Jonas, professional basketball player, Max Strus, as well as actress and beauty entrepreneur Peyton List, to raise awareness of the EVO ICL lens.
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In August 2019, the FDA notified us that it had determined that STAAR had provided sufficient data to support initiation of a human clinical study in the United States of the EVO/EVO+ VISIAN® Implantable Collamer® Lens for Myopia, and EVO/EVO+ VISIAN® Toric Implantable Collamer® Lens for Myopia with Astigmatism.
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We will continue to support customers of all our Other Products through the end of 2023. We do not expect to offer for sale our IOLs used in cataract surgery thereafter.
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In November 2020, we completed enrollment for the primary study analysis cohort of 300 subjects in our U.S. EVO clinical trial. In April 2021, we submitted clinical data to the FDA to support a marketing approval for our EVO family of myopia lenses. Our submission remains under interactive review with the FDA.
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We will continue to support customers of all our Other Products through the end of 2023. We do not expect to offer for sale any of our Other Products thereafter. Other Products sales also include normal recurring sales adjustments such as sales return allowances.
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This line of foldable cataract IOLs is manufactured from silicone in a three-piece design with Polyimide loop haptics attached to the optic, they are largely aspheric cataract IOLs that use optical designs that produce a clearer image than traditional spherical lenses, especially in low light.
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The ICL is the only foldable, minimally invasive posterior chamber phakic intraocular lens approved for sale in the U.S. In addition, competitors from Asia are beginning to appear in the market with their low-cost version of a posterior chamber implantable contact lens, increasing the level of competition.
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One customer, Shanghai Lansheng, our China distributor who sells into China and Hong Kong, accounted for approximately 47% of our consolidated net sales during fiscal 2021.
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In April 2020, the European Parliament postponed implementation of MDR to May 2021 due to the COVID pandemic but did not postpone the May 2024 MDR CE Marking requirement.
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The ICL is the only foldable, minimally invasive PIOL approved for sale in the U.S.
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In October 2022, the UK postponed to July 2024 the implementation of the UK Medical Device Regulations related to certification and applying of a UK Certification Mark .
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DEKRA performed an unannounced audit in December 2018, and surveillance audits in 2019. In 2020, DEKRA audited and approved our new facility in Brugg, Switzerland and completed surveillance audits of all our facilities, reconfirming our compliance to EN ISO 13485:2016 and MDSAP. In 2021, DEKRA conducted audits of our facilities and re-certified them under MDSAP and EN ISO 13485:2016.
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The Pharmaceuticals and Medical Devices Agency (PMDA), a quasi-governmental organization, performs many of the medical device review functions for MHLW. Medical devices generally must undergo thorough safety examinations and demonstrate medical efficacy before the MHLW grants shonin (premarket device approval) or ninsho (premarket certification).
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The health and safety of our employees is a top priority. We created and follow various safety policies and procedures. Also, we offer health insurance and wellness programs.
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Our most recent Sustainability Report, drafted consistent with the Sustainability Accounting Standards Board (SASB) framework of sustainability topics for medical equipment and supplies companies, is available in the Investor Resources section of our website ( www.staar.com ). We established a cross-functional climate risk committee to identify the risks presented by climate change and opportunities to reduce our environmental impact.
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IOLs in which the haptic is also a part of the optic material is called a single-piece IOL, while IOLs in which the haptics are attached to the optic is called a three-piece IOL. 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The impact of COVID-19 and these measures implemented or recommended by governmental authorities and other third parties have had a significant impact on many businesses, including ours. For example, we suspended most of our production on March 17, 2020 with the exception of continuation of critical late-staged processes.
The impact of COVID-19 and these measures implemented or 19 recommended by governmental authorities and other third parties have had a significant impact on many businesses, including ours. For example, we suspended most of our production on March 17 , 2020 with the exception of continuation of critical late-staged processes.
The 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.
The commencement and completion of clinical trials may be delayed or prevented by many factors, including, but not limited to: • an inability to reach agreement with regulatory authorities regarding the scope or extent of a proposed clinical trial; • an inability to timely identify and reach agreement on acceptable terms with prospective clinical trial sites and entities involved in the conduct of our clinical trials; 24 • failure by third-party clinical trial managers to comply with applicable regulations or protocols; • flaws in the design of the clinical trials; • slower than expected rates of patient recruitment and enrollment; • periodic amendments to clinical trial protocols to address certain variables which arise during the course of a trial; • lack of effectiveness of our products; or • unforeseen safety issues.
Our Certificate of Incorporation and Bylaws contain other provisions that could have an anti-takeover effect, including the following: • stockholders cannot act by consent; • stockholders cannot fill vacancies on our Board of Directors; • certain provisions, including those related to changing the number of directors, limiting our stockholders’ ability to fill vacancies on our Board of Directors, prohibiting stockholder action by written consent, and amending such provisions, cannot be altered, amended or repealed, and provisions inconsistent therewith cannot be adopted, without the affirmative vote of holders of at least two-thirds in voting power of our outstanding shares of common stock entitled to vote thereon; and • stockholders must give advance notice to nominate directors or propose other business.
Our Certificate of Incorporation and Bylaws contain other provisions that could have an anti-takeover effect, including the following: • stockholders cannot act by consent; • stockholders cannot fill vacancies on our Board of Directors; • certain provisions, including those related to changing the number of directors, limiting our stockholders’ ability to fill vacancies on our Board of Directors, prohibiting stockholder action by written consent, and 28 amending such provisions, cannot be altered, amended or repealed, and provisions inconsistent therewith cannot be adopted, without the affirmative vote of holders of at least two-thirds in voting power of our outstanding shares of common stock entitled to vote thereon; and • stockholders must give advance notice to nominate directors or propose other business.
Our primary competitors, including Alcon (formally Novartis), Johnson & Johnson (formerly Abbott Medical Optics, or AMO), Bausch Health Companies (formerly Valeant or Bausch & Lomb), and Carl Zeiss Meditec have much greater financial, technical, marketing and distribution resources and brand name recognition than we do and some of them have large international markets for a full suite of ophthalmic products.
Our primary competitors, including Alcon (formally Novartis), Johnson & Johnson (formerly Abbott Medical Optics, or AMO), Bausch Health Companies (formerly Valeant or Bausch & Lomb), and Carl Zeiss Meditec have much greater financial, technical, marketing and distribution resources and brand name recognition than we do and 20 some of them have large international markets for a full suite of ophthalmic products.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, and liability under laws that 21 protect the privacy of personal information and regulatory penalties, disrupt our operations and the supply of products we provide to our clients, compromise our intellectual property or other confidential business information, or damage our reputation, any of which could adversely affect our profitability, revenue and competitive position.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, and liability under laws that protect the privacy of personal information and regulatory penalties, disrupt our operations and the supply of products we provide to our clients, compromise our intellectual property or other confidential business information, or damage our reputation, any of which could adversely affect our profitability, revenue and competitive position.
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. Data corruption, cyber-based attacks or network security breaches and/or noncompliance with data protection and privacy regulations could negatively impact our operations.
If we were involved in an environmental accident or found to 21 be in substantial non-compliance with applicable environmental laws, it could harm our reputation, and we could be held liable for damages or penalized with fines. Data corruption, cyber-based attacks or network security breaches and/or noncompliance with data protection and privacy regulations could negatively impact our operations.
Any litigation or claims against or instituted by us, whether or not successful, could result in substantial costs, divert resources and the efforts of our personnel away from daily operations, harm our reputation, result in the impairment of our intellectual property rights, limit our ability to pursue future products and/or otherwise materially adversely impact our business.
Any litigation or claims against or instituted by us, whether or not successful, could result in 25 substantial costs, divert resources and the efforts of our personnel away from daily operations, harm our reputation, result in the impairment of our intellectual property rights, limit our ability to pursue future products and/or otherwise materially adversely impact our business.
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 22 to one or more of our facilities could adversely affect our ability to manufacture our products.
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.
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. 25 L aws pertaining to healthcare fraud and abuse could materially 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. L aws pertaining to healthcare fraud and abuse could materially adversely affect our business, financial condition, and results of operations.
Sales of our existing products may decline rapidly if one of our 23 competitors introduces a superior product, or if we announce a new product of our own. If we focus on research and development or technologies that do not lead to better products, more effective or advanced products could surpass our current and planned products.
Sales of our existing products may decline rapidly if one of our competitors introduces a superior product, or if we announce a new product of our own. If we focus on research and development or technologies that do not lead to better products, more effective or advanced products could surpass our current and planned products.
Even when substitute suppliers are available, the need to verify the substitute supplier’s regulatory compliance and the quality standards of the replacement material could significantly delay production and materially reduce our sales. In particular, we manufacture the proprietary collagen-containing raw material used in our ICLs.
Even when substitute suppliers are available, the need to verify 17 the substitute supplier’s regulatory compliance and the quality standards of the replacement material could significantly delay production and materially reduce our sales. In particular, we manufacture the proprietary collagen-containing raw material used in our ICLs.
We cannot ensure that our efforts will be successful and failure to achieve or maintain compliance may materially and adversely impact our business and operations. 16 We rely and depend on independent distributors in international markets .
We cannot ensure that our efforts will be successful and failure to achieve or maintain compliance may materially and adversely impact our business and operations. We rely and depend on independent distributors in international markets .
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 ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, and our attractiveness as an investment or business partner could be 23 negatively impacted.
We do not actively hedge our exposure to currency rate fluctuations. The strengthening of the U.S. dollar would likely negatively impact our results. We price some of our products in U.S. dollars, and thus changes in exchange rates can make our products more expensive in some offshore markets and reduce our sales.
We do not actively hedge our exposure to currency rate fluctuations. The continuing strengthening of the U.S. dollar would likely continue to negatively impact our results. We price some of our products in U.S. dollars, and thus changes in exchange rates can make our products more expensive in some offshore markets and reduce our sales.
We expect this decrease in sales in certain geographies, such as parts of Europe and Asia, to continue through the first half of 2022 and possibly beyond as different geographies may or may not resume pre-pandemic levels of business activities as novel COVID-19 variant strains emerge.
We expect this decrease in sales in certain geographies , such as parts of Europe and Asia , to continue through the first half of 202 3 and possibly beyond as different geographies may or may not resume pre-pandemic levels of business activities as novel COVID-19 variant strains emerge .
Other U.S. companies in the medical device and pharmaceutical field have faced criminal penalties under the FCPA for allowing their agents to deviate from appropriate practices in doing business with such individuals. 20 We could experience losses due to product liability claims.
Other U.S. companies in the medical device and pharmaceutical field have faced criminal penalties under the FCPA for allowing their employees or agents to deviate from appropriate practices in doing business with such individuals. We could experience losses due to product liability claims.
For example, it is uncertain whether physicians in countries that recognize the CE Mark will adopt the EVO Viva lens for use in presbyopic eyes, which o u r Notified Body approved for marketing and sale in July 2020 . Resources devoted to research and development may not yield new products that achieve regulatory approval or commercial success.
For example, it is uncertain whether physicians in countries that recognize the CE Mark will adopt the EVO Viva lens for use in presbyopic eyes, which our Notified Body approved for marketing and sale in July 2020. Resources devoted to research and development may not yield new products that achieve regulatory approval or commercial success.
For example, on March 11, 2020, the World Health Organization (“WHO”) characterized the Novel Coronavirus Disease 2019 (“COVID-19”) as a pandemic, resulting in governmental authorities and other third parties implementing or recommending a number of measures to contain the spread of COVID-19, including travel restrictions, shelter-in-place orders and business limitations and shutdowns.
For example, on March 11, 2020, the World Health Organization (WHO) characterized the Novel Coronavirus Disease 2019 (COVID-19) as a pandemic, resulting in governmental authorities and other third parties implementing or recommending a number of measures to contain the spread of COVID-19, including travel restrictions, shelter-in-place orders and business limitations and shutdowns.
Global physical climate changes, including unseasonable weather conditions and earthquakes, could disrupt our operations by impacting the availability and cost of 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 margin associated with certain of our products.
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.
Actual results could differ materially from those anticipated or implied in these forward-looking statements because of factors beyond our control, including the risks faced by us described below. Risks Related to Our Business We may not be able to continue our growth and profitability trajectory. In 2021 our revenue grew by 41% and we achieved $0.50 diluted earnings per share.
Actual results could differ materially from those anticipated or implied in these forward-looking statements because of factors beyond our control, including the risks faced by us described below. Risks Related to Our Business We may not be able to continue our growth and profitability trajectory. In 2022 our revenue grew by 23% and we achieved $0.78 diluted earnings per share.
In the future other types of crises, may create an environment of business uncertainty around the world, which may hinder sales and/or supplies of our products nationally and internationally. 19 The extent to which the pandemic impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that are uncertain and cannot be predicted, including the following: the duration and scope of the pandemic; the impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on consumer spending; how quickly and to what extent more customary economic and operating conditions can resume; its impact on our customers’ facilities; levels of consumer confidence; whether our COVID-19 preventative measures such as remote working arrangements, changes to manufacturing work areas, such as adherence to social distancing guidelines, and other workforce changes will impact operational efficiency or inventory levels; our ability to obtain supplies from vendors or transport products to customers; or adverse impacts to any other element of our supply chain; the impact on regulatory agencies, including the review and approval process; the impact on clinical studies; the ability of our customers to successfully navigate the impacts of the pandemic such as resuming activities and growing patient interest in our lenses; and actions governments, businesses and individuals take in response to the pandemic.
The extent to which the pandemic impacts our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that are uncertain and cannot be predicted, including the following: the duration and scope of the pandemic; the impact it has on global and regional economies and economic activity, including the duration and magnitude of its impact on consumer spending; how quickly and to what extent more customary economic and operating conditions can resume; its impact on our customers’ facilities; levels of consumer confidence; whether our COVID-19 preventative measures such as remote working arrangements, changes to manufacturing work areas, such as adherence to social distancing guidelines, and other workforce changes will impact operational efficiency or inventory levels; our ability to obtain supplies from vendors or transport products to customers; or adverse impacts to any other element of our supply chain; the impact on regulatory agencies, including the review and approval process; the impact on clinical studies; the ability of our customers to successfully navigate the impacts of the pandemic such as resuming activities and growing patient interest in our lenses; and actions governments, businesses and individuals take in response to the pandemic.
We continu e to invest in our cybersecurity program to enhance current capabilities and also implementation new capabilities in our effort to keep pace with the changing threat landscape. Also, certain of our information technology systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality.
We continue to invest in our cybersecurity program to enhance current capabilities and also implement new capabilities in our effort to keep pace with the changing threat landscape. Also, certain of our information technology systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality.
While we plan to continue sales growth and remain profitable, there can be no guarantee that we will achieve our growth and profitability plans in 2022. While we achieved profitability in the past four consecutive years, we reported losses in three of the past seven years.
While we plan to continue sales growth and remain profitable, there can be no guarantee that we will achieve our growth and profitability plans in 2023. While we achieved profitability in the past five consecutive years, we reported losses in three of the past eight years.
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 2021 our ICL sales grew 51% and orders outstripped our ability to supply.
Further, any failure by us to forecast demand for or to maintain an adequate supply of, raw material and finished product could result in an interruption in the supply of certain products and a decline in the sales of that product. For example, in 2022 our ICL sales grew 27%.
If the FDA disagrees with our determination and requires us to submit new 510(k) notifications or PMAs for modifications to our previously cleared products for which we have concluded that new clearances or approvals are unnecessary, we may 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 disagrees with our determination and requires us to submit new 510(k) notifications or PMAs for modifications to our previously cleared products for which we have concluded that new clearances or approvals are unnecessary, we may 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. 27 Regulatory agencies in other countries similarly require approval or clearance prior to our marketing or selling products in those countries.
Possible sanctions for violation of these healthcare compliance laws include fines, civil and criminal penalties, exclusion from government healthcare programs, and despite our compliance efforts, we face the risk of an enforcement activity or a finding of a violation of these laws. We have entered into a variety of agreements with healthcare professionals.
Possible sanctions for violation of these healthcare compliance laws include fines, civil and criminal penalties, exclusion from government healthcare programs, and despite our compliance efforts, we face the risk of an enforcement activity or a finding of a violation of these laws.
Our largest investor beneficially owns approximately 18% of our outstanding common stock, and our largest four investors beneficially own approximately 50% of our outstanding common stock. Two of our current seven directors were recommended by our investors.
Our largest investor beneficially owns approximately 18% of our outstanding common stock, and our largest four investors beneficially own approximately 50% of our outstanding common stock. One of our current six directors was recommended by our investors.
If we are not successful in doing so, our business and financial condition will be harmed. 26 If our products, or malfunction of our products, cause or contribute to a death or a serious injury, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions, agency enforcement actions and harm to our results.
If our products, or malfunction of our products, cause or contribute to a death or a serious injury, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions, agency enforcement actions and harm to our results.
In 2021, we generated approximately 96% of our total sales outside the U.S.
In 2022, we generated approximately 95% of our total sales outside the U.S.
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 26 the FDA or others, the FDA or other regulatory bodies may disagree with our determinations and require us to report those actions as recalls.
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.
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.
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. Furthermore, there is no assurance that clearance or approval will be granted.
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.
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.
We may consider and, as appropriate, make acquisitions of technologies, products, and businesses that we believe are complementary to our business. Acquisitions typically entail many risks and could result in difficulties in integrating the operations, personnel, technologies, and products acquired, and mitigating the risk of unknown liabilities some of which may result in significant payments or charges to earnings.
In addition, negative publicity about investigations or allegations of misconduct, even without a finding of misconduct, could harm our reputation with healthcare professionals and also with the market for our common stock.
In addition, negative publicity about investigations or allegations of misconduct, even without a finding of misconduct, could harm our reputation with healthcare professionals and also with the market for our common stock. Responding to investigations or conducting internal investigations can be costly, time-consuming, and disruptive to our business.
Further, we or our distributors have obtained regulatory approvals outside the United States for many of our products. We or our distributors may be unable to maintain regulatory qualifications, clearances or approvals in these countries or obtain qualifications, clearances, or approvals in other countries.
Further, we or our distributors have obtained regulatory approvals outside the United States for many of our products. We or our distributors may be unable to maintain regulatory qualifications, clearances or approvals in these countries or obtain qualifications, clearances, or approvals in other countries. If we are not successful in doing so, our business and financial condition will be harmed.
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.
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.
Our reliance on foreign subsidiaries and independent distributors requires vigilance in maintaining our policy against participation in corrupt activity. In many of our markets outside the U.S., doctors and hospital administrators may be deemed government officials. Despite precautions we may take, non-compliance may occur that could harm our reputation and financial results.
In many of our markets outside the U.S., doctors and hospital administrators may be deemed government officials. Despite precautions we may take, non-compliance may occur that could harm our reputation and financial results.
Our pension plans taken together are underfunded by approximately $8.8 million ($1.3 million for the Japan Plan and $7.5 million for the Swiss Plan) as of December 31, 2021.
Our pension plans taken together are underfunded by approximately $1.9 million ($1.2 million for the Japan Plan and $0.7 million for the Swiss Plan) as of December 30, 2022.
We manufacture in the U.S. and inflation has increased significantly in the U.S. during recent months, and we can expect as a result to experience increased costs in our own supply chain which may be difficult to pass along to our customers.
We manufacture in the U.S. and inflation has increased in the U.S. during recent months, and we can expect as a result to experience increased costs in our own supply chain which may be difficult to pass along to our customers. Any inability to successfully manage growth could materially and adversely affect our business, financial condition, and results of operation.
Regulatory agencies in other countries similarly require approval or clearance prior to our marketing or selling products in those countries. We rely on our distributors to obtain regulatory clearances or approvals of our products in certain countries outside of the United States.
We rely on our distributors to obtain regulatory clearances or approvals of our products in certain countries outside of the United States.
The sale of a substantial number of shares of our common stock by any or all of our largest investors or our other stockholders within a short period of time could cause our common stock price to decline, make it more difficult for us to raise funds through future offerings of our common stock or acquire other businesses using our common stock as consideration. 28 In addition, having such a concentration of ownership may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from seeking to acquire, a majority of our outstanding common stock or control of our Board of Directors, including through a proxy solicitation.
The sale of a substantial number of shares of our common stock by any or all of our largest investors or our other stockholders within a short period of time could cause our common stock price to decline, make it more difficult for us to raise funds through future offerings of our common stock or acquire other businesses using our common stock as consideration.
In addition, our employees may use social media tools and mobile technologies inappropriately, which may give rise to liability, or which could lead to the exposure of sensitive information. In either case, such uses of social media and mobile technologies could have a material adverse effect on our business, financial condition, and results of operations.
In addition, our employees may use social media tools and mobile technologies inappropriately, which may give rise to liability, or which could lead to the exposure of sensitive information.
Also, if China, which accounted for approximately 47% of our fiscal 2021 consolidated net sales, experienced a significant economic downturn, we may experience a significant reduction in sales.
Also, if China, which accounted for approximately 52% of our fiscal 2022 consolidated net sales, experienced a significant economic downturn or disruption, continued restrictive COVID mitigation efforts, social or political unrest, we may experience a significant reduction in sales.
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.
Because the ICL is our best selling and highest gross margin product, restricted growth or a decline in its sales could materially harm our business.
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. Because the ICL is our best selling and highest gross margin product, restricted growth or a decline in its sales could materially harm our business.
We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (FCPA). Any failure to comply with these laws, even if inadvertent, could result in significant penalties or otherwise harm our reputation, business, financial condition and results of operations.
Any failure to comply with these laws, even if inadvertent, could result in significant penalties or otherwise harm our reputation, business, financial condition and results of operations.
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. 17 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 ).
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.
We manufacture most of our products at a single facility in Monrovia, California. All or a portion of the Monrovia facility could suffer catastrophic loss due to fire, flood, earthquake, terrorism or other natural or man-made disasters, including manufacturing challenges such as equipment failure.
All or a portion of the Monrovia facility could suffer catastrophic loss due to fire, flood, earthquake, terrorism or other natural or man-made disasters, including manufacturing challenges such as equipment failure. Developing additional manufacturing sites may require significant expense for personnel and equipment and a long period to obtain regulatory approvals.
Failure to receive necessary approvals in foreign jurisdictions on a timely basis, or at all, could harm our business and operating results.
Failure to receive necessary approvals in foreign jurisdictions on a timely basis, or at all, could harm our business and operating results. In addition, regulations and requirements for approvals can vary in each international country, which can significantly increase the costs to sell our products in these international countries.
These and other risks may have a material adverse effect on our operations in any particular country and on our business, financial condition and results of operations as a whole. We may not be able to fully use our recorded tax loss carryforwards.
These and other risks may have a material adverse effect on our operations in any particular country and on our business, financial condition and results of operations as a whole. Changes in our effective tax rate or additional tax liabilities could adversely impact our net income.
We expect to continue to devote resources and attention to our quality systems and compliance and other regulatory requirements as part of the ordinary course of business.
We plan to remain in compliance with regulatory requirements established by applicable global regulatory agencies, however, there can be no guaranty that we will do so. We expect to continue to devote resources and attention to our quality systems and compliance and other regulatory requirements as part of the ordinary course of business.
For example, if Shanghai Lansheng, which accounted for approximately 47% of our fiscal 2021 consolidated net sales, ceased to serve as our distributor, or significantly underperformed our expectations, we may experience a substantial reduction in sales. 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 example, if Shanghai Lansheng, which accounted for approximately 52% of our fiscal 2022 consolidated net sales, ceased to serve as our distributor, or significantly underperformed our expectations, we may experience a substantial reduction in sales. We rely on sales in China for over 50% of our 2022 net sales.
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. Obtaining clearance or approval can be a long and expensive process, and clearance or approval is never certain.
Complying with government regulation substantially increases the cost of developing, manufacturing and selling our products. Competing in the ophthalmic products industry requires us to introduce new or improved products and processes continuously, and to submit these to the FDA and other regulatory bodies for clearance or approval.
In addition, competitors from Asia are beginning to appear in some markets with their low-cost version of an implantable contact lens, which competes with our ICL. With our increased commercial success with the ICL, additional companies may seek to enter the refractive phakic intraocular lens market. Non-compliance with anti-corruption laws could lead to penalties or harm our reputation .
With our increased commercial success with the ICL, additional companies may seek to enter the refractive phakic intraocular lens market. Non-compliance with anti-corruption laws could lead to penalties or harm our reputation . We are subject to anti-corruption laws in the jurisdictions in which we operate, including the U.S. Foreign Corrupt Practices Act (FCPA).
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.
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.
We plan to remain in compliance with regulatory requirements established by applicable global regulatory agencies, however, there can be no guaranty that we will do so. If we cannot maintain compliance with a particular jurisdiction’s regulatory requirements, it could adversely impact our financial performance/have a material adverse effect on our ongoing business and operations.
Our profitability is challenged by the competitive nature of our industry and the other risks to our business detailed herein. 16 Compliance issues may adversely impact our operations. If we cannot maintain compliance with a particular jurisdiction’s regulatory requirements, it could adversely impact our financial performance/have a material adverse effect on our ongoing business and operations.
Activities outside the U.S. accounted for approximately 96% of our total sales during 2021. Foreign currency fluctuations could result in volatility of our revenue.
Because our business is global our sales and profits may fluctuate or decline in response to changes in foreign currency exchange rates and/or other international risks (including tariffs). Activities outside the U.S. accounted for approximately 95% of our total sales during 2022. Foreign currency fluctuations could result in volatility of our revenue.
Their greater resources for research, development and marketing, and their greater capacity to offer comprehensive products and equipment to providers, makes for intense competition. Over the past several years, we have lost market share in IOL sales to some of our competitors.
Their greater resources for research, development and marketing, and their greater capacity to offer comprehensive products and equipment to providers, makes for intense competition. In addition, competitors from Asia are beginning to appear in some markets with their low-cost version of an implantable contact lens, which competes with our ICL.
Acquisitions of technologies, products, and businesses could disrupt our operations, involve increased expenses and present risks not contemplated at the time of the transactions. We may consider and, as appropriate, make acquisitions of technologies, products, and businesses that we believe are complementary to our business.
In either case, such uses of social media and mobile technologies could have a material adverse effect on our business, financial condition, and results of operations. 22 Acquisitions of technologies, products, and businesses could disrupt our operations, involve increased expenses and present risks not contemplated at the time of the transactions.
They can defer the choice to have refractive surgery if they lack the disposable income to pay for it or do not feel their income is secure. 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.
Patients must pay for the procedure, frequently through installment financing arrangements with third parties. They can defer the choice to have refractive surgery if they lack the disposable income to pay for it or do not feel their income is secure.
Approximately ninety-two percent (92%) of our revenue was derived from ICL lenses used in refractive procedures. Refractive surgery is an elective procedure generally not covered by health insurance. Patients must pay for the procedure, frequently through installment financing arrangements with third parties.
Unfavorable economic conditions or negative publicity concerning complications of laser eye surgery, or medical devices in general, could hurt sales of our refractive products. Approximately 95% of our revenue was derived from ICL lenses used in refractive procedures. Refractive surgery is an elective procedure generally not covered by health insurance.
Responding to investigations or conducting internal investigations can be costly, time-consuming, and disruptive to our business. 27 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.
Risks Related to Ownership of Our Common Stock The market price of our common stock is likely to be volatile. The market price for our common stock has fluctuated widely. The closing price of our common stock ranged from $46.82 to $111.58 per share during the year ended December 30, 2022.
Removed
Our profitability is challenged by the competitive nature of our industry and the other risks to our business detailed herein. Compliance issues may adversely impact our operations. Quality system and other deficiencies observed by the FDA at certain of our facilities in the past resulted in delays in product approvals.
Added
China accounted for approximately 52% of our fiscal 2022 consolidated net sales.
Removed
We have accumulated approximately $194.7 million of U.S. federal tax net operating loss carryforwards as of December 31, 2021, which can be used to offset taxable income in future years if our U.S. operations become profitable. If unused, the pre-2018 tax loss carryforwards will begin to expire between 2022 and 2037.
Added
If trade relations with the U.S. were to result in trade restrictions, if COVID-mitigation regulations implemented by the Chinese government, if social or political unrest were to disrupt business in China, or if other events in China significantly reduced or disrupted business activities in China, that may materially and adversely harm our business.
Removed
The enacted legislation commonly known as the Tax Cuts and Jobs Act of 2017, or the Tax Act, subjects a U.S. shareholder to tax on Global Intangible Low Tax Income (GILTI) earned by certain foreign subsidiaries.
Added
We are subject to income taxes as well as non-income-based taxes in Switzerland, the U.S. and various other jurisdictions in which we operate.
Removed
At this time, our U.S. operations are not profitable, however, recognizing GILTI may offset federal net operating loss carryforwards, as it did for fiscal years 2018 and 2019. Our ability to utilize any future net operating losses may also be limited by the Tax Act.
Added
The laws and regulations in these jurisdictions are inherently complex and we will be obliged to make judgments and interpretations about the application of these laws and regulations to us, including our subsidiaries and our operations and businesses.
Removed
Under the Tax Act, the amount of post-2017 net operating losses we are permitted to deduct in any taxable year is limited to 80% of our taxable income in such year. The unused net operating losses, pre-2018 tax year can still offset 100% of taxable income.
Added
Those laws and regulations include those related to any restructuring of intercompany operations, holdings or financings, the valuation of intercompany services; cross-border payments between affiliated companies; and the related effects on income tax, VAT and transfer tax.
Removed
In addition, the Tax Act generally eliminates the ability to carry back any net operating loss to prior taxable years, while allowing post-2017 unused net operating losses to be carried forward indefinitely.
Added
Further, our tax liabilities could be adversely affected by numerous other factors, including income before taxes being lower than anticipated in countries with lower statutory tax rates and higher than anticipated in countries with higher 18 statutory tax rates, changes in the valuation of deferred income tax assets and liabilities, and changes in tax laws and regulations.
Removed
Due to these changes under the Tax Act, we may not be able to realize a tax benefit from the use of our net operating losses, whether or not we generate profits in future years.
Added
Although we believe our tax estimates are reasonable, any changes in our judgments and interpretation of tax laws or any material differences as a result of any audits could result in unfavorable tax adjustments that may have an adverse effect on our overall tax liability. Changes in tax laws could result in additional tax liabilities.
Removed
Moreover, if we were to experience a significant change in ownership, Internal Revenue Code Section 382 may restrict the future utilization of our tax loss carryforwards even if our U.S. operations generate significant profits. 18 We are vulnerable to any loss of use of our principal manufacturing facility.
Added
Changes in tax laws can and do occur. For example, in 2017, the U.S. government enacted the Tax Cuts and Jobs Act, which is complex and continues to be further clarified with supplemental guidance. Changes to tax laws may require us to make significant judgment in determining the appropriate provision and related accruals for these taxes.
Removed
Developing additional manufacturing sites may require significant expense for personnel and equipment and a long period to obtain regulatory approvals. Our California and Japanese facilities are in areas where earthquakes could cause catastrophic loss.
Added
Thus, as a result, such changes could result in substantially higher taxes and a significant adverse effect on our results of operations, financial conditions and liquidity.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The data assumes $100 was invested on December 30, 2016 in STAAR common stock and in each of the composite indices, and that dividends (if any) were reinvested. We have never paid dividends on our common stock and have no present plans to do so. 30 Prepared by Zacks Investment Research, Inc. Used with Permission. All rights reserved.
The data assumes $100 was invested on December 29 , 201 7 in STAAR common stock and in each of the composite indices, and that dividends (if any) were reinvested. We have never paid dividends on our common stock and have no present plans to do so. Prepared by Zacks Investment Research, Inc. Used with Permission. All rights reserved.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Market (NASDAQ) under the symbol “STAA.” Holders As of February 18, 2022, there were approximately 288 record holders of our Common Stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Market (NASDAQ) under the symbol “STAA.” Holders As of February 17, 2023, there were approximately 281 record holders of our Common Stock.
The declaration and payment of any such dividends in the future depends upon the Company’s earnings, financial condition, capital needs, and other factors deemed relevant by the Board of Directors and may be restricted by future agreements with lenders. 29 Stock Performance Graph This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference into any filing of STAAR Surgical Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Stock Performance Graph This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference into any filing of STAAR Surgical Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
The CRSP index has been included with data through 2020; • a peer group we have selected based on data and advice provided by the Radford Group, consisting of the following 16 companies: Angio Dynamics (ANGO) Inogen (INGN) Anika Therapeutics (ANIK) LeMaitre Vascular (LMAT) AtriCure (ATRC) Merit Medical Systems (MMSI) Atrion (ATRI) Nevro (NVRO) AxoGen (AXGN) Penumbra (PEN) Cardiovascular Systems (CSII) Surmodics (SRDX) CryoLife (CRY) Tactile Systems Technology (TCMD) Glaukos (GKOS) Tandem Diabetes Care (TNDM) Returns in the graph below reflect historical results; we do not intend to suggest they predict future performance.
The following graph shows a comparison from December 29, 2017 to December 30, 2022 of the total performance of the following: • STAAR Surgical Company; • The NASDAQ Composite Index; • a peer group we have selected based on data and advice provided by the Radford Group, consisting of the following 16 companies: Angio Dynamics (ANGO) Inogen (INGN) Anika Therapeutics (ANIK) LeMaitre Vascular (LMAT) AtriCure (ATRC) Merit Medical Systems (MMSI) Atrion (ATRI) Nevro (NVRO) AxoGen (AXGN) Penumbra (PEN) Cardiovascular Systems (CSII) Surmodics (SRDX) CryoLife (CRY) Tactile Systems Technology (TCMD) Glaukos (GKOS) Tandem Diabetes Care (TNDM) In 2022, we revised our peer group to a standard major market and industry index peer group to better reflect our current company profile and market capitalization.
Removed
The following graph shows a comparison from December 30, 2016 to December 31, 2021 of the total performance of the following: • STAAR Surgical Company; • The NASDAQ Composite Index replaces the CRSP NASDAQ Stock Market (US and Foreign Companies) Index in this analysis and going forward, as the CRSP Index data is no longer accessible.
Added
The declaration and payment of any such dividends in the future depends upon the Company’s earnings, financial condition, capital needs, and other factors deemed relevant by the Board of Directors and may be restricted by future agreements with lenders.
Removed
Total Returns Index for Fiscal Years: 2016 2017 2018 2019 2020 2021 STAAR Surgical Company 100.00 142.86 288.12 316.87 730.15 841.49 The Nasdaq Stock Market (US and Foreign Companies) 100.00 129.37 124.60 171.38 244.69 — The Nasdaq Composite Index 100.00 129.64 124.98 173.12 249.51 304.85 Peer Group 100.00 128.58 149.79 174.19 211.96 226.23 Notes: A.
Added
The new peer group is the S&P 400 Health Care Index. The chart below shows our performance compared to both the prior peer group and the new peer group. 30 Returns in the graph below reflect historical results; we do not intend to suggest they predict future performance.
Removed
The lines represent monthly index levels derived from compounded daily returns that include all dividends. B. These indexes are reweighted daily, using the market capitalization from the previous trading day. C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. D.
Added
Total Returns Index for Fiscal Years: 2017 2018 2019 2020 2021 2022 STAAR Surgical Company 100.00 201.68 221.81 511.10 589.03 313.12 The Nasdaq Composite Index 100.00 96.41 133.54 192.47 235.15 158.65 Old Peer Group 100.00 116.50 135.49 164.85 175.91 116.28 New Peer Group - S&P 400 Health Care Index 100.00 104.58 129.19 170.22 189.55 151.53 ITEM 6. [Reserved] 31
Removed
The index level for all series was set to $100.00 on December 30, 2016. ITEM 6. [Reserved]

Item 7. Management's Discussion & Analysis

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

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Sales Return Reserves We provide allowances for sales returns such that returns are matched against the sales from which they originated. While such allowances have historically been within our expectations, we cannot guarantee that we will continue to experience the same return rates that we have in the past.
Sales Return Reserves We provide allowances for sales returns such that returns are matched against the sales from which they originated. While such allowances have historically been within our expectations, we cannot guarantee that we will 38 continue to experience the same return rates that we have in the past.
Other product sales, including cataract IOLs for 2021 decreased 20% from 2020, mainly due to product yield issues requiring rework related to preloaded injector parts manufactured on our behalf by a third-party manufacturer then sold by us to a third-party manufacturer for product they sell to their customers, as well as decreased cataract IOL sales.
Other product sales in 2021 decreased 20% from 2020, mainly due to product yield issues requiring rework related to preloaded injector parts manufactured on our behalf by a third-party manufacturer then sold by us to a third-party manufacturer for product they sell to their customers, as well as decreased cataract IOL sales.
In particular, these include statements about any of the following: any guidance as to earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, product mix, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally), the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or 31 government approval of a new or improved products (including the EVO family of lenses in the U.S. and the EVO Viva family of lenses for presbyopia internationally ); 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 20 2 2 business plans; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.
In particular, these include statements about any of the following: any projections of or guidance as to earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, product mix, capital expense or any other financial items; the expected impact of the COVID-19 pandemic and related public health measures (including but not limited to their impact on sales, operations or clinical trials globally), the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of a new or improved products; commercialization of new or improved products; future economic conditions or size of market opportunities; expected costs of operations; statements of belief, including as to achieving 2023 business plans; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.
Research and development expense consist primarily of compensation and related costs for personnel responsible for the research and development of new and existing products, the regulatory and clinical activities required to acquire and maintain product approvals globally and medical affairs expenses. These costs are expensed as incurred.
Research and development expense consist primarily of compensation and related costs for personnel responsible for the research and development of new and existing products, the regulatory and clinical activities required to acquire and maintain product approvals globally and medical affairs expenses.
Gross profit margin increased to 77.5% of revenue for 2021 compared to 72.4% of revenue for 2020, due to higher mix of ICL sales, geographic sales mix, a decreased mix of injector part sales which carry a lower margin and the non-recurring expenses related to the 2020 COVID-19 manufacturing pause, partially offset by increased period costs associated with manufacturing expansion projects.
Gross profit margin increased to 77.5% of revenue for 2021 compared to 72.4% of revenue for 2020, due to higher mix of ICL sales, geographic sales mix, a decreased mix of injector part sales which carry a lower margin, partially offset by increased period costs associated with manufacturing expansion projects.
The sales increase was driven by the APAC region, which grew 51% with unit growth of 47%, primarily due to sales growth in India up 123%, Japan up 56%, China up 50%, other APAC Distributors up 50% and Korea up 36%.
Total ICL sales for 2021 increased 51% from 2020, with unit growth up 48%. The sales increase was driven by the APAC region, which grew 51% with unit growth of 47%, primarily due to sales growth in India up 123%, Japan up 56%, China up 50%, other APAC Distributors up 50% and Korea up 36%.
We consider all available information in our assessments of the adequacy of the reserves for uncollectible accounts. Stock-Based Compensation We account for the issuance of stock awards by estimating the fair value of awards issued using the Black-Scholes pricing model.
We consider all available information in our quarterly assessments of the adequacy of the allowance for sales returns. Stock-Based Compensation We account for the issuance of stock awards by estimating the fair value of awards issued using the Black-Scholes pricing model.
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.
Inflation Management believes inflation has not had a significant impact on our net sales and revenues and on income from continuing operations during the past three years. Recent Accounting Pronouncements None.
Other income, net generally relates to interest income earned on cash and cash equivalents, interest expense on notes payable and finance lease obligations, gains or losses on foreign currency transactions, and royalty income.
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.
The shelf registration statement became effective on February 22, 2021 and expires on February 22, 2024. Among the purposes for which STAAR could use the proceeds of securities sold in the future under the shelf registration statement are working capital, capital expenditures, expansion of sales and marketing, and continuing research and development.
Among the purposes for which STAAR could use the proceeds of securities sold in the future under the shelf registration statement are working capital, capital expenditures, expansion of sales and marketing, and continuing research and development.
Research and Development Expense The following table presents our research and development expense for the fiscal years presented (dollars in thousands): Percentage Change 2021 2020 2019 2021 vs. 2020 2020 vs. 2019 Research and development expense $ 33,862 $ 31,918 $ 25,298 6.1 % 26.2 % Percentage of sales 14.7 % 19.6 % 16.8 % Research and development expenses for 2021 increased 6.1% from 2020 due to increased bonus and stock-based compensation expenses and salary-related and payroll tax expenses, partially offset by decreased clinical expenses associated with our U.S.
Research and Development Expense The following table presents our research and development expense for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Research and development expense $ 35,983 $ 33,862 $ 31,918 6.3 % 6.1 % Percentage of sales 12.7 % 14.7 % 19.6 % Research and development expenses for 2022 increased 6.3% from 2021 due to increased salary-related and payroll tax expenses and bonus and stock-based compensation expenses, partially offset by decreased clinical expenses associated with our clinical trials.
In addition, we use our incremental borrowing rate as the discount rate to record the lease ROU asset. 39 Impairment of Long-Lived Assets Intangible assets (excluding goodwill) and other long-lived assets (including property, plant and equipment and lease ROU assets) are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.
Impairment of Long-Lived Assets Intangible assets (excluding goodwill) and other long-lived assets (including property, plant and equipment and lease ROU assets) are reviewed for impairment whenever events such as product discontinuance, plant closures, product dispositions or other changes in circumstances indicate that the carrying amount may not be recoverable.
Percentage of Net Sales 2021 2020 2019 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 22.5 % 27.6 % 25.5 % Gross profit 77.5 % 72.4 % 74.5 % General and administrative 19.1 % 20.7 % 19.5 % Selling and marketing 29.2 % 28.0 % 30.3 % Research and development 14.7 % 19.6 % 16.8 % Total selling, general and administrative 63.0 % 68.3 % 66.6 % Operating income 14.5 % 4.1 % 7.9 % Total other income (expense), net (0.9 )% 0.9 % 0.8 % Income before income taxes 13.6 % 5.0 % 8.7 % Provision (benefit) for income taxes 3.0 % 1.4 % (0.7 )% Net income 10.6 % 3.6 % 9.4 % Net Sales The following table presents our net sales, by product for the fiscal years presented (dollars in thousands): 2021 2020 2019 % of Total Sales % of Total Sales % of Total Sales ICLs 92.4 % $ 212,905 86.5 % $ 141,407 86.1 % $ 129,322 Other product sales Cataract IOLs 5.4 % 12,519 8.3 % 13,574 10.5 % 15,689 Other surgical products 2.2 % 5,048 5.2 % 8,479 3.4 % 5,174 Total other product sales 7.6 % 17,567 13.5 % 22,053 13.9 % 20,863 Net sales 100.0 % $ 230,472 100.0 % $ 163,460 100.0 % $ 150,185 Net sales for 2021 increased 41% from 2020.
Percentage of Net Sales 2022 2021 2020 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 21.5 % 22.5 % 27.6 % Gross profit 78.5 % 77.5 % 72.4 % General and administrative 19.2 % 19.1 % 20.7 % Selling and marketing 31.2 % 29.2 % 28.0 % Research and development 12.7 % 14.7 % 19.6 % Total selling, general and administrative 63.1 % 63.0 % 68.3 % Operating income 15.4 % 14.5 % 4.1 % Total other income (expense), net 0.6 % (0.9 )% 0.9 % Income before income taxes 16.0 % 13.6 % 5.0 % Provision for income taxes 2.4 % 3.0 % 1.4 % Net income 13.6 % 10.6 % 3.6 % Net Sales The following table presents our net sales, by product for the fiscal years presented (dollars in thousands): 2022 2021 2020 % of Total Sales % of Total Sales % of Total Sales ICLs 94.8 % $ 269,712 92.4 % $ 212,905 86.5 % $ 141,407 Other product sales Cataract IOLs 3.4 % 9,638 5.4 % 12,519 8.3 % 13,574 Other surgical products 1.8 % 5,041 2.2 % 5,048 5.2 % 8,479 Total other product sales 5.2 % 14,679 7.6 % 17,567 13.5 % 22,053 Net sales 100.0 % $ 284,391 100.0 % $ 230,472 100.0 % $ 163,460 Net sales for 2022 increased 23% from 2021.
Gross Profit The following table presents our gross profit and gross profit margin for the fiscal years presented (dollars in thousands): Percentage Change 2021 2020 2019 2021 vs. 2020 2020 vs. 2019 Gross profit $ 178,637 $ 118,362 $ 111,954 50.9 % 5.7 % Gross margin 77.5 % 72.4 % 74.5 % Gross profit for 2021 increased 50.9% from 2020.
Gross Profit The following table presents our gross profit and gross profit margin for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Gross profit $ 223,383 $ 178,637 $ 118,362 25.0 % 50.9 % Gross margin 78.5 % 77.5 % 72.4 % Gross profit for 2022 increased 25.0% from 2021.
For 2019, net cash provided by financing activities consisted of $3.5 million of proceeds from the exercise of stock options, offset by a $2.0 million repayment on the Japan line of credit and $1.3 million repayment of finance lease obligations. Accounts receivable, net was $43.5 million and $35.2 million at December 31, 2021 and January 1, 2021, respectively.
For 2020, net cash provided by financing activities consisted of $20.6 million of proceeds from the exercise of stock options, partially offset by $0.6 million repayment of finance lease obligations and a $0.5 million repayment on the Japan line of credit. Accounts receivable, net was $62.4 million and $43.5 million at December 30, 2022 and December 31, 2021, respectively.
Selling and Marketing Expense The following table presents our marketing and selling expense for the fiscal years presented (dollars in thousands): Percentage Change 2021 2020 2019 2021 vs. 2020 2020 vs. 2019 Selling and marketing expenses $ 67,294 $ 45,764 $ 45,491 47.0 % 0.6 % Percentage of sales 29.2 % 28.0 % 30.3 % Selling and marketing expenses for 2021 increased 47.0% from 2020, due to increased advertising and promotional activities, salary-related and payroll tax expenses, trade shows expense, commission expense, and bonus and stock-based compensation expenses.
Selling and Marketing Expense The following table presents our marketing and selling expense for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Selling and marketing expenses $ 88,856 $ 67,294 $ 45,764 32.0 % 47.0 % Percentage of sales 31.2 % 29.2 % 28.0 % Selling and marketing expenses for 2022 increased 32.0% from 2021, due to increased advertising and promotional activities, trade shows and sales meetings expense, travel expenses and bonus and stock-based compensation expenses.
Other Income (Expense), Net The following table presents our other income, net for the fiscal years presented (dollars in thousands): Percentage Change 2021 2020 2019 2021 vs. 2020 2020 vs. 2019 Other income (expense), net $ (2,035 ) $ 1,498 $ 1,174 —* 27.6 % Percentage of sales -0.9 % 0.9 % 0.8 % * Denotes change is greater than + 100%.
These costs are expensed as incurred. 35 Other Income (Expense) , Net The following table presents our other income (expense), net for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Other income (expense), net $ 1,750 $ (2,035 ) $ 1,498 —* —* Percentage of sales 0.6 % (0.9 )% 0.9 % * Denotes change is greater than + 100%.
“Business,” for a discussion of: • Operations • Principal Products • Distribution and Customers • Competition • Regulatory Matters • Research and Development Strategic Imperatives for 2022 For 2022 we intend to achieve the following strategic imperatives: • Position EVO Implantable Lenses as a Special and Transformational Pathway to Visual Freedom ; • Innovate and Develop a Pipeline of Next Generation Premium Collamer-Based Intraocular Lenses; • Support the Transformation of the Refractive Surgery Paradigm to Lens-Based through Clinical Validation and Medical Affairs Excellence; • Achieve our corporate imperatives in alignment with our Environmental, Social and Governance commitments; • Continue our Focus on and Commitment to STAAR’s Culture of Quality ; and • Deliver Shareholder Value. 32 Finally, we will continue to evaluate opportunities to acquire new product lines, technologies, and companies.
“Business,” for a discussion of: • Operations • Principal Products • Distribution and Customers • Competition • Regulatory Matters • Research and Development 32 Strategic Imperatives for 2023 For 2023 we will focus on the following strategic imperatives: • Position EVO Implantable Lenses as the Most Desirable Pathway to Visual Freedom ; • Innovate and Develop a Pipeline of Next Generation Premium Collamer-Based Intraocular Lenses; • Accelerate the Transition in Refractive Surgery to Lens-Based through Clinical Validation and Medical Affairs Excellence; • Achieve our corporate imperatives in alignment with our Environmental, Social and Governance commitments; • Continue our Focus on and Commitment to STAAR’s Culture of Quality ; and • Delight Shareholders.
The sales increase was driven by the APAC region, which grew 15 % with unit growth of 17 %, primarily due to sales growth in Japan up 56 %, other APAC Distributors up 38%, Korea up 17 % and China up 11 %.
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 increase in net sales was due to increased ICL sales of $71.5 million, partially offset by a decrease in other product sales of $4.5 million. Changes in foreign currency favorably impacted net sales by $0.5 million. Net sales for 2020 increased 9% from 2019.
The increase in net sales was due to increase d ICL sales of $ 71.5 million , partially offset by a decrease in other product sales of $ 4.5 million. Changes in foreign currency favorably impacted net sales by $ 0 . 5 million. Total ICL sales for 2022 increased 27% from 2021, with unit growth up 33%.
A summary of cash flows for the fiscal years presented (dollars in thousands): 2021 2020 2019 Cash flows from: Operating activities $ 43,962 $ 20,951 $ 25,795 Investing activities (13,645 ) (8,404 ) (10,178 ) Financing activities 17,793 19,571 149 Effect of exchange rate changes (857 ) 367 203 Net increase in cash and cash equivalents 47,253 32,485 15,969 Cash and cash equivalents, at beginning of year 152,453 119,968 103,999 Cash and cash equivalents, at end of year $ 199,706 $ 152,453 $ 119,968 For 2021, net cash provided by operating activities consisted of $24.5 million in net income and $21.9 million in non-cash items, offset by $2.4 million in working-capital changes.
A summary of cash flows for the fiscal years presented (dollars in thousands): 2022 2021 2020 Cash flows from: Operating activities $ 35,715 $ 43,962 $ 20,951 Investing activities (156,376 ) (13,645 ) (8,404 ) Financing activities 8,297 17,793 19,571 Effect of exchange rate changes (862 ) (857 ) 367 Net increase (decrease) in cash and cash equivalents (113,226 ) 47,253 32,485 Cash and cash equivalents, at beginning of year 199,706 152,453 119,968 Cash and cash equivalents, at end of year $ 86,480 $ 199,706 $ 152,453 37 For 2022, net cash provided by operating activities consisted of $38.8 million in net income and $25.8 million in non-cash items, offset by $28.9 million in working-capital changes.
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.
For example, COVID-19 impacted certain of our Chinese customers and, in the U.S., STAAR’s manufacturing operations. Results of Operations The following table sets forth the percentage of total sales represented by certain items reflected in the Company’s Consolidated Statement of Income for the period indicated.
Changes in foreign currency favorably impacted other product sales by $0.5 million. Other product sales represented 13.5% of our total sales for fiscal year 2020.
Changes in foreign currency unfavorably impacted other product sales by $0.3 million. Other product sales represented 7.6% of our total sales for fiscal year 2021.
For leases that increase using an inflation rate indicator, we use the inflation rate at the time the lease was entered into for the length of the lease term.
For leases that increase using an inflation rate indicator, we use the inflation rate at the time the lease was entered into for the length of the lease term. In addition, we use our incremental borrowing rate as the discount rate to record the lease ROU asset.
The table below summarizes the year over year changes in other income, net (in thousands): 35 Favorable (Unfavorable) 2021 vs. 2020 2020 vs. 2019 Interest income (expense), net $ (276 ) $ (750 ) Foreign exchange (3,828 ) 1,381 Royalty income 575 (111 ) Other (4 ) (196 ) Net change in other income (expense), net $ (3,533 ) $ 324 Provision (Benefit) for Income Taxes The following table presents our provision (benefit) for income taxes for the fiscal years presented (in thousands): Percentage Change 2021 2020 2019 2021 vs. 2020 2020 vs. 2019 Provision (benefit) for income taxes $ 6,803 $ 2,354 $ (1,022 ) —* —* * Denotes change is greater than + 100%.
The table below summarizes the year over year changes in other income (expense), net (in thousands): Favorable (Unfavorable) 2022 vs. 2021 2021 vs. 2020 Interest income (expense), net $ 2,486 $ (276 ) Foreign exchange 1,257 (3,828 ) Royalty income (211 ) 575 Other 253 (4 ) Net change in other income (expense), net $ 3,785 $ (3,533 ) Provision for Income Taxes The following table presents our provision for income taxes for the fiscal years presented (in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Provision for income taxes $ 6,797 $ 6,803 $ 2,354 (0.1 )% —* Effective tax rate 14.9 % 21.7 % 28.5 % * Denotes change is greater than + 100%.
For 2020, net cash provided by operating activities consisted of $17.8 million in non-cash items and $5.9 million in net income, offset by $2.7 million in working-capital changes. For 2019, net cash provided by operating activities consisted of $14.0 million in net income and $13.0 million in non-cash items, offset by $1.2 million in working-capital changes.
For 2020, net cash provided by operating activities consisted of $17.8 million in non-cash items and $5.9 million in net income, offset by $2.7 million in working-capital changes For 2022 we decided to invest our cash in slightly higher yielding securities.
The decrease in DOH is due to increased sales of ICL products resulting in more frequent inventory turnover. 37 Shelf Registration On May 6, 2020, STAAR filed a universal shelf registration statement with the SEC covering the future public offering and sale of up to $200 million in equity or debt securities or any combination of such securities.
Shelf Registration On May 6, 2020, STAAR filed a universal shelf registration statement with the SEC covering the future public offering and sale of up to $200 million in equity or debt securities or any combination of such securities. The shelf registration statement became effective on February 22, 2021 and expires on February 22, 2024.
We continue to monitor the commercial and operational impact of new variants of COVID-19 in our markets, which remains uncertain at this time and may adversely affect our financial results. For example, COVID-19 impacted certain of our European customers and, in the U.S., STAAR’s manufacturing operations.
Finally, we will continue to evaluate opportunities to acquire new product lines, technologies, and companies. We continue to monitor the commercial and operational impact of new variants of COVID-19 in our markets, which remains uncertain at this time and may adversely affect our financial results.
If STAAR seeks financing under the shelf registration statement in the future, we cannot assure that such financing will be available on favorable terms, if at all. Credit Facilities, Lease Line of Credit, Contractual Obligations, and Commitments Credit Facilities Refer to Note 8 to the Consolidated Financial Statements.
If STAAR seeks financing under the shelf registration statement in the future, we cannot assure that such financing will be available on favorable terms, if at all. Critical Accounting Estimates Our accounting policies are more fully described in Note 1 of the Consolidated Financial Statements.
General and Administrative Expense The following table presents our general and administrative expense for the fiscal years presented (dollars in thousands): Percentage Change 2021 2020 2019 2021 vs. 2020 2020 vs. 2019 General and administrative expense $ 44,142 $ 33,911 $ 29,313 30.2 % 15.7 % Percentage of sales 19.1 % 20.7 % 19.5 % General and administrative expenses for 2021 increased 30.2% from 2020, due to increased bonus and stock-based compensation expenses, salary-related and payroll tax expenses, outside services, facilities costs and corporate insurance. 34 General and administrative expenses for 2020 increased 15.7% from 2019, due to increased salary-related and payroll expenses, stock-based compensation expenses, tax consulting, corporate insurance and facility costs, slightly offset by decreased travel expenses.
Also contributing to the increase in gross profit margin for 2021, was $1.2 million in non-recurring expenses incurred related to the COVID-19 manufacturing pause from March 17 through April 27, 2020. 34 General and Administrative Expense The following table presents our general and administrative expense for the fiscal years presented (dollars in thousands): Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 General and administrative expense $ 54,742 $ 44,142 $ 33,911 24.0 % 30.2 % Percentage of sales 19.2 % 19.1 % 20.7 % General and administrative expenses for 2022 increased 24.0% from 2021, due to increased facilities costs, bonus and stock-based compensation expenses, outside services, and salary-related and payroll tax expenses.
EVO clinical trial. Research and development expenses for 2020 increased 26.2% from 2019 primarily due to increased clinical expenses associated with our EVO clinical trial in the U.S., and increased salary-related and payroll tax expenses.
Research and development expenses for 2021 increased 6.1% from 2020 due to increased bonus and stock-based compensation expenses and salary-related and payroll tax expenses, partially offset by decreased clinical expenses associated with our U.S. EVO clinical trial.
Selling and marketing expenses for 2020 increased 0.6% from 2019, due to increased advertising and promotional activities and salary-related and payroll expenses, offset by decreased trade shows and travel expenses.
Selling and marketing expenses for 2021 increased 47.0% from 2020, due to increased advertising and promotional activities, salary-related and payroll tax expenses, trade shows expense, commission expense, and bonus and stock-based compensation expenses.
A reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in Note 10 of Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 36 Liquidity and Capital Resources We believe that current cash, cash equivalents and future cash flow from operating activities will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the financial statements included in this Annual Report.
During 2022, 2021 and 2020, there were no unrecognized benefits related to uncertain tax positions taken by us. 36 Liquidity and Capital Resources We believe that current cash, cash equivalents, investments available for sale and future cash flow from operating activities will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the financial statements included in this Annual Report.
The increase in net sales was due to increased ICL sales of $12.1 million and in other product sales of $1.2 million. Changes in foreign currency favorably impacted net sales by $1.5 million. Total ICL sales for 2021 increased 51% from 2020, with unit growth up 48%.
The increase in net sales was due to increased ICL sales of $56.8 million, partially offset by a decrease in other product sales of $2.9 million. Changes in foreign currency unfavorably impacted net sales by $12.9 million. 33 Net sales for 2021 increased 41 % from 2020 .
The Europe, Middle East, Africa and Latin America region sales increased 46% with unit increase of 48%, due to sales growth in the Middle East and North Africa up 81%, Latin America up 68%, United Kingdom up 61%, Distributor Operations up 45%, Spain up 40% and Germany up 35%.
The Europe, Middle East, Africa and Latin America region sales increased 46% with unit increase of 48%, due to sales growth in our distributor markets of 59% and our direct markets of 38%. The North America region sales increased 57%, with unit increase of 61%, due to sales growth in the U.S. up 58% and Canada up 53%.
The North America region sales increased 57%, with unit increase of 61%, due to sales growth in the U.S. up 58% and Canada up 53%. Changes in foreign currency favorably impacted ICL sales by $0.8 million.
The North America region sales increased 51%, with unit increase of 47%, due to sales growth in the U.S. up 59% and Canada up 10%. Changes in foreign currency unfavorably impacted ICL sales by $10.3 million, which impacted our Japan and Europe, Middle East and Africa markets. ICL sales represented 94.8% of our total sales for fiscal year 2022.
Gross profit margin decreased to 72.4% of revenue for 2020 compared to 74.5% of revenue for 2019, due to geographic sales mix, $1.2 million in expenses related to the COVID-19 manufacturing pause from March 17 through April 27, 2020, increased period costs associated with the manufacturing expansion projects and increased mix of injector part sales which carry a lower margin, partially offset by increased ICL volume.
Gross profit margin increased to 78.5% of revenue for 2022 compared to 77.5% of revenue for 2021, due to geographic sales mix and an increased mix of ICL sales which carry a higher margin, partially offset by increased period costs associated with manufacturing expansion projects. Gross profit for 2021 increased 50.9% from 2020.
Changes in foreign currency unfavorably impacted other product sales by $0.3 million. Other product sales represented 7.6% of our total sales for fiscal year 2021. Other product sales in 2020 increased 6% from 2019, due to increased preloaded injector part sales to a third-party manufacturer for product they sell to their customers, partially offset by decreased IOL sales.
Other product sales for 2022 decreased 16% from 2021, mainly due to decreased sales of cataract IOLs. Changes in foreign currency unfavorably impacted other product sales by $2.6 million. Other product sales represented 5.2% of our total sales for fiscal year 2022.
Other expense, net for 2021 was $2.0 million and other income, net for 2020 and 2019 was $1.5 million and $1.2 million, respectively. The change in 2021 was due primarily to increased foreign exchange losses (primarily euro).
The change in other income (expense), net for 2022 was due to increased interest income, as a result of our investments held available for sale and higher interest rates and decreased foreign exchange losses (primarily euro). The change in other income (expense), net for 2021 was due primarily to increased foreign exchange losses (primarily euro).
The increase in investment in property, plant and equipment during 2021, relative to 2020, is primarily due to an increased in investments in manufacturing facilities. The decrease in investment in property, plant and equipment during 2020, relative to 2019, is primarily due to a slight decrease in investments in manufacturing facilities.
The increase in investment in property, plant and equipment during 2022, relative to 2021, and the increase during 2021, relative to 2020, was primarily due to an increased in investments in manufacturing facilities. For 2022, net cash provided by financing activities of $8.3 million consisted primarily of proceeds from the exercise of stock options.
Changes in foreign currency favorably impacted ICL sales by $1. 0 million. ICL sales represented 86.5 % of our total sales for fiscal year 2020 .
Changes in foreign currency favorably impacted ICL sales by $0.8 million. ICL sales represented 92.4% of our total sales for fiscal year 2021. Other product sales, includes cataract IOLs, delivery systems and normal recurring sales adjustments such as sales return allowances.
Additionally, during 2021 we fully repaid and cancelled our Japan line of credit and cancelled our Swiss framework agreement given our current cash resources. We do not have any off-balance sheet arrangements. Overview of changes in cash and cash equivalents and other working capital accounts.
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.
Contractual Obligations The following table represents the Company’s known contractual obligations as of December 31, 2021 (in thousands): Payments Due by Period Contractual Obligations Total 1 Year 2 – 3 Years 4 – 5 Years More than 5 Years Finance lease obligations (Note 9)* $ 546 $ 147 $ 357 $ 42 $ — Operating lease obligations (Note 9)* 36,591 4,993 10,270 7,537 13,791 Pension benefit payments (Note 11)* 8,758 169 484 637 7,468 Severance (Note 13)* 90 90 — — — Asset retirement obligation (Note 13)* 198 — 198 — — Open purchase orders (Note 13)* 17,342 16,029 1,250 63 — Total $ 63,525 $ 21,428 $ 12,559 $ 8,279 $ 21,259 * Refer to the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K Critical Accounting Estimates Our accounting policies are more fully described in Note 1 of the Consolidated Financial Statements.
Our current liquidity and capital resources, as discussed above, will enable us to meet our known contractual obligations as of December 30, 2022 (in thousands): Payments Due by Period Contractual Obligations Total 1 Year 2 – 3 Years 4 – 5 Years More than 5 Years Finance lease obligations (Note 9)* $ 397 $ 182 $ 215 $ — $ — Operating lease obligations (Note 9)* 36,002 5,222 9,543 7,972 13,265 Pension benefit payments (Note 11)* 1,935 214 590 640 491 Severance (Note 13)* 410 410 — — — Asset retirement obligation (Note 13)* 220 220 — — — Open purchase orders (Note 13)* 17,623 17,149 471 3 — Total $ 56,587 $ 23,397 $ 10,819 $ 8,615 $ 13,756 * Refer to the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K Overview of changes in cash and cash equivalents and other working capital accounts.
The Europe , Middle East, Africa and Latin America region sales decreased 3% and unit s decreased 11%, as a result of decreased sales in the Middle East and North A frica down 35%, Latin America down 13% and Spain down 4%, partially offset by sales growth in Germany up 15%, the U nited K ingdom up 8% and Other Distributors up 4%.
The Europe, Middle East, Africa and Latin America region sales decreased 1.0% with unit increase of 15%, due to sales decreases in our direct markets down 8%, offset by sales growth in our distributor markets up 9%.
Days’ Inventory on Hand (DOH) was 79 and 114 days in 2021 and 2020, respectively, for finished goods, including consignment inventory.
Inventories, net was $24.2 million and $17.2 million at December 30, 2022 and December 31, 2021, respectively. Days’ Inventory on Hand (DOH) was 94 and 79 days for 2022 and 2021, respectively, for finished goods, including consignment inventory. The increase in DOH is due to increased production to support sales growth of ICL products.
We recorded income taxes for 2021 due to income tax expense generated from pre-tax profits in our foreign jurisdictions and a recapture of our U.S. valuation allowance of $0.8 million, as a result of increased tax deductions in the projection of taxable income in our valuation assessment.
Our effective tax rates differ from the U.S. federal statutory rate of 21% for 2022, 2021 and 2020, respectively, primarily due to the income taxes generated in foreign jurisdictions.
Removed
Production output and modest supply chain challenges continue to impact us and resulted in a continued backlog of over 20,000 lenses at the end of the fourth quarter. We continue to focus on meeting the significant demand of our ICL lenses and achieving standard inventory level requirements in 2022.
Added
As a result of third-party materials and supply chain challenges that affect our cataract IOLs and associated delivery devices, we will no longer manufacture cataract IOLs, though we will continue to support these products through the end of 2023, as supplies permit. We do not expect this decision to have a significant impact to revenue growth in future years.
Removed
ICL sales represented 92.4% of our total sales for fiscal year 2021. 33 Total ICL sales for 2020 increased 9 % from 2019 , with unit growth up 11 %.
Added
General and administrative expenses for 2021 increased 30.2% from 2020, due to increased bonus and stock-based compensation expenses, salary-related and payroll tax expenses, outside services, facilities costs and corporate insurance.
Removed
The North America region sales decreased 14 % and units decreased 12%, mainly due to decreased sales in the U.S. down 17%, slightly offset by sales growth in Canada up 2%.
Added
Also impacting our effective tax rates was a release of $0.8 million of our U.S. valuation allowance in 2022, a recapture of our U.S. valuation allowance of $0.8 million in 2021 and a release of $0.5 million of our U.S. valuation allowance in 2020.
Removed
The decreases in these various regions were impacted by the COVID-19 pandemic in the first half of 2020; most markets started to reopen in mid-May/early June, with India and the Middle East being the two markets that remained the most challenged by COVID-19 during the second half of 2020.
Added
Our financial condition at December 30, 2022, December 31, 2021 and January 1, 2021 included the following (in thousands): 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Cash and cash equivalents $ 86,480 $ 199,706 $ 152,453 $ (113,226 ) $ 47,253 Investments available for sale 139,061 — — 139,061 — Total $ 225,541 $ 199,706 $ 152,453 $ 25,835 $ 47,253 Current assets $ 311,723 $ 271,411 $ 216,418 $ 40,312 $ 54,993 Current liabilities 51,716 48,802 41,236 2,914 7,566 Working capital $ 260,007 $ 222,609 $ 175,182 $ 37,398 $ 47,427 Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions.
Removed
Gross profit for 2020 increased 5.7% from 2019.
Added
Our investment policy primary objective is capital preservation while maximizing our return on investment. Investments available for sale may include U.S. government and corporate debt securities, commercial paper, certain certificates deposit and related security types, that are rated by two nationally recognized statistical rating organizations with minimum investment grade ratings of AAA to A-/A-1+ to A-2, or the equivalent.
Removed
The increase for 2020 was mainly due to increased foreign exchange gains (primarily euro), partially offset by decreased net interest income, as a result of lower interest rates.
Added
We do not have any off-balance sheet arrangements.
Removed
From time to time, we may adjust the projections of taxable income as a result of current conditions.
Added
For 2021, net cash provided by operating activities consisted of $24.5 million in net income and $21.9 million in non-cash items, offset by $2.4 million in working-capital changes.
Removed
We recorded income taxes for 2020 due to income tax expense generated from pre-tax profits in our foreign jurisdictions and a release of $0.5 million of our U.S. valuation allowance, as a result of increases in foreign income and changes in the usage and release of our deferred tax assets.
Added
For 2022, net cash used in investment activities of $156.4 million resulted from $155.7 million in purchases of investments available for sale and $18.1 million in purchases of property, plant and equipment, partially offset by $17.5 million of proceeds from the maturity of investments available for sale.
Removed
We recorded an income tax benefit for 2019 due to a release of our U.S. valuation allowances of $3.4 million as a result of positive evidence in U.S. projected future profits, offset by income tax expense generated from pre-tax profits in our foreign jurisdictions.
Added
Days’ Sales Outstanding (DSO) was 89 and 67 days, respectively for 2022 and 2021. The increase in DSO in 2022 is temporary and was due to decreased customer collections of receivables in the fourth quarter of 2022 primarily from payment delays from customers where there was a surge in COVID-19 cases, resulting from lifting COVID-19 restrictions.
Removed
During 2021, 2020 and 2019, there were no unrecognized benefits related to uncertain tax positions taken by us. All earnings from our subsidiaries are not considered to be permanently reinvested. Beginning 2019, we do not need to accrue withholding taxes on foreign earnings (Note 10 to the Consolidated Financial Statements).
Added
Investments Available for Sale Investments available for sale are investments in debt securities for which the Company does not have the positive intent and ability to hold to maturity and are measured at fair value.
Removed
During 2021, 2020 and 2019 there were no withholding taxes paid to foreign jurisdictions. ASC 740 requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset may not be realizable.
Added
We recognize impairment when there has been a decline in fair value below amortized cost if we intend to sell the security or it is more-likely-than-not that we will be required to sell the security before recovery of its amortized cost basis. The impairment related to credit losses is recognized in other income (expense) on the Consolidated Statements of Income.
Removed
The ultimate realization of deferred tax assets is dependent upon future generation of income during the periods in which temporary differences representing net future deductible amounts become deductible. In evaluating our ability to recover our deferred tax assets, we consider among other things, projected future income, tax planning strategies and all other available evidence in making this assessment.
Added
Any portion of impairment not related to credit losses is recognized in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. The measurement of the credit loss component is equal to the difference between the 39 debt security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield.
Removed
Under the incremental cash tax savings approach (Notes 1 and 10 to the Consolidated Financial Statements), our U.S. cumulative valuation allowance was as follows (in thousands): 2021 2020 Cumulative federal valuation allowance $ 43,626 $ 34,681 Cumulative state valuation allowance 7,848 7,399 Total U.S. valuation allowance $ 51,474 $ 42,080 Under the incremental cash tax savings approach, the U.S. valuation allowance recorded reflects the net operating losses and deferred tax assets which would not result in future cash tax savings and therefore provide no additional benefit.
Removed
Total U.S. net deferred tax assets were $3.0 million and $3.9 million at December 31, 2021 and January 1, 2021, respectively.
Removed
Our financial condition at December 31, 2021, January 1, 2021 and January 3, 2020 included the following (in millions): 2021 2020 2019 2021 vs. 2020 2020 vs. 2019 Cash and cash equivalents $ 199.7 $ 152.5 $ 120.0 $ 47.2 $ 32.5 Current assets $ 271.4 $ 216.4 $ 174.7 $ 55.0 $ 41.7 Current liabilities 48.8 41.2 34.5 7.6 6.7 Working capital $ 222.6 $ 175.2 $ 140.2 $ 47.4 $ 35.0 We invest our net proceeds in short-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
Removed
For 2020, net cash provided by financing activities consisted of $20.6 million of proceeds from the exercise of stock options, partially offset by $0.6 million repayment of finance lease obligations and a $0.5 million repayment on the Japan line of credit.
Removed
Days’ Sales Outstanding (DSO) was 67 and 70 days, respectively in 2021 and 2020. The decrease in DSO was mainly due to increased customer collections of receivables in the fourth quarter of 2021. Inventories, net was $17.2 million and $18.1 million at December 31, 2021 and January 1, 2021, respectively.
Removed
We consider all available information in our quarterly assessments of the adequacy of the allowance for sales returns. 38 Allowance for Doubtful Accounts We maintain provisions for uncollectible accounts based on estimated losses resulting from the inability of our customers to remit payments.
Removed
While such credit losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates that we have in the past.
Removed
Measurement of such losses is based on an expected loss model which requires consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and financial health of specific customers.
Removed
“ Financial Statements and Supplementary Data – Note 1 – Organization and Description of Business and Accounting Policies – Income Taxes ” of this Annual Report on Form 10-K.

Other STAA 10-K year-over-year comparisons