STAAR Surgical NASDAQ: STAA executives emphasized a return to execution in fiscal 2026 after what they described as a disruptive and transitional 2025, highlighting progress in China channel inventory normalization, a sharpened cost structure, and early momentum for new products including EVO+ in China.
Leadership transition and post-merger reset
On the company’s fourth quarter fiscal 2025 earnings call, Interim Co-CEO Warren Foust said he and Interim Co-CEO/CFO Deborah Andrews assumed shared leadership effective February 1. Foust said STAAR’s board has retained Egon Zehnder to run a search for the next CEO, including both internal and external candidates.
Management repeatedly referenced the disruption tied to the company’s proposed merger with Alcon, which was ultimately terminated. Foust said the company is now focused on a “growth, profit and innovation” plan for 2026, arguing that uncertainty related to the proposed transaction affected distributor behavior in multiple regions during the fourth quarter.
China: inventory reset, improved visibility, and cautious optimism
Andrews described China inventory rebalancing as STAAR’s most significant operational challenge in 2025, following what she said was a double-digit decline in end-market EVO ICL sales during 2024 that led to elevated channel inventory. In response, STAAR paused shipments, worked to normalize channel inventory, and tightened distributor discipline. By late 2025, she said China distributor inventory had declined to contractual levels.
She also noted that a $27.5 million China shipment in December 2024 contributed to elevated inventory and was consumed during fiscal 2025, with all related revenue recognized by the end of the third quarter. Andrews said the company historically lacked complete visibility into downstream inventory and procedure volumes, but invested over the past year in data processes that have “improved materially” and will continue to evolve.
In response to analyst questions, Foust said STAAR is now monitoring China inventory weekly and that distributor inventory remained stable exiting 2025, even “a little bit below” the six-month contractual level the company has referenced previously. He added that while the company is not providing guidance, management remains optimistic as China’s end market improved in 2025 to mid-single-digit growth after a difficult 2024, and procedures improved as the year ended.
On seasonality, Andrews said STAAR expects China’s typical pattern to continue, with the second and third quarters remaining strong in 2026 as they have been historically.
New products and manufacturing: EVO+ rollout and Swiss expansion
Foust said STAAR launched EVO+ in China, calling it the company’s first new lens in China in more than a decade. He said early demand has been encouraging and that STAAR is scaling manufacturing in Nidau, Switzerland to increase supply. Over time, he said STAAR expects EVO+ to support higher average selling prices (ASPs) and margin expansion in China.
Andrews added that the Switzerland facility is now producing commercial product and is focused on EVO+ for China. She said products manufactured in Switzerland are not subject to U.S./China tariffs, which she characterized as a near-term benefit as EVO+ rolls out in China. She also said Swiss manufacturing could provide longer-term supply chain resilience and flexibility to manufacture EVO and EVO+ for China in the future.
STAAR also discussed planned expansion of the Lioli injector beyond the U.S. Foust said the injector is established in the United States and will be introduced in EMEA as an additional option for surgeons.
When asked about the innovation pipeline beyond near-term launches, Foust said the company is working on additional projects and intends to provide more visibility on timelines and milestones in future calls, but said STAAR is not yet ready to share detailed timelines.
Fourth quarter results: China rebound tempered by returns; profitability improved
Andrews reported fourth quarter net sales of $57.8 million, up from $49.0 million in the year-ago quarter. China net sales were $17.5 million versus $7.8 million a year earlier, though Andrews said the rebound was “lower than anticipated” because certain China sub-distributors and customers returned some inventory to STAAR’s distributors during the quarter.
She attributed some of the quarter’s disruption to uncertainty about STAAR’s future during the proposed Alcon acquisition, saying it also affected distributor purchasing behavior outside China. She added that lower distributor inventories could support improved net sales in 2026 and beyond.
Outside China, STAAR said net sales declined 2% year over year in the quarter, with divergent regional trends:
- Americas: up 18% in the fourth quarter.
- EMEA: down 20%, driven by a distributor transition in the Middle East and distributor dynamics across the region tied to the proposed merger.
- APAC ex-China: up 2% in the fourth quarter.
Gross margin in the fourth quarter was 75.7% versus 64.7% in the prior-year quarter. Andrews said the improvement was driven primarily by timing related to cost of sales recognition associated with the December 2024 China shipment, lower period costs from cost reductions implemented in the first quarter of 2025, and the ramp-up of Swiss manufacturing, partially offset by higher inventory provisions.
Total operating expenses were $66.6 million versus $59.6 million a year earlier. The quarter included $11.2 million of costs related to the terminated Alcon merger and $0.7 million of restructuring costs. Excluding merger and restructuring expenses, operating expenses were $54.7 million, down 8.2% from the prior-year quarter, which Andrews said reflected the company’s 2025 cost actions.
Adjusted EBITDA was a loss of $0.2 million compared with a loss of $20.8 million in the year-ago quarter, with Andrews attributing the improvement largely to higher gross profit and lower operating expenses (before merger and restructuring), partially offset by merger and restructuring expenses.
2026 outlook themes: sales recovery target, margin headwinds, and expense discipline
Management did not provide formal 2026 guidance, but offered qualitative expectations. Andrews said STAAR expects a “significant” increase in sales in 2026 compared with 2025 and is targeting profitability in fiscal 2026, citing cost reductions achieved in 2025.
However, Andrews also said gross margin could be “slightly lower” in 2026 relative to 2025 due to higher inventory costs from Swiss manufacturing being sold in 2026 and increased inventory reserves tied to expiring product. She said the company will work to offset these pressures through higher ASPs and manufacturing yield and efficiency improvements, which she said could become tailwinds in 2027.
On operating expenses, Andrews said STAAR expects to maintain its operating expense run rate generally aligned with the $225 million target previously communicated in the first quarter of 2025. She also said cash could dip modestly near term, but STAAR expects to resume cash generation in the back half of 2026 and end the year with a higher cash balance than 2025.
STAAR ended the quarter with approximately $187.5 million in cash equivalents and investments available for sale and no debt, according to Andrews.
About STAAR Surgical NASDAQ: STAA
STAAR Surgical Company, together with its subsidiaries, designs, develops, manufactures, markets, and sells implantable lenses for the eye, and companion delivery systems to deliver the lenses into the eye. The company provides implantable Collamer lens product family (ICLs) to treat visual disorders, such as myopia, hyperopia, astigmatism, and presbyopia. It markets its products to health care providers, including ophthalmic surgeons, vision and surgical centers, hospitals, government facilities, and distributors, as well as products are primarily used by ophthalmologists.
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