STAAR Surgical Stock Tumbles After Q2 Earnings: Here's Why

STAAR Surgical Company's STAA Q2 sales reached $92.3 million, up 14% Y/Y, driven by ICL sales growth of 19% and ICL unit growth of 21%, missing the consensus of $93.04 million.

The company reported Q2 adjusted EPS of $0.40, down from $0.42 a year ago, beating the consensus of $0.32.

During the quarter, the company recorded various accounting adjustments related to its Other Products, specifically its non-core Cataract IOL business, which the company had previously announced it would no longer support after fiscal 2023

Cash, cash equivalents, and investments available for sale at June 30, 2023, totaled $209.5 million, compared to $225.5 million at the end of the fourth quarter of 2022.

Guidance: "Given increased conservatism related to the global environment and a revised near-term outlook for U.S. growth, we are updating our fiscal 2023 ICL sales outlook to a range of approximately $320 million to $325 million. At the mid-point of the range, our outlook represents approximately 20% growth over fiscal 2022 ICL sales of approximately $270 million," said Tom Frinzi, President and CEO.

The guidance compares to the consensus of $346.46 million and the prior guidance of $340 million-$348 million.

William Blair analysts Margaret Kaczor and Macauley Kilbane say the guidance is achievable this year, focusing on what growth could be in 2024 (management suggested 15%-20% may be a good initial range). 

While the model remains under review, taking the high end of management's 2023 guidance and the middle of the range of 15%-20% results in sales of $382 million versus William Blair's estimate of $433, most of the decrease is expected from the U.S.

Most of the opportunity for growth inflection in the near term relies on the U.S., which has underperformed more recently.

The uncertainty and investor focus on the U.S. will ultimately limit share performance until greater clarity is gained on its growth potential. 

Price Action: STAA shares are down 11.5% at $46.27 on the last check Thursday.