Staar Surgical Company · NASDAQ:STAA
Staar Surgical — H1 2013 Earnings Presentation
30 slides from Staar Surgical's earnings presentation, Aug 14, 2013
Slide 1: Visian ICL, Fastest Growing Refractive Technology in the World
1 Visian ICL, Fastest Growing Refractive Technology in the World August 14, 2013 NASDAQ : STAA
Slide 2: Forward-Looking Statements
Forward - Looking Statements All statements in this press release that are not statements of historical fact are forward - looking statements, including statem ents about any of the following: any projections of earnings, revenue, sales, profit margins, cash, effective tax rate or any other financia
Slide 3: Generating Strong Current and Future Growth
Generating Strong Current and Future Growth • Two Large Market Opportunities • Sustainable Competitive Advantages • Rapid Cadence of New Products • Increasing IP Position on Key Technologies • Strong Balance Sheet • Manufacturing Consolidation Savings 2014 3
Slide 4: Intraocular Lens Focus
Intraocular Lens Focus Only 4 Lenses Placed within the Eye Cataract IOL Refractive ICL 60.5% H1 Revenue 55% in 2012 33.8% H1 Revenue 41% 2012
Slide 5: STAAR's Value Driver
STAAR’s Value Driver • $3B Addressable Market • Currently about 2% Market Share • $21.9M Revenue H1 – $80M End Customer Sales Annualized • Sales Growth Rate 27% in H1/ 31% Q2 – 85% Gross Margins – New Product Launches • 10% Share in Focused Markets Yields Nearly $300M of End Customer Sales 5 The Vis
Slide 6: Visian ICL and TICL
Visian ICL and TICL • Implantable Collamer ® Lens Better Known as the “Implantable Contact Lens” • Made f rom a Proprietary Material Called Collamer • Corrects Myopia (Nearsightedness/Inability to See Far) • Toric ICL (TICL TM ) Version Corrects Both Myopia and Astigmatism (Blurred D ue to Inability
Slide 7: Competitive Landscape
Competitive Landscape • STAAR Is the Market Leader – >65% Unit & Dollar Market Share – Only Posterior Lens Approach • Other Players (Anterior Lens) – Abbott - AMO (Very L ittle P romotion) – Ophtec – Novartis - Alcon (Removed from Key Markets ) • The Big Guys Are in the WRONG Place! • LASIK is the R
Slide 8: ICL vs LASIK
8 ICL • Small Micro Incision • Adds Lens into the Eye • Permanent but Removable • No Induced Dry Eye • Future Options Preserved LASIK • Incision over 1 Inch - Long • Burns Material Away • Cannot Be Reversed • Potential Dry Eye • May Reduce Future Options LASIK is NOT the Best Procedure for All 8 - 1
Slide 9: The ICL Technology Era Beginning?
The ICL Technology Era Beginning? 9 • RK: Started in 1978, Peaked in 1994 • PRK: Started in 1984, Peaked in 2006 • LASIK: Started in 1989, has LASIK Peaked?? – Big Guys Heavily Invested – LASIK Procedures Losing Share in Major Markets • Visian ICL: – Over 375,000 ICLs Implanted World W ide – Gaining
Slide 10: Visian ICL with CentraFLOW (V4c ICL)
Visian ICL with CentraFLOW™ (V4c ICL) • CentraFLOW™ Technology Assists the Natural Aqueous Flow within the Eye Utilizing the KS - AquaPORT™ • Eliminates a Procedure and Visit - (LASIK - like) – Same Day ICL Surgery now Possible • Economics Better for t he Surgeon • 10% Price Premium • Over 20,000 Im
Slide 11: Targeted ICL Markets
Targeted ICL Markets 11 Market 2012 Total Ref. Proc. 2012 Ref. Proc. ∆ 2012 ICL Proc. ∆ ICL Share Ref. Proc. ICL Share Gain China * 830,000 (21%) +37% 1.2% x U.S.* 623,700 Flat +2% 1.0% x Japan* 254,000 (22%) 102% .9% x Latin Am* 227,260 +4% (6%) 1.2% India* 148,550 +5% +26% 4.2% x S. Korea* 138,260
Slide 12: H1 2013 Continue to Gain Market Share
0 500 1000 1500 2000 2500 3000 3500 4000 4500 Korea China U.S. Spain India Japan M East Lat Amer Germany Italy U.K. H1 12 H1 13 H1 2013 Continue to Gain Market Share LASIK Under Downward Pressure H1 Results 2012 - 13 Visian ICL Sales Increase in All 11 Target Markets +141% +7% +11% +13% +21% +33% +6
Slide 13: ICL New Product Cadence Rapid
V4b Q1 2011 - Expanded Range , Allowing Treatment of Virtually All Myopic Patients Available CE Markets; new markets in 2013 ICL New Product Cadence Rapid & Enhancement of Proprietary Positions 13 V4c Q1 2012 - CentraFLOW* Technology Eliminates a Step in Current Procedure ( LASIK - like) Available C
Slide 14: Consumer Awareness Activities
• Launched new website, www.staarmd.com, to assist surgeons with Practice Development efforts with the Visian ICL • Patient leads generated from Doc Finder increasing • New Websites for China, Japan and Middle East • Video Views of Visian ICL increasing significantly Consumer Awareness Activities 14
Slide 15: Social Media Marketing (Movie Theater Ads in Korea)
• 240 Screens for a three month period throughout Korea. 15 Social Media Marketing (Movie Theater Ads in Korea)
Slide 16: What Our Support Delivers
What Our Support Delivers Consumer Awareness Initiatives Drives Patients to ICL Technology & ICL Surgeons Practice Management Programs Provides Surgeons with ICL Marketing Tools for Patients Clinical Support (234 ICL Presentations in 2012) Provides Surgeons with ICL Clinical Based Evidence 16
Slide 17: Cataract IOL: Large & Growing Market
• 21.9M IOLs Implanted in 2013 ( 26.1M 2018) • The Big Three Hold ≈70% Market Share – Novartis (Alcon), Abbott (AMO), B&L (Now Valeant) • STAAR Strategy – Focused on Only the Higher Margin Premium IOLs – Focused Only in Markets that Generate a Fair Profit Large & Growing Market Tough Competitive Lan
Slide 18: New IOL Products: It's All About Supply
New IOL Products • H1 Sales W ere $12.2M, (7%) USD YoY • 4 % Growth in Constant Currency • Acceptance of the KS - IOL Products Has Escalated • Supply from 3 rd party has limited our growth: – Approximately $1.2M in Backorders from European Customers at End of H1 – Reduced Accounts with Consignments
Slide 19: Unique Collamer Material
Unique Collamer ® Material • Proprietary Hydrophilic Material Produces Superior Quality of Vision • 40 % Water Content Produces Reduced Glare or Halo Effect – No Glistenings • Several Active Material P atents (Next Significant One Expires 2015 with Some Blocking Patents until 2017) • 18 Y ears Manuf
Slide 20: Solid Start to 2013 YOY Growth
Solid Start to 2013 YOY Growth • Total Sales Grow by 15% to $36.2M / 21% Growth on CC Basis • Visian ICL Sales Increase by 27% • IOL Sales in USD Declined by – 4% Growth in Constant Dollars – 20% Unit Growth in Japan – $1.2M Backorder on Preloaded Acrylic IOLs in Europe • Gross Margin 69.9%, Negativ
Slide 21: H1 Financial Results 2013 GAAP
H1 Financial Results 2013 GAAP 21 H1 2013 H1 2012 Change Revenue $36,165 $31,451 +$4,714/+15% Gross Profit $25,274 $21,947 +$3,327/+15% Gross Profit Margin 69.9% 69.8% +10bps Operating Expenses $23,496 $21,833 +$1,663/+8% Income Before Taxes $ 1,663 $ 300 +$1,363 Income Taxes $ 914 $ 559 +$355 Net I
Slide 22: H1 Financial Results 2013 Non-GAAP Measures
H1 Financial Results 2013 Non - GAAP Measures 22 Measure H1 2013 H2 2012 GAAP Net Income (loss) $ 749 $ (259) Mfg. Consolidation Expenses $1,514 $1,252 Spain Distribution Transition Cost $ 442 $ 173 Foreign Currency Impact $ 264 $ 182 Adjustment of Warrant Value $ (27) $ (207) Stock - based Compensa
Slide 23: Expanding Gross Margins
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 2007 2008 2009 2010 2011 2012 H1 2013 GM% IOL Mix ICL Mix 69.9% 61% 34% Expanding Gross Margins 23 H1 Negative Impacts: 154 bps IOL Injector sales, yen value 80 bps, Manufacturing start up & under absorbed OH in Japan 80 bps.
Slide 24: STAAR Balance Sheet
STAAR Balance Sheet • Profitable and Generating Cash – $19.7M in Cash as of 6 /28/13 – $3.2M Generated in Cash during 2012, $350k H1 (typical cycle) • Working L ine of C redit in Japan at 1.4% Interest Rate • $ 121M in NOLs (Worth $ 1.00/share) • 36.7M Diluted Shares Outstanding – 1.4M Warrants at A
Slide 25: Manufacturing Consolidation: Project Comet
Manufacturing Consolidation • Consolidate Four Manufacturing Operations (Japan , U.S., Switzerland) to One E xisting U.S. Facility in Monrovia • 3 + Years to Complete at a Cost of $6.2M – Spent $1.1M in 2011/$2.6M in 2012 – Planned Spend $ 2.3M in 2013, H1 $1.5M • Complete Manufacturing Consolidatio
Slide 26: STAAR's Pathway to the Future
STAAR’s Pathway to the Future! • Continued ICL Market Penetrations – Double Digit Revenue Growth – 85 % Gross Margin – New Products (V4c, V5 and V6) • Targeted IOL Profitable Growth – Single Digit R evenue Growth – 60 %+ Gross Margin Target – New Products ( nanoFLEX Toric + KS - SP) • Project Comet
Slide 27: Post Comet Operating Model Potential
Post Comet Operating Model Potential 27 Metric 2013 Analyst Ests * If $80M If $90M If $100M Revenue $ 72.1 $ 80.0 $90.0 $100.0 Gross Margin % 71% 77.0% 78.5% 80% Gross Margin $ $ 51.2 $ 61.6 $70.6 $ 80.0 Operating Exps. $ 46.2 $46.5 ** $48.5 $ 50.0 Operating Inc. $ $ 4.9 $ 15.1 $22.1 $ 30.0 Operatin
Slide 28: Key Drivers for Growth
• Increased Investments in Sales & Marketing and R&D – Added 19 Sales & Marketing Positions (4 More in 2013) • Planned New Product Launches • Key Regulatory Decisions – V4c approval in Korea and Argentina late Q2 – V4c approval for India (Q3) – V5 CE Mark Approval (Q3) – Have B een T old TICL Going
Slide 29: 2013 Metrics - Revenue Growth Metric Increased
2013 Metrics - Revenue Growth Metric Increased; Manufacturing Consolidation Extended • Total Revenue Growth in the Range of 12 - 14% – Increased from 8 to 10 % • Gross Margin Expansion by a Minimum of 250 BPS for the Year • Profitable on a GAAP Basis Each Quarter • Continuous Quarterly Progress Towa
Slide 30: Visian ICL, Fastest Growing Refractive Technology in the World
30 Visian ICL, Fastest Growing Refractive Technology in the World August 14, 2013 NASDAQ : STAA