SCHEDULE 13D/A: Broadwood Capital Boosts STAAR Surgical Stake to 24.3%, Citing Undervaluation and Governance Improvements

Broadwood Capital and its affiliates have significantly increased their beneficial ownership in STAAR Surgical Company to 24.3%, asserting the company's current valuation does not reflect its long-term potential despite recent stock price declines and operational challenges.

Summary

• Broadwood Partners, L.P., Broadwood Capital, Inc., and Neal C. Bradsher (collectively, the "Reporting Persons") have increased their beneficial ownership in STAAR Surgical Company (the "Issuer").
• As of the filing date, the Reporting Persons collectively beneficially own 11,979,098 shares of STAAR Surgical's Common Stock, representing 24.3% of the outstanding shares.
• The Reporting Persons acquired their shares for investment purposes, with purchases dating back to 1994, and have significantly increased their position since late 2022, including substantial purchases in early 2025.
• They believe the Issuer's stock price has fallen considerably due to macroeconomic headwinds in the global refractive surgery market and operational missteps.
• Despite recent challenges, the Reporting Persons assert that the Issuer's current valuation does not reflect the advantages of its proprietary technology, its potential to transform the refractive surgery market, or its ability to address the global myopia epidemic.
• They anticipate a period of accelerating revenue growth and expanding profit margins for the Issuer as macroeconomic headwinds abate and operational issues are addressed.
• The Reporting Persons support the Issuer's new CEO, citing their operational experience and history of successfully growing global businesses profitably.
• They welcome recent corporate governance improvements, specifically the restoration of the separation of CEO and Board Chair roles, and the appointment of directors with relevant industry and shareholder alignment expertise.
• The Reporting Persons intend to continue dialogue with the Board and other shareholders regarding corporate governance, shareholder alignment, and strategies for long-term shareholder value creation.
• They would oppose any proposed acquisition of the Issuer at a price that does not represent a very large premium to its current market value, believing such a price would not reflect the Issuer's long-term value.

Sentiment

Score: 8

Explanation: The sentiment is highly positive from the Reporting Persons' perspective, as they have significantly increased their stake, believe the company is undervalued, and see strong long-term potential despite recent challenges. They express confidence in new management and governance improvements.

Positives

• Reporting Persons have significantly increased their stake, demonstrating strong conviction in the Issuer's long-term value.
• Belief that the Issuer's proprietary technology has the potential to transform the refractive surgery market and address the global myopia epidemic.
• Anticipation of accelerating revenue growth and expanding profit margins as macroeconomic headwinds subside and operational issues are resolved.
• Support for the new CEO, citing their strong operational experience and track record of profitable global business growth.
• Positive view on recent corporate governance improvements, including the separation of CEO and Board Chair roles and the appointment of experienced directors.
• The Issuer has continued to increase its share of the global market for refractive surgery despite recent challenges.

Negatives

• The Issuer's stock price has fallen considerably since January 2024.
• The decline is attributed to macroeconomic headwinds pressuring the global refractive surgery market.
• The Issuer has experienced operational missteps that hindered business progress.
• Current valuation is believed not to reflect the company's true long-term value or potential.

Risks

• Macroeconomic headwinds could continue to pressure the global refractive surgery market, impacting the Issuer's business progress.
• Operational missteps could persist, hindering the Issuer's ability to achieve accelerating revenue growth and expanding profit margins.
• The Issuer's valuation may continue to not reflect its perceived advantages and potential if market conditions or operational performance do not improve as expected.

Future Outlook

The Reporting Persons believe that STAAR Surgical's business has the potential to enter a period of accelerating revenue growth and expanding profit margins as macroeconomic headwinds abate and as the Issuer addresses its operational missteps. They also believe the company's proprietary technology has the potential to transform the refractive surgery market and address the global myopia epidemic.

Management Comments

• "The Reporting Persons believe that the Issuer's new CEO will help the Issuer to realize its substantial long-term global growth opportunity and improve its profitability."
• "The Reporting Persons are impressed with the new CEO's operational experience and history of successfully and profitably growing global businesses."
• "The Reporting Persons remain attentive to the importance of corporate governance matters and shareholder alignment, and believe that shareholder-oriented corporate governance made a substantial contribution to the Issuer's overall progress in the period from 2015 to 2022."
• "The Reporting Persons have welcomed recent improvements in corporate governance, many of which have resulted from a dialogue between shareholders and the Issuer's board of directors."
• "In particular, the Reporting Persons support the Board's recent decision to restore the separation of the roles of CEO and Board Chair, as well as the appointments of directors with an understanding of shareholder alignment and a deep understanding of the global medical device industry, particularly in Asia."
• "The Reporting Persons intend to remain in dialogue from time to time with members of the Board and other shareholders about improvements to the Issuer's corporate governance and shareholder alignment, and strategies for long-term shareholder value creation."

Industry Context

The filing highlights the impact of macroeconomic headwinds on the global refractive surgery market, which has pressured STAAR Surgical's stock price. Despite this, the Reporting Persons believe STAAR Surgical's proprietary technology is well-positioned to transform this market and address the global myopia epidemic. The company's significant revenue derivation from Asia (approximately 80%) underscores its strong presence in the global medical device industry, particularly in that region.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to industry standards. It broadly refers to the 'global refractive surgery market' and 'global medical device industry, particularly in Asia' as the context for STAAR Surgical's operations and challenges.

Management Changes

Corporate Governance

Stakeholder Impact

• **Shareholders**: The Reporting Persons' increased stake and advocacy for long-term value creation, improved corporate governance, and opposition to low-premium acquisitions directly impact shareholders by potentially driving share price appreciation and better oversight.
• **Management/Employees**: The support for the new CEO and focus on addressing operational missteps suggest potential changes in operational strategies and accountability, which could affect employees.
• **Customers**: The focus on transforming the refractive surgery market and addressing the global myopia epidemic implies continued innovation and market expansion, benefiting customers through advanced products and wider availability.

Next Steps

• The Reporting Persons intend to review their investment in the Issuer on a continuing basis.
• The Reporting Persons may take further actions with respect to their investment depending on various factors including the Issuer's financial position, share price, market conditions, and general economic/industry conditions.
• The Reporting Persons intend to remain in dialogue from time to time with members of the Issuer's management, Board, and other significant shareholders regarding improvements to corporate governance, shareholder alignment, and strategies for long-term shareholder value creation.
• The Reporting Persons reserve the right to effect one or more changes or transactions in the number of Shares they may beneficially own in open-market or privately negotiated transactions.

Key Dates

Recommendation

Keywords

STAAR Surgical Company, Broadwood Capital, Schedule 13D, Beneficial Ownership, Refractive Surgery, Myopia Epidemic, Corporate Governance, Investment Strategy, Medical Device Industry, Shareholder Value, Stock Price Decline, Operational Missteps, CEO, Board of Directors