SCHEDULE 13D/A: Broadwood Capital Significantly Increases Stake in STAAR Surgical, Citing Undervaluation and Governance Improvements

Broadwood Capital and its affiliates have significantly increased their beneficial ownership in STAAR Surgical Company to 25.4%, asserting the company's stock is undervalued despite macroeconomic headwinds and expressing confidence in new leadership and recent corporate governance enhancements.

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 March 31, 2025, the Reporting Persons collectively beneficially own 12,512,944 shares, representing 25.4% of the Issuer's outstanding Common Stock (based on 49,325,372 shares outstanding).
• The Reporting Persons acquired these shares for investment purposes, having initiated their position in 1994, and have significantly increased their holdings since late 2022, including recent purchases between March 4, 2025, and April 2, 2025, at weighted average prices ranging from $16.30 to $17.99.
• They believe the Issuer's stock price is depressed due to macroeconomic headwinds affecting the global refractive surgery market and that its current valuation does not reflect its proprietary technology's advantages or its potential to address the global myopia epidemic.
• The Reporting Persons anticipate accelerating revenue growth and expanding profit margins as macroeconomic conditions improve and the Issuer addresses past operational missteps.
• They support the Issuer's new CEO and Interim CFO, citing their operational experience and track record of value creation.
• The Reporting Persons welcome recent corporate governance improvements, including the separation of CEO and Board Chair roles and the appointment of new directors with relevant industry and shareholder alignment expertise, particularly concerning the Asian market which accounts for approximately 80% of the Issuer's revenue.
• They intend to continue dialogue with the Board and other shareholders regarding corporate governance, shareholder alignment, and long-term value creation strategies.

Sentiment

Score: 8

Explanation: The Reporting Persons have significantly increased their stake, indicating strong confidence in the company's long-term potential despite current macroeconomic challenges and past operational missteps. Their positive outlook is based on the company's proprietary technology, new leadership, and improved corporate governance, suggesting a belief in substantial future value creation.

Positives

• Reporting Persons believe the Issuer's proprietary technology has the potential to transform the refractive surgery market and address the global myopia epidemic.
• They anticipate the Issuer's business will enter a period of accelerating revenue growth and expanding profit margins as macroeconomic headwinds abate and operational missteps are addressed.
• The Issuer has continued to increase its share of the global market for refractive surgery and is making progress toward realizing its substantial long-term growth opportunity.
• The Reporting Persons are impressed with the new CEO's operational experience and history of successfully and profitably growing global businesses.
• The new Interim CFO is expected to help improve profitability and create shareholder value, having previously served successfully as CFO until 2020.
• Recent improvements in corporate governance are welcomed, including the restoration of the separation of CEO and Board Chair roles.
• Appointments of new directors with understanding of shareholder alignment and deep knowledge of the global medical device industry, especially in Asia, are seen as positive.

Negatives

• The Issuer's stock price has remained depressed amid macroeconomic headwinds.
• The current valuation does not reflect the advantages of the Issuer's technology or its potential.
• The Issuer has experienced "previous operational missteps."

Risks

• Macroeconomic headwinds continue to pressure the global refractive surgery market, potentially impacting the Issuer's stock price and valuation.
• The Issuer's ability to achieve accelerating revenue growth and expanding profit margins is contingent on macroeconomic headwinds abating and successful resolution of previous operational missteps.
• The Issuer's valuation may not fully reflect its long-term value if market conditions do not improve or if strategic initiatives are not successful.

Future Outlook

The Reporting Persons believe that STAAR Surgical Company's business has the potential to enter a period of accelerating revenue growth and expanding profit margins as macroeconomic headwinds abate and the company addresses its previous operational missteps. They are confident that the new CEO and Interim CFO will help the company realize its substantial long-term global growth opportunity and improve profitability. They intend to remain in dialogue with the Board and other shareholders to pursue strategies for long-term shareholder value creation.

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 also believe that the Issuer's new Interim CFO will help the Issuer to improve its profitability and create shareholder value, noting that she previously served as CFO of the Issuer during a long period of business success and shareholder value creation, until her retirement in 2020."

Industry Context

The document highlights that the global refractive surgery market is currently pressured by macroeconomic headwinds, leading to a depressed stock price for STAAR Surgical. Despite this, the Reporting Persons believe STAAR Surgical's proprietary technology has the potential to transform this market and address the global myopia epidemic. The company's significant revenue derivation from Asia (approximately 80%) underscores the importance of the Asian market within the global medical device industry for its business.

Comparison to Industry Standards

• The document notes that the Issuer's stock price has remained depressed amid macroeconomic headwinds that have pressured the global refractive surgery market, implying underperformance relative to the market's potential or historical trends.
• The Reporting Persons believe the Issuer's valuation does not reflect the advantages of its proprietary technology or its potential to transform the refractive surgery market and address the global myopia epidemic, suggesting it is undervalued compared to its intrinsic potential within the industry.
• The document does not provide specific comparable companies, projects, or detailed results for direct benchmarking against industry standards.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: The Reporting Persons' increased stake and activist stance aim to create "significant additional shareholder value over time" and improve "shareholder alignment." Their opposition to low-premium acquisitions directly benefits existing shareholders by advocating for higher returns.
• Management: The document expresses support for the new CEO and Interim CFO, indicating a positive working relationship or at least confidence in their ability to execute.
• Employees: Not directly mentioned, but improved profitability and growth could indirectly benefit employees through job security or opportunities.
• Customers: Not directly mentioned, but the focus on proprietary technology and market transformation implies continued innovation and service.
• Creditors: Not directly mentioned, but improved profitability and financial health would generally be positive for creditors.

Next Steps

• The Reporting Persons intend to review their investment in the Issuer on a continuing basis.
• They may take further actions with respect to their investment depending on various factors including financial position, share price, market conditions, and general economic/industry conditions.
• They have been and may continue to be in contact with the Issuer's management, Board, other significant shareholders, and others regarding alternatives to create significant additional shareholder value over time.
• They 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.
• They 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, Schedule 13D, Broadwood Capital, Broadwood Partners, Neal C. Bradsher, Beneficial Ownership, Shareholder Activism, Corporate Governance, Refractive Surgery Market, Myopia Epidemic, Medical Device Industry, Investment Strategy, Shareholder Value, CEO Change, CFO Change, SEC Filing