DEFA14A: STAAR Surgical Reports Preliminary Q3 2025 Sales

STAAR Surgical Company announced preliminary net sales of $94.7 million for Q3 2025, a 6.9% increase year-over-year, driven by a significant China shipment payment and growth outside China, despite reduced new orders from Chinese distributors.

Summary

• Preliminary net sales for the third quarter ended September 26, 2025, were $94.7 million.
• This represents a 6.9% increase compared to $88.6 million in the prior year period.
• Preliminary net sales included $25.9 million related to a December 2024 ICL shipment to China, which was subject to extended payment terms and paid in full during Q3 2025.
• The year-over-year increase was primarily driven by this December China Shipment combined with 7.7% growth in net sales outside China.
• Growth was partially offset by lower new orders from distributors in China during Q3 2025, attributed to leaner inventory management.
• Sales for the nine months ended September 26, 2025, were lower than the prior year period as distributors in China reduced their inventory by approximately $80 million to $85 million.
• As of September 26, 2025, distributors in China maintained owned inventory at approximately six months, aligned to contractual levels.
• The financial information presented is unaudited and subject to adjustment during the company's quarterly review and finalization of financial statements.
• A Special Meeting of Stockholders is scheduled for October 23, 2025, to vote on the Alcon merger proposal.

Sentiment

Score: 6

Explanation: The preliminary net sales show a positive year-over-year growth, largely due to the full payment of a significant prior China shipment. Growth outside China is also robust. However, new orders from China distributors were lower, and year-to-date sales were negatively impacted by inventory reduction in China. The results are preliminary and unaudited, and the company faces significant risks related to the pending Alcon merger.

Positives

• Achieved preliminary net sales of $94.7 million for Q3 2025, representing a 6.9% year-over-year increase.
• Successfully received and recognized $25.9 million in net sales from the previously disclosed December 2024 China ICL shipment, resolving extended payment terms.
• Demonstrated strong performance with 7.7% growth in net sales outside of China.
• Chinese distributors' inventory levels are now aligned to contractual levels, estimated at approximately six months.

Negatives

• Experienced lower new orders from distributors in China during Q3 2025, partly due to leaner inventory management.
• Sales for the nine months ended September 26, 2025, were lower than the prior year period due to Chinese distributors reducing their inventory by $80 million to $85 million instead of purchasing new product.
• The overall net sales growth for Q3 2025 was significantly bolstered by the recognition of a prior period shipment, potentially masking underlying organic growth trends in the China market.

Risks

• Ability to continue growth and profitability trajectory, including potential slowdown or disruption to the Chinese economy or new competition.
• Preliminary net sales and financial calculations are unaudited and subject to adjustments during the quarterly financial close process or independent auditor review.
• The occurrence of any event, change, or circumstances that could lead to the termination of the Alcon merger agreement or cause delays in its consummation.
• Failure to obtain approval of the proposed Alcon merger from STAAR's stockholders.
• Failure to obtain certain required regulatory approvals or satisfy other closing conditions for the completion of the proposed Alcon merger within expected timeframes or at all.
• Disruption of management's attention from ongoing business operations due to the proposed Alcon merger.
• The effect of the announcement of the proposed Alcon merger on the ability to retain and hire key personnel and maintain relationships with customers, suppliers, and other business partners.
• Ability to meet expectations regarding the timing and completion of the Alcon merger transaction.
• The outcome of any legal proceedings that may be instituted against STAAR related to the proposed Alcon merger.
• The possibility that STAAR's stock price may decline significantly if the proposed Alcon merger is not consummated.

Future Outlook

The company anticipates potential adjustments to these preliminary unaudited financial results as it completes its quarterly review and finalizes financial statements. The future is also heavily tied to the outcome of the Alcon merger proposal, which is subject to stockholder and regulatory approvals, and the ongoing dynamics of the China market.

Management Comments

• STAAR is announcing its preliminary net sales results in advance of its quarterly earnings announcement to provide all stockholders with additional information regarding third quarter net sales performance and trends in advance of the STAAR Special Meeting of Stockholders scheduled for October 23, 2025, to vote on the Alcon merger proposal.

Industry Context

STAAR Surgical operates in the ophthalmic surgery market, specifically as a global leader in phakic IOLs for vision correction. The preliminary sales results highlight the ongoing importance of the China market, where inventory management and distributor purchasing patterns significantly impact overall sales. The pending Alcon merger is a major industry event that could reshape the competitive landscape for STAAR's products and its market position.

Comparison to Industry Standards

• NA

Legal Proceedings

• Potential legal proceedings that may be instituted against STAAR related to the proposed Alcon merger.

Stakeholder Impact

• Shareholders: Will vote on the Alcon merger proposal on October 23, 2025, with preliminary sales data provided to inform their decision. The stock price may decline significantly if the proposed merger is not consummated.
• Customers/Suppliers: Potential impact on relationships due to the proposed Alcon merger.
• Employees: Potential impact on the ability to retain and hire key personnel due to the proposed Alcon merger.

Next Steps

• Complete the quarterly review and finalize financial statements for the quarter ended September 26, 2025.
• File the Quarterly Report on Form 10-Q for the quarter ended September 26, 2025.
• Undergo review of consolidated financial statements by independent registered public accounting firms.
• Hold the Special Meeting of Stockholders on October 23, 2025, to vote on the Alcon merger proposal.

Key Dates

Recommendation

The preliminary Q3 2025 net sales show a modest increase driven by a one-time payment from a prior China shipment and solid growth outside China. However, new orders from China distributors were lower, and year-to-date sales were negatively impacted by inventory reduction in that key market. The results are unaudited and subject to change. The primary near-term driver for the stock is the upcoming vote on the Alcon merger, which introduces significant uncertainty and risk. Given the mixed operational signals and the binary nature of the merger outcome, a 'hold' recommendation is appropriate until more clarity emerges from the finalized Q3 results and the merger vote.

Keywords

STAAR Surgical, STAA, Preliminary Sales, Q3 2025, Net Sales, ICL, Implantable Collamer Lenses, Vision Correction, China Market, Alcon Merger, Proxy Statement, SEC Filing