Recently, STAAR Surgical (NASDAQ stock code: STAA）， A leading manufacturer specializing in the production of implantable lenses for vision correction, due to the sluggish Chinese market, announced that it will lay off a total of 115 employees at its two factories in California on April 21st.

01. The sharp deterioration of demand in China has led to layoffs
However, STAAR Surgical has made it clear that this layoff will not result in the closure of any factories and will still retain over 550 employees in Southern California.

Behind this layoff is the business pressure caused by weak demand in the Chinese market. A spokesperson for STAAR Surgical explained in an email, "This decision is made to put our company in the best position amidst the current weakness in our largest end market and ongoing macroeconomic and geopolitical challenges putting pressure on our business.

From a data perspective, STAAR Surgical's business is highly dependent on overseas markets. According to the company's annual report, 94% of its revenue last year came from sales outside the United States, with two customers distributed to China and Hong Kong accounting for approximately 51% of the combined net sales. However, in 2024, Starr's sales to Chinese distributors decreased by 13% year-on-year, to $161.3 million.

In STAAR Surgical's fourth quarter performance report released earlier this month, CEO Tom Flintstones further pointed out that despite the Chinese government's stimulus plan announced in September, China's macroeconomic situation and consumer confidence have not significantly improved. This background resulted in STAAR Surgical's net loss for the full year of 2024 reaching $20.2 million, while the company had achieved a net profit of $21.3 million the previous year.

Flynn specifically mentioned that the demand for Starr's self funded implanted Collamer crystal in China "sharply deteriorated" at the end of last year. Despite an improvement in the number of surgeries in January, the company still expects China's demand to remain sluggish in the fiscal year 2025, especially in the first half of the year. To address this challenge, STAAR Surgical has stated that they have been working with distributors to address the issue of high inventory levels and plan to reduce production output, capital expenditures, and operating expenses this year.

Monrovia is not only the global administrative office of STAAR Surgical, but also the location of its main crystal manufacturing plants, warehouses, and distribution facilities. In Aliso Viejo, STAAR Surgical focuses on producing raw materials for crystals and has an advanced research facility.

Perhaps in response to sluggish sales, STAAR Surgical announced a leadership change on February 27th. Stephen C. Farrell, the current Chief Independent Director of the STAAR Board, has been appointed as President and CEO, effective from February 26, 2025. Tom Frinzi, the current President and CEO of STAAR, will continue to serve as an advisor in the company until January 2026 to support leadership transition and establish a strong relationship with STAAR in the ophthalmology industry.

Despite facing challenges, according to STAAR Surgical's annual report, its total number of employees at the end of 2024 still reached 1211, higher than 1115 in 2023. This indicates that despite layoffs, STAAR Surgical is still striving to maintain its operational scale and seeking opportunities for growth in adversity.

02. Leaders in segmented fields
STAAR Surgical was founded in 1982 and is headquartered in California, USA, with some of its production bases located in Switzerland. The COLLAMER refractive lens (ICL) launched by STAAR company with exclusive patent protection is the only implantable posterior chamber contact lens in the world that has been certified by the US FDA, European CE, and China NMPA. As of 2024, the global implantation volume of STAAR's ICL lenses has exceeded 3 million pieces, demonstrating its significant influence in the vision correction market.

Myopia, also known as nearsightedness, is a common refractive disorder. In myopia, if the eyeball is too long or the cornea is too curved, the light entering the eye will focus before reaching the retina, making distant objects appear blurry while nearby objects appear relatively clear. The symptoms of myopia usually include blurred far vision, eye fatigue, and frequent squinting. The causes of myopia are complex and may involve genetic factors or environmental factors such as prolonged close eye use. According to data provided by STAAR, approximately 2.6 billion people worldwide suffered from myopia or high myopia in 2020, and this number is expected to surge to 4.9 billion by 2050, highlighting the global nature of myopia and its potential impact on global visual health.

STAAR has launched the EVO ICL surgical solution to address myopia issues. EVO ICL (EVO Implantable Collamer Lens) is an implantable contact lens used to correct refractive errors such as myopia, hyperopia, and astigmatism. Unlike traditional laser corneal refractive surgery such as LASIK, EVO ICL surgery involves minimally invasive surgery to implant soft COLLAMER material lenses between the iris and natural crystalline lens of the eye, without the need to cut corneal tissue. This surgery is reversible, meaning that EVO ICL lenses can be removed or replaced as needed in the future, and may reduce the occurrence of corneal complications. In addition, some patients have reported that EVO ICL provides better visual quality, especially in nighttime or low light environments. For patients with high myopia or those with thin corneas who are not suitable for laser surgery, EVO ICL is a feasible alternative.

STAAR's ICL product line is the core pillar of its overall business. The COLLAMER material developed by the company is composed of hydroxymethyl methacrylate (HEMA), water, and trace amounts of collagen, with water accounting for nearly 40%. This material has extremely high biocompatibility and can reduce intraocular stress reactions and allergic symptoms. COLLAMER material also provides UV protection while maintaining normal visual effects. After 30 years of iterative upgrades, STAAR's ICL product line has evolved to the sixth generation (V6). From the initial V0 model to V6, STAAR has continuously improved its ICL lens design, including enhancing lens stability, increasing optical area, and reducing the probability of cataract occurrence.

03. Performance is greatly affected by the Chinese market
STAAR Surgical Company announced its financial year 2024 and fourth quarter performance report on February 11th. STAAR Surgical faces significant challenges in the 2024 fiscal year, mainly due to weak demand in the Chinese market. The China region is STAAR's largest global market, with product sales of $107 million, $147 million, and $185 million in China from 2021 to 2023. In the fiscal year 2024, STAAR Surgical's ICL sales in China were $161 million (approximately RMB 1.16 billion), a significant decrease from the previous fiscal year. In the fourth quarter, ICL sales in the Chinese market were only $7.5 million, a significant decrease from the same period last year. The following is a detailed analysis of its financial report and related situation:

 Financial Performance
Overall revenue: In fiscal year 2024, STAAR Surgical's net sales were $313.9 million, a decrease of approximately 3% from the previous fiscal year, with ICL (artificial intraocular lens) sales of $312.5 million.
Quarterly performance: Net sales in the fourth quarter were $49 million, a significant decrease year-on-year, mainly due to the decline in demand in the Chinese market. However, apart from the Chinese market, ICL's sales increased by 17% year-on-year.
Profitability: The gross profit margin for fiscal year 2024 is 76.3%, slightly lower than the 78.4% for the same period last year. The company's net loss was $20.2 million, compared to a net income of $21.3 million in the same period last year. Adjusted EBITDA was $23.2 million, significantly lower than the $56.8 million in the same period last year.

 Market performance
Chinese market: China is one of the important markets for STAAR Surgical, but the macroeconomic downturn in 2024 has led to a significant decline in its sales in China. The company expects the Chinese market to remain sluggish in the first half of 2025 and is expected to recover in the second half.
Other regions of the world: Except for the Chinese market, STAAR Surgical's ICL sales in other regions of the world have shown strong performance, with a 17% increase in the fourth quarter and a 13% increase for the whole year. This indicates that the demand for its products remains strong in other regions around the world.

 Future prospects
FY2025 Expectation: STAAR Surgical holds a cautiously optimistic attitude towards FY2025, expecting double-digit growth in ICL sales except for the Chinese market. The company plans to cope with lower revenue expectations by reducing production volume, minimizing capital expenditures, and optimizing operating costs.
Chinese market recovery: The company is working with distributors to reduce inventory levels and prepare for market recovery. Although it is expected that the sales revenue in the Chinese market will be below 5 million US dollars in the first half of 2025, it is expected to recover to 75 million to 125 million US dollars in the second half of the year.
STAAR Surgical will continue to promote the application of ICL technology globally, while consolidating its market leadership position through market education, technological innovation, and team building. In addition, the company is actively responding to macroeconomic challenges and enhancing its risk resistance through cost control and operational optimization.

Source: http://qixieke.com/Font/index/detailPage.html?id=3367-19