UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: October 2, 2026
Or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-11634
STAAR Surgical Company
(Exact Name of Registrant as Specified in its Charter)
Delaware
95-3797439
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
25510 Commercentre DriveLake Forest, California
92630
(Address of Principal Executive Offices)
(Zip Code)
(626) 303-7902
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common
STAA
NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The registrant has 50,201,819 shares of common stock, par value $0.01 per share, outstanding as of October 30, 2026.
STAAR SURGICAL COMPANY
INDEX
PAGE
NUMBER
PART I – FINANCIAL INFORMATION
1
ITEM 1
FINANCIAL STATEMENTS
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
20
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
28
ITEM 4.
CONTROLS AND PROCEDURES
PART II – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
ITEM 1A.
RISK FACTORS
29
ITEM 5.
OTHER INFORMATION
ITEM 6.
EXHIBITS
30
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
(Unaudited)
October 2, 2026
January 2, 2026
ASSETS
Current assets:
Cash and cash equivalents
$
133,610
153,150
Investments available for sale (amortized cost basis of $72,919 and $34,385 at October 2, 2026 and January 2, 2026, respectively)
72,804
34,386
Accounts receivable trade, net of allowance for credit losses of $720 and $83 at October 2, 2026 and January 2, 2026, respectively
86,528
50,064
Inventories, net
45,017
55,496
Prepayments, deposits and other current assets
15,471
18,449
Total current assets
353,430
311,545
Property, plant and equipment, net
68,525
73,323
Operating lease right-of-use assets, net
26,163
29,609
Cloud-based software
33,063
30,700
Goodwill
1,786
Deferred income taxes
1,030
3,365
Other assets
1,159
1,350
Total assets
485,156
451,678
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
14,249
11,574
Obligations under operating leases
5,943
5,872
Allowance for sales returns
10,223
10,199
Other current liabilities
45,126
40,859
Total current liabilities
75,541
68,504
27,701
32,481
Asset retirement obligations
45
Deferred rent
89
Pension liability
5,651
6,375
Total liabilities
109,027
107,494
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 50,577 shares issued and 50,201 shares outstanding at October 2, 2026 and 49,779 shares issued and 49,403 shares outstanding at January 2, 2026
506
498
Additional paid-in capital
517,381
504,682
Treasury stock, 376 and 376 shares at October 2, 2026 and January 2, 2026, respectively
(6,461
)
Accumulated other comprehensive loss
(6,112
(6,511
Accumulated deficit
(129,185
(148,024
Total stockholders’ equity
376,129
344,184
Total liabilities and stockholders’ equity
See accompanying notes to the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended
Nine Months Ended
September 26, 2025
Net sales
83,411
94,732
270,468
181,641
Cost of sales
24,276
16,857
72,747
42,962
Gross profit
59,135
77,875
197,721
138,679
Selling, general and administrative expenses:
General and administrative
18,899
20,763
58,660
66,190
Selling and marketing
24,316
23,461
75,769
76,689
Research and development
10,461
9,209
30,329
30,811
Merger transaction and related costs
—
5,926
6,743
Restructuring, impairment and related charges
26
2,681
27,938
Total selling, general and administrative expenses
53,676
59,385
174,182
207,554
Operating income (loss)
5,459
18,490
23,539
(68,875
Other income (expense), net:
Interest income, net
1,175
790
3,021
3,522
Gain (loss) on foreign currency transactions
(42
(843
(1,563
3,138
Other income, net
388
353
1,225
604
Total other income, net
1,521
300
2,683
7,264
Income (loss) before income taxes
6,980
18,790
26,222
(61,611
Provision for income taxes
1,405
9,906
7,383
528
Net income (loss)
5,575
8,884
18,839
(62,139
Net income (loss) per share:
Basic
0.11
0.18
0.37
(1.26
Diluted
Weighted average shares outstanding:
50,542
49,633
50,257
49,499
51,449
50,549
51,402
2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Other comprehensive income (loss):
Defined benefit plans:
Net change in plan assets
876
(514
764
(184
Reclassification into other income (expense), net
(6
17
(18
49
Investments available for sale:
Change in unrealized gain (loss)
(101
3
(117
11
Foreign currency translation gain (loss)
244
(639
(238
866
Tax effect
(158
250
8
(240
Other comprehensive income (loss), net of tax
855
(882
399
504
Comprehensive income (loss)
6,430
8,002
19,238
(61,635
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
CommonStock Shares
CommonStock ParValue
AdditionalPaid-InCapital
Treasury Stock Shares
Treasury Stock
AccumulatedOtherComprehen-sive Income(Loss)
AccumulatedDeficit
Total
Balance, at July 3, 2026
50,499
505
513,081
(376
(6,967
(134,760
365,398
Net income
Other comprehensive income
Stock-based compensation
5,620
Repurchase of employee common stock for taxes withheld
(53
(1,320
Vested restricted and performance stock units
131
Balance, at October 2, 2026
50,577
Balance, at June 27, 2025
49,546
495
484,801
(261
(4,479
(5,645
(138,599
336,573
Other comprehensive loss
Common stock issued upon exercise of options
157
2,963
2,964
8,222
Repurchase of common stock
(115
(1,982
(2
Balance, at September 26, 2025
49,730
497
495,986
(6,527
(129,715
353,780
4
Balance, at January 2, 2026
49,779
88
1,407
1,408
17,221
(235
(5,929
(5,931
945
9
Balance, at December 27, 2024
49,294
493
471,449
(7,031
(67,576
397,335
Net loss
210
3,349
3,351
22,543
(71
(1
(1,355
(1,356
297
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment
6,931
6,312
Amortization of cloud-based software
2,001
304
Non-cash operating lease expense
2,691
2,665
Impairment of fixed assets and operating lease right-of-use assets
14,593
Accretion/Amortization of investments available for sale
(502
(55
2,434
(718
Change in net pension liability
704
43
Loss on disposal of property and equipment
23
Stock-based compensation expense
16,900
21,975
Provision for sales returns and credit losses
665
975
Inventory provision
4,493
3,261
Changes in working capital:
Accounts receivable
(37,133
18,004
Inventories
6,254
(12,449
Prepayments, deposits, and other assets
2,269
1,051
(4,363
(11,064
2,414
(7,911
Other current and non-current liabilities
712
(5,186
Net cash provided by (used in) operating activities
25,310
(30,316
Cash flows from investing activities:
Acquisition of property and equipment
(1,872
(4,143
Purchase of investments available for sale
(81,947
(26,464
Proceeds from maturity of investments available for sale
40,532
92,984
Proceeds from sale of investments available for sale
3,400
3,377
Net cash provided by (used in) investing activities
(39,887
65,754
Cash flows from financing activities:
Repayment of finance lease obligations
Proceeds from the exercise of stock options
Proceeds from vested restricted and performance stock units
Net cash used in financing activities
(4,514
(4,505
Effect of exchange rate changes on cash and cash equivalents
(449
1,063
Increase (decrease) in cash and cash equivalents
(19,540
31,996
Cash and cash equivalents, at beginning of the year
144,159
Cash and cash equivalents, at end of the period
176,155
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 — Basis of Presentation and Significant Accounting Policies
STAAR Surgical Company, a Delaware corporation, was first incorporated in 1982, and together with its subsidiaries designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. The accompanying Condensed Consolidated Financial Statements present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. In accordance with those rules and regulations, certain information and footnote disclosures normally included in the Annual Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of January 2, 2026 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2026.
The Condensed Consolidated Financial Statements for the three and nine months ended October 2, 2026 and September 26, 2025, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three and nine months ended October 2, 2026 and September 26, 2025, are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
Each of the Company’s fiscal reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks. Unless the context indicates otherwise “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries.
Restructuring, Impairment and Related Charges
In the first half of 2025, the Company took a number of steps to change its leadership team, realign its leadership structure to better address market needs, reduce costs and discretionary spending, and better position the Company to return to sustainable growth. In addition, as a result of the termination of the Agreement and Plan of Merger (the “Merger Agreement”) with Alcon Research, LLC, a Delaware limited liability company (“Alcon”) in January 2026 and the entry into a letter agreement (the “Cooperation Agreement”) with Broadwood Partners, L.P. and its affiliates (“Broadwood”), the Company incurred additional restructuring related charges due to leadership realignment. Restructuring, impairment and related charges were as follows (in thousands):
Severance and reduction in workforce(1)
18
1,614
12,471
Consulting expenses
1,067
874
Impairment on leasehold improvements and machinery and equipment(2)
7,759
Impairment on real property right-of-use assets(3)
4,083
Impairment on internally developed software(2)
2,751
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)
Merger Transactions and Related Costs
In connection with the proposed merger with Alcon and the Cooperation Agreement, the Company incurred professional service expenses of $6,743,000 for the nine months ended October 2, 2026. The Cooperation Agreement provided for the reimbursement of certain reasonable out-of-pocket fees and expenses to Broadwood, Yunqi Capital and Defender Capital related to the merger with Alcon. See Note 16 – Related Party Transactions.
Vendor Concentration
There were two vendors that accounted for over 34% and 30% of the Company’s consolidated accounts payable as of October 2, 2026 and January 2, 2026, respectively. There was one vendor that accounted for over 10% of the Company’s consolidated purchases for the three months ended October 2, 2026.
Segment Reporting
The Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer. The Company’s CODM manages and allocates resources to the operations of the Company on a consolidated basis. The CODM assesses performance by comparing actual results to forecasts and decides how to allocate resources, i.e., headcount and compensation, based on net income or on operating results, if a net loss. Significant segment expenses are consistent with those presented on the Condensed Consolidated Statements of Operations.
The measure of segment assets is reported on the balance sheet as total consolidated assets and the expenditures for additions to long-lived assets, and depreciation and amortization expense is consistent with those presented on the Condensed Consolidated Statement of Cash Flows.
See Note 14 – Disaggregation of Sales, Geographic Sales and Product Sales and Note 15 – Geographic Assets for specific information regarding the Company’s sales and long-lived assets.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).” ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 requires footnote disclosure about specific expenses to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil- and gas-production activities or other types of depletion expenses. The tabular disclosure also would include certain other expenses, when applicable. ASU 2024-03 does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company previously disclosed that it had adopted the annual disclosure requirements of ASU 2024-03 at the beginning of fiscal year 2026 and would adopt the interim disclosure requirements beginning in fiscal year 2027. The Company has since determined to adopt the annual disclosure requirements and interim disclosure requirements as of their effective dates under ASU 2024-03 and therefore will adopt the annual disclosure requirements at the beginning of fiscal year 2027 and the interim disclosure requirements beginning in fiscal year 2028.
Note 2 — Investments Available for Sale
Investments available for sale (“AFS”) and the related fair value measurement consisted of the following (in thousands):
Fair Value Measurements
Amortized Cost
Unrealized Gains
Unrealized Losses
Estimated Fair Value
Level 1
Level 2
Commercial paper
18,803
(29
18,774
Certificates of deposit
3,077
(5
3,072
U.S. Treasury securities
11,944
(3
11,941
Corporate debt securities
39,095
(78
39,017
Total investments AFS
72,919
60,863
14,682
816
990
17,897
17,898
34,385
33,396
The Company obtains the fair value from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers and other industry and economic events.
The Company assessed each debt security in a gross unrealized loss position to determine whether the decline in fair value below amortized cost was a result of credit losses or other factors, whether the Company expects to recover the amortized cost of the debt security, the Company’s intent to sell and whether it is more-likely-than-not that the Company will not be required to sell the debt security before the recovery of the amortized cost basis. There has been no allowance for expected credit losses recorded for the three and nine months ended October 2, 2026 and September 26, 2025.
The following table shows the fair value of investments AFS by contractual maturity (in thousands):
As of October 2, 2026
Within one year
After one year through five years
Note 2 — Investments Available for Sale (Continued)
During the nine months ended October 2, 2026, several of the Company’s investments AFS with an aggregate fair value of $3,400,000 were subject to early redemption. The Company recognized a gain upon redemption of less than $1,000 for the nine months ended October 2, 2026. During the nine months ended September 26, 2025, several of the Company’s investments AFS with an aggregate fair value of $3,377,000 were subject to early redemption. The Company recognized a gain upon redemption of $2,000 for the nine months ended September 26, 2025.
Note 3 — Inventories
Inventories, net are stated at the lower of cost and net realizable value, determined on a first-in, first-out basis and consisted of the following (in thousands):
Raw materials and purchased parts
12,336
10,238
Work in process
6,649
8,514
Finished goods(1)
29,590
39,673
Total inventories, gross
48,575
58,425
Less inventory reserves
(3,558
(2,929
Total inventories, net
Note 4 — Prepayments, Deposits, and Other Current Assets
Prepayments, deposits, and other current assets consisted of the following (in thousands):
Prepayments and deposits
5,147
8,229
Prepaid insurance
1,119
3,269
Prepaid income taxes
758
1,917
3,793
418
Value added tax (VAT) receivable
3,844
4,249
Other(1)
810
367
Total prepayments, deposits and other current assets
10
Note 5 — Property, Plant and Equipment
Property, plant and equipment, net consisted of the following (in thousands):
Machinery and equipment
51,285
45,137
Computer equipment and software
12,578
10,525
Furniture and fixtures
7,527
7,483
Leasehold improvements
24,623
19,403
Construction in process
18,724
30,340
Total property, plant and equipment, gross
114,737
112,888
Less accumulated depreciation
(46,212
(39,565
Total property, plant and equipment, net
As discussed in Note 1 – Basis of Presentation and Significant Accounting Policies, during the nine months ended September 26, 2025, the Company recognized fixed asset impairment expense of $7,759,000, primarily on leasehold improvements and machinery and equipment as the Company will no longer be using these assets. The Company also recognized impairment during the nine months ended September 26, 2025 of $2,751,000 for internally developed software that the Company will no longer be using as it transitions to a cloud-based software solution. These amounts are recorded in Restructuring, impairment and related charges on the Condensed Consolidated Statements of Operations.
Construction in process primarily consists of the build out and validation of machinery and equipment.
The Company recorded depreciation expense in the following categories as follows (in thousands):
960
750
2,771
2,390
1,081
3,012
2,790
196
176
568
525
197
200
580
570
Total depreciation expense
2,000
6,275
Note 6 — Cloud-Based Software
The Company capitalized cloud-based software implementation costs related to several systems, including enterprise resource planning and customer relationship management systems, which were placed into service at the beginning of the second quarter of 2026. The Company expects to continue to invest and add functionality to its systems. Capitalized cloud-based software costs, net consisted of the following (in thousands):
Capitalized cloud-based software
39,266
31,527
Less accumulated amortization
(2,410
(409
Total capitalized cloud-based software, net
36,856
31,118
Capitalized cloud-based software included in prepayments, deposits and other current assets
Note 6 — Cloud-Based Software (Continued)
Activity related to cloud-based software was as follows (in thousands):
Additions to cloud-based software
2,693
3,963
7,739
11,064
948
104
Capitalized software placed into service
33,699
2,035
Note 7 — Other Current Liabilities
Other current liabilities consisted of the following (in thousands):
Accrued salaries and wages
16,247
12,981
Accrued bonuses
7,346
9,424
Severance payable(1)
1,035
894
Income taxes payable
3,385
1,304
Marketing obligations
3,333
3,397
Other(2)
13,780
12,859
Total other current liabilities
Note 8 — Operating Leases
The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ten years in length with options to extend. The Company does not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):
878
773
68
413
Real property
38,875
39,824
Operating lease right-of-use assets, gross
39,821
41,010
(13,658
(11,401
Current operating lease obligations
Long-term operating lease obligations
Total operating lease liability
33,644
38,353
Weighted-average remaining lease term (in years)
6.1
6.7
Weighted-average discount rate
6.52
%
6.33
12
Note 8 — Operating Leases (Continued)
As discussed in Note 1, during the nine months ended September 26, 2025, the Company recognized impairment on real property right-of-use assets of $4,083,000. The impairment relates to the Company’s decision to exit several of its leased properties, for which the Company has obtained a subtenant for one of its properties and is actively pursuing subleasing the remaining properties. The impairment was determined based on market comparables of similar subleased properties. The impairment is recorded in Restructuring, impairment and related charges on the Condensed Consolidated Statements of Operations.
Supplemental cash flow information related to operating leases was as follows (in thousands):
Operating lease cost
1,757
6,154
5,704
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows
2,353
1,724
6,378
5,037
Right-of-use assets obtained in exchange for new operating lease liabilities
82
91
2,024
Future Maturities of Lease Liabilities
Estimated future maturities of lease liabilities under operating leases having initial or remaining non-cancelable lease terms more than one year as of October 2, 2026 is as follows (in thousands):
As of October 2, 202612 Months Ended
Operating Leases
September 2027
7,968
September 2028
6,945
September 2029
7,041
September 2030
6,319
September 2031
5,216
Thereafter
8,328
Total future minimum lease payments
41,817
Less amounts representing interest
(8,173
Total lease liability
Note 9 — Income Taxes
The Company recorded an income tax provision as follows (in thousands):
The effective tax rates for the three months ended October 2, 2026 and September 26, 2025 were 20.1% and 52.7%, respectively, and were 28.2% and (0.9)% for the nine months ended October 2, 2026 and September 26, 2025, respectively. The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% for the three and nine months ended October 2, 2026 and September 26, 2025, respectively, primarily due to the income tax expense generated in foreign jurisdictions.
13
Note 10 — Defined Benefit Pension Plans
The Company has defined benefit plans covering employees of its Switzerland and Japan operations. The following table summarizes the components of net periodic pension cost recorded for the Company’s defined benefit pension plans (in thousands):
Service cost(1)
440
451
1,347
1,291
Interest cost(2)
97
66
283
191
Expected return on plan assets(2)
(173
(145
(505
(419
Prior service cost/(credit)(2),(3)
(54
332
(164
226
Settlement gain(2),(3)
(11
Actuarial gain/(loss) recognized in current period(2),(3)
48
(312
146
(166
Net periodic pension cost
358
389
1,107
1,112
The Company currently is not required to and does not make contributions to its Japan pension plan. The Company’s contributions to its Swiss pension plan are as follows (in thousands):
Employer contribution
360
361
1,076
983
Note 11 — Stockholders’ Equity
Incentive Plan
The Company maintains an Amended and Restated Omnibus Equity Incentive Plan, as amended (the “Equity Plan”). The Equity Plan allows for awards of stock options, performance stock options (“PSOs”), stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and other stock- and cash-based awards, including awards that are subject to service-based and performance-based vesting conditions. As of October 2, 2026, the Company had outstanding grants of stock options, PSOs, RSUs and PSUs.
Stock options granted under the Equity Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board of Directors (the “Board”), and expire over periods not exceeding 10 years from the date of grant. Certain stock options and stock-based awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Equity Plan). Grants of PSOs generally vest based on service, performance, or a combination of both. Grants of restricted stock outstanding under the Equity Plan generally vest over periods of one to three years. Grants of RSUs and PSUs outstanding under the Equity Plan generally vest based on service, performance, or a combination of both. On June 18, 2026, stockholders approved a proposal to increase the number of shares under the Equity Plan by 3,900,000 shares, for a total of 26,705,000 shares. As of October 2, 2026, there were 3,730,108 shares available for grant under the Equity Plan.
14
Note 11 — Stockholders’ Equity (Continued)
Stock-Based Compensation
The cost that has been charged against income for stock-based compensation is set forth below (in thousands):
Stock options
793
1,566
2,794
5,611
PSOs
203
Restricted stock
302
RSUs
2,495
3,382
7,880
9,690
PSUs
1,699
2,478
5,088
5,085
Nonemployee stock options
188
124
564
426
Nonemployee RSUs
139
608
371
861
Total stock-based compensation expense
5,517
8,158
The Company recorded stock-based compensation costs in the following categories (in thousands):
296
806
428
2,772
5,026
7,717
12,352
1,275
1,492
3,765
4,078
1,174
1,592
4,612
5,117
Total stock-based compensation expense, net
Amounts capitalized as part of inventory
103
64
321
Total stock-based compensation expense, gross
As of October 2, 2026, total unrecognized compensation cost and the weighted-average period of recognition related to non-vested stock-based compensation arrangements were as follows (dollars in thousands):
Unrecognized Compensation Costs
Weighted-Average Recognition Period (in Years)
3,936
1.9
4,502
3.2
17,870
6,503
1.2
Total unrecognized stock-based compensation cost
32,811
Assumptions
The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model applying 15% estimated forfeiture rate based on historical forfeiture experience and applying the weighted-average assumptions noted in the following table. The fair value of each PSO is estimated on the date of grant using a Monte Carlo simulation model and applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of stock options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that stock options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.
15
Assumptions (Continued)
Stock Options
Expected dividend yield
0
Expected volatility
62
60
Risk-free interest rate
4.39
3.83
4.29
4.07
Expected term (in years)
4.86
5.05
Performance Stock Options
57
4.63
5.96
Stock Options and Performance Stock Options
A summary of stock option and PSO activity under the Equity Plan for nine months ended October 2, 2026 is presented below:
StockOptions(in 000’s)
Weighted-AverageExercisePrice
Weighted-AverageRemainingContractualTerm (years)
AggregateIntrinsicValue(in 000’s)
Outstanding at January 2, 2026
1,716
44.85
Granted
25.75
Exercised
(88
15.94
Forfeited or expired
(161
41.68
Outstanding at October 2, 2026
1,971
41.52
6.36
1,223
Exercisable at October 2, 2026
1,385
47.71
1,065
Restricted Stock, Restricted Stock Units and Performance Stock Units
A summary of RSU and PSU activity under the Equity Plan for the nine months ended October 2, 2026 is presented below (shares in thousands):
Unvested at January 2, 2026
1,459
802
594
423
Vested
(595
(350
(307
(141
Unvested at October 2, 2026
1,151
734
Share Repurchase Program
In September 2026, the Company’s Board of Directors authorized a share repurchase program under which the Company may repurchase up to $50.0 million of its outstanding common stock. During the quarter ended October 2, 2026, the Company did not repurchase any of its shares under the share repurchase program.
16
Note 12 - Commitments and Contingencies
Executive Agreements
The Company has entered into agreements with certain of its executives that provide for severance payments and benefits upon termination of employment by the company without “cause” or by the executive for “good reason” as defined in the applicable agreements. Certain executives are also party to agreements that provide for enhanced payments and benefits in connection with a termination of employment upon a “change in control.”
Litigation and Claims
From time to time, the Company is involved in various legal proceedings, claims, regulatory actions and other matters arising in the normal course of business. These legal proceedings, claims, regulatory actions and other matters may relate to, among other things, contractual rights and obligations, vendor and distributor relations, employment matters, and claims of product liability or medical device quality compliance. The Company maintains insurance coverage for various matters, including product liability and certain securities claims. While the Company does not believe that any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.
Note 13 — Basic and Diluted Net Income (Loss) Per Share
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands except per share amounts):
Numerator:
Denominator:
Weighted average common shares:
Common shares outstanding
Denominator for basic calculation
Weighted average effects of potentially diluted common stock:
51
96
56
391
452
520
465
368
569
Denominator for diluted calculation
Because the Company had a net loss for the nine months ended September 26, 2025, the number of diluted shares is equal to the number of basic shares. The following table sets forth potentially dilutive securities excluded from the computation of diluted net income (loss) per share for the periods presented because their effect would have been anti-dilutive (shares in thousands):
Stock options and PSOs
1,611
2,020
1,505
2,346
Restricted stock, RSUs and PSUs
69
33
803
1,680
3,096
1,538
3,149
Note 14 — Disaggregation of Sales, Geographic Sales and Product Sales
100% of the Company’s sales are generated from the ophthalmic surgical product segment and the CODM makes operating decisions and allocates resources based upon the consolidated operating results, and therefore the Company operates as one operating segment for financial reporting purposes. The Company’s principal products are implantable Collamer Lenses (“ICLs”) used in refractive surgery. The composition of the Company’s net sales is primarily related to ICL sales. Net sales include sales of delivery systems and normal recurring sales adjustments such as sales return allowances. In the following tables, sales are disaggregated by category and sales by geographic market data.
The Company maintains finished goods inventory at different sites in the United States, Switzerland and Japan, and from time to time, consigns or ships finished goods inventory to surgeons, hospitals, and distributors in advance of anticipated demand. The Company maintains title and risk of loss on consigned inventory and generally does not recognize revenue for consignment inventory until the Company is notified that the lenses have been implanted. The following table disaggregates the Company’s consignment sales (in thousands):
Non-consignment sales
75,498
62,995
231,910
138,371
Consignment sales
7,913
31,737
38,558
43,270
Total net sales
In April 2025, in order to mitigate potential financial exposure from tariffs imposed by China, the Company negotiated and implemented consignment agreements with its two distributors in China and delivered consigned inventory to its distributors in advance of the implementation of tariffs and delivered additional consignment inventory throughout fiscal 2025. As this consigned inventory in China is purchased by the Company’s distributors, revenue associated with such consigned inventory are recorded as consignment sales. China consignment sales for the three and nine months ended October 2, 2026 were $5,547,000 and $27,701,000, respectively. China consignment sales were $27,969,000 and $30,754,000 for the three and nine months ended September 26, 2025, respectively.
The Company’s product is marketed and sold in more than 85 countries and its product is manufactured in the United States and Switzerland. Sales are attributed to countries based on locations of customers. The composition of the Company’s net sales to unaffiliated customers was as follows (in thousands):
Domestic
6,462
5,632
19,184
16,726
Foreign:
China(1)
39,301
55,833
139,084
60,255
Japan
10,376
11,226
33,782
33,536
27,272
22,041
78,418
71,124
Total foreign sales
76,949
89,100
251,284
164,915
The Company’s China distributors accounted for 47% and 51% of net sales for the three and nine months ended October 2, 2026, respectively. The Company’s China distributors accounted for 59% and 33% of net sales for the three and nine months ended September 26, 2025. As of October 2, 2026, the Company’s China distributors accounted for 61% of consolidated trade receivables, and as of January 2, 2026, the Company’s China distributors accounted for 33% of consolidated trade receivables.
Note 15 — Geographic Assets
The Company’s long-lived assets are located in the following geographical locations in which the Company operates. Other than the U.S. and Switzerland, no other geographic location exceeds 10% of each category of long-lived assets. The composition of the Company’s long-lived assets was as follows (in thousands):
U.S.
Switzerland
51,212
16,974
339
Operating lease ROU assets, net
19,460
4,481
2,222
107,528
21,455
2,561
131,544
55,621
17,311
21,454
5,346
2,809
108,193
22,657
3,200
134,050
Note 16 — Related Party Transactions
On January 14, 2026, following the termination of the Merger Agreement, STAAR entered into the Cooperation Agreement with Broadwood, and agreed, among other things, to increase the size of the Board from six to seven directors, accept the resignations of Mr. Farrell and Dr. Yeu from the Board, and appoint each of Messrs. Bradsher, LeBuhn and Wang (each a “New Director”) to the Board. Additionally, the Company agreed that the Board would nominate each New Director as a candidate for election as a director at the 2026 annual meeting of shareholders and that the size of the Board, until the conclusion of the 2027 annual meeting of shareholders, will not exceed seven directors. The Company also agreed to reimburse Broadwood, Yunqi Capital and Defender Capital for certain reasonable and documented out-of-pocket fees and expenses they have incurred. Each of Broadwood and Yunqi Capital were holders of more than 5% of the Company’s outstanding stock at the time the Company entered into the Cooperation Agreement. The Cooperation Agreement was reviewed and approved by the Company’s Board, and it reviewed and approved the payment of the fees and expenses incurred by Broadwood and Yunqi Capital. For the nine months ended October 2, 2026, the Company paid $5,036,000 to Broadwood, $962,000 to Yunqi Capital and $3,000 to Defender Capital, in accordance with the Cooperation Agreement.
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Special Note Regarding Forward-Looking Statements
The matters addressed in this Item 2 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created therein. In some cases readers can recognize forward-looking statements by the use of words like “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “believe,” “will,” “should,” “could,” “forecast,” “potential,” “continue,” “ongoing” (or the negative of those words and similar words or expressions), although not all forward-looking statements contain these words. Forward-looking statements include, without limitation, statements regarding the intent, belief or current expectations of the Company and its management regarding any of the following: demand for our Implantable Collamer® Lenses; the benefits of our leadership realignment and related efforts; the timing of and our ability to manufacture and supply 100% of EVO and EVO+ ICLs for China from Switzerland and statements regarding tariff-related impacts associated therewith; China macroeconomic conditions, procedure volumes, demand, and inventory levels; any projections of or guidance as to future earnings, revenue, sales, profit margins, expense rate, cash, effective tax rate, product mix, capital expense or any other financial items; the plans, strategies, and objectives of management for future operations or prospects for achieving such plans; potential outcomes and timing of the Company’s enterprise resource planning implementation; projections regarding production volumes in the U.S. and/or Switzerland; statements regarding new, existing, or improved products, including but not limited to, expectations for success of new, existing, and improved products in the U.S. or international markets or government approval of new or improved products; commercialization of new or improved products; future economic conditions or size of market opportunities globally; expected costs of operations; statements of belief, including as to achieving business plans for 2026 and beyond; expected regulatory activities and approvals, product launches, and any statements of assumptions underlying any of the foregoing.
Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution investors and prospective investors that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors, which if they do not materialize or prove correct, could cause actual results to differ materially from those expressed or implied by such forward-looking statements. We caution you not to place undue reliance on these forward-looking statements and to note they speak only as of the date hereof. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements include, without limitation, our ability to grow and generate profit; our reliance on independent distributors in international markets; a slowdown or disruption to the Chinese economy; global economic conditions; disruptions in our supply chain; fluctuations in foreign currency exchange rates; international trade disputes (including involving tariffs) and substantial dependence on demand from Asia; changes in effective tax rate or tax laws; any loss of use of our principal manufacturing facility; competition; potential losses due to product liability claims; our exposure to environmental liability; data corruption, cyber-based attacks or network security breaches and/or noncompliance with data protection and privacy regulations; acquisitions of new technologies; climate changes; the willingness of surgeons and patients to adopt a new or improved product and procedure; extensive clinical trials and resources devoted to research and development; compliance with government regulations; legal proceedings, claims and regulatory actions; the discretion of regulatory agencies to approve or reject existing, new or improved products, or to require additional actions before or after approval, or to take enforcement action; laws pertaining to healthcare fraud and abuse; changes in FDA or international regulations related to product approval; product recalls or failures; and other important factors, including those described in our Annual Report on Form 10-K in “Item 1A. Risk Factors” filed on March 3, 2026.
We disclaim any intention or obligation to update or review these financial projections or forward-looking statements due to new information or other events except as required by law.
The following discussion should be read in conjunction with the Company’s unaudited Condensed Consolidated Financial Statements, including the related notes, provided in this report.
We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website in the ‘Investor Relations’ sections. Accordingly, investors should monitor such portions of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.
Overview
STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. We are the leading manufacturer of phakic implantable lenses used worldwide in corrective or “refractive” surgery. We have been dedicated solely to ophthalmic surgery for over 40 years. Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual
freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction. We generate worldwide revenue almost exclusively from sales of our Implantable Collamer® Lenses, or “ICLs.” Our ICLs are made from Collamer, which is a proprietary collagen copolymer material created and exclusively used by STAAR to make our lenses soft, flexible and biocompatible with the eye. Our ICLs are phakic lenses, meaning that they are implanted into the eye without removing the eye’s natural crystalline lens. This distinguishes an ICL procedure from other refractive procedures, as it does not involve the removal of corneal eye tissue. All of our ICLs are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery. Further, while ICLs are intended to be permanent, our ICLs are reversible lens implants, meaning they can be removed by a doctor if desired. We are also working to expand ICL adoption worldwide through partnerships and patient education. Finally, we are prioritizing investments in R&D, clinical proof and regulatory progress to expand beyond our core offering and bring meaningful new products to patients.
STAAR employs a commercialization strategy that strives for sustainable, profitable growth. Our growth strategy includes making our complete ICL product line available in our existing geographic markets and expanding into attractive markets where we do not sell our products today. In addition, we are focused on driving awareness of the ICL procedure and the clinical benefits of our ICLs, and providing surgeon training, support and education, particularly in our newer markets.
Business Environment and Factors Affecting Comparability
For the three months ended October 2, 2026, net sales were $83.4 million, compared with $94.7 million during the same period last year, a decrease of 12%. Third-quarter 2025 net sales included $25.9 million associated with delayed revenue recognition of an order placed and shipped in 2024 (the “December China Shipment”). Excluding that amount, the prior-year comparison base would have been $68.8 million, against which third-quarter 2026 net sales would have increased 21%.
Gross profit margin for the third quarter of 2026 was 70.9% of total net sales, compared to 82.2% in the prior-year quarter. The year-over-year decline was primarily driven by the recognition under U.S. GAAP, revenues for the $25.9 million December China Shipment in the third quarter of 2025 while corresponding costs for the December China Shipment were recognized in the fourth quarter of 2024, which therefore increased the third quarter of 2025 gross margin by 6.7%. Excluding this one-time item, reported gross margin in the third quarter of 2025 would have been 75.5% (the “Adjusted Third Quarter 2025 Gross Margin”).
Several temporary factors caused gross profit margin in the third quarter of 2026 to decline from the Adjusted Third Quarter of 2025 Gross Margin:
As a result of these factors, we do not expect to achieve our target gross margin of 75% in 2026, although we do expect improvement in the fourth quarter of 2026. We expect gross margin to improve going forward for several reasons. First, we expect manufacturing costs to decrease as production volumes rise in both the U.S. and Switzerland. Second, freight costs will improve once certain ERP enhancements are introduced to enable us to consolidate shipments to customers. Third, all new ICLs for China were manufactured in Switzerland starting the third quarter of 2026, we expect tariff costs will decline. Finally, we expect expiring product to decrease from the levels we saw during the first nine months of 2026.
Selling, general and administrative expenses were $53.7 million in the third quarter of 2026, compared to $59.4 million in the third quarter of 2025. Excluding restructuring, impairment, and related charges of $6.0 million recorded in the previous year that were not repeated this year, third quarter of 2025 selling, general and administrative expenses would have been $53.4 million. Third quarter of 2026 selling, general and administrative expenses included year-over-year decreases driven primarily by lower variable compensation, partially offset by higher depreciation expense associated with the Company’s ERP system.
The ERP implementation represented a significant operational undertaking for the Company this year. As sales volumes grew, unforeseen operational challenges emerged that required extensive daily manual intervention from teams across the organization. Through these concentrated efforts, the Company successfully met its sales targets for the quarter. While certain implementation-related issues persist, the Company has developed and implemented a comprehensive remediation plan and anticipates resolving the most significant issues by the end of 2026. The Company expects to continue to invest and add functionality to its systems.
21
Net income for the third quarter of 2026 was $5.6 million or $0.11 per diluted share, down from net income of $8.9 million or $0.18 per diluted share for the prior year quarter. Net income in the prior year quarter was favorably affected by the December China Shipment, tax effected at $15.2 million. Excluding this impact, the net loss would have been $6.3 million or $(0.13) per diluted share. Cash and investments available for sale increased to $206.4 million at October 2, 2026 from $181.5 million at July 3, 2026, and we expect to continue to generate cash during the remainder of the year.
In September 2026, we announced that our Board of Directors authorized the repurchase of up to $50.0 million of the Company’s common stock. We did not repurchase any shares of our common stock under this share repurchase program during the third quarter of 2026.
Critical Accounting Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses and analyzes data in our unaudited Condensed Consolidated Financial Statements provided in this report, which we have prepared in accordance with U.S. generally accepted accounting principles. Preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board. Actual results may differ, significantly at times, from these estimates if actual conditions differ from our assumptions.
Management believes that there have been no significant changes during the nine months ended October 2, 2026 to the items that we disclosed as our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended January 2, 2026.
Results of Operations
The following table shows the percentage of our total sales represented by certain items reflected in our Condensed Consolidated Statements of Income for the periods indicated.
Percentage of Net Sales for
100.0
29.1
17.8
26.9
23.7
70.9
82.2
73.1
76.3
22.7
21.9
21.7
36.4
29.2
24.8
28.0
42.2
12.5
9.7
11.2
17.0
0.0
6.3
2.5
3.3
1.0
15.3
Total selling, general and administrative
64.4
62.7
114.2
6.5
19.5
8.7
(37.9
)%
1.8
0.3
4.0
8.3
19.8
(33.9
1.7
10.5
2.7
6.6
9.3
7.0
(34.2
Net Sales
The following table presents our net sales (dollars in thousands):
PercentageChange
2026 vs. 2025
(12.0
48.9
22
Three Months Ended October 2, 2026 Compared to the Three Months Ended September 26, 2025
Net sales for the three months ended October 2, 2026 decreased 12.0% from the same period of 2025. The decrease was due to the recognition of $25.9 million in net sales related to the previously disclosed December China Shipment in the prior period, which did not recur in the current period. The December China Shipment was paid in full during the three months ended September 26, 2025. Excluding the December China Shipment from the prior period, net sales would have increased 21.1%. The composition of our net sales is primarily related to ICL sales. Net sales also include sales of delivery system and normal recurring sales adjustments such as sales return allowances.
The sales decrease was driven by the Asia Pacific (“APAC”) region, which decreased 20%. Lower sales in China drove the decrease, due to the December China Shipment. In Japan, our second largest market, sales decreased 8% due to the impact of currency fluctuation. Excluding the effects of this impact, sales were essentially flat while units grew 1%. Sales in Korea also decreased due to weakness in demand. These decreases were partially offset by increases in Taiwan, India and other areas in the APAC region. Excluding the impact of the December China Shipment, APAC sales would have increased 20%.
Sales in the Europe, Middle East and Africa (“EMEA”) region increased 31%. The increase came mainly from higher sales in the EMEA direct and distributor markets, despite the current geopolitical situation in the Middle East. Sales in the Middle East decreased 2% during this period. Excluding the Middle East, the EMEA region sales increased 51%.
The Americas region sales increased 14%, primarily due to sales growth in the U.S. and Latin America.
Changes in foreign currency unfavorably impacted net sales by $1.0 million.
Nine Months Ended October 2, 2026 Compared to the Nine Months Ended September 26, 2025
Net sales for the nine months ended October 2, 2026 increased 48.9% from the same period of 2025, primarily due to increased sales in China. Net sales for the nine months ended September 26, 2025 included the December China Shipment, of which a payment of $1.6 million was received during the three months ended June 27, 2025 and the remaining $25.9 million was paid in full during the three months ended September 26, 2025. Excluding the December China Shipment from the prior period, net sales would have increased 75.5%.
Sales in the APAC region increased by 66% compared to the same period of 2025. Higher China, Taiwan, Japan and Korea and other APAC markets drove the increase. Lower sales in India partially offset these increases. Excluding the impact of the December China Shipment, APAC sales would have increased 112%.
The EMEA region sales increased 8% compared to the same period of 2025. The increase came from higher sales in EMEA direct markets. The increase was partially offset by lower sales in the EMEA distributor markets, mostly in the Middle East due to the current geopolitical situation in the region. Sales in the Middle East decreased 30% during this period. Excluding the Middle East, EMEA region sales increased 20%.
The Americas region sales increased 17%, primarily due to sales growth in the U.S. and Canada and Latin America.
Changes in foreign currency unfavorably impacted net sales by $0.6 million.
Gross Profit
The following table presents our gross profit and gross profit margin (dollars in thousands):
(24.1
42.6
Gross profit margin
Gross profit for the three months ended October 2, 2026 decreased 24.1% from the same period of 2025. Gross profit margin decreased to 70.9% of revenue for the three months ended October 2, 2026 compared to 82.2% of revenue for the three months ended September 26, 2025. Gross profit for the nine months ended October 2, 2026 increased 42.6% from the same period of 2025. Gross profit margin decreased to 73.1% of revenue for the nine months ended October 2, 2026 compared to 76.3% for the nine months ended September 26, 2025.
Gross profit and gross profit margin were partially affected by when the December China Shipment’s net sales and cost of sales were recognized. Its cost of sales was recognized in December 2024, when the product shipped. Its net sales were recognized at a 100% gross margin when payment was received: $1.6 million was received during the three months ended June
27, 2025 and the remaining $25.9 million during the three months ended September 26, 2025. Excluding the December China Shipment, gross profit would have been $52.0 million for the three months ended September 26, 2025 and $111.2 million for the nine months ended September 26, 2025. Gross profit margin would have been 75.5% for the three months ended September 26, 2025 and 72.1% for the nine months ended September 26, 2025. Excluding the December China Shipment, gross profit margin would have decreased for the three months ended October 2, 2026 and increased for the nine months ended October 2, 2026 compared to the same periods of 2025.
For the nine months ended October 2, 2026 two factors helped gross profit and gross profit margin compared to the same period of 2025:
For both the three and nine months ended October 2, 2026, several factors hurt gross profit and gross profit margin compared to the same periods of 2025:
We expect tariffs will continue to affect gross profit margin until we can supply 100% of EVO and EVO+ICL lenses for China from inventory produced in Switzerland. Although all new ICL’s for China were manufactured in Switzerland starting the third quarter of 2026, any U.S. product in inventory and sold to China will continue to be subject to tariffs.
General and Administrative Expense
The following table presents our general and administrative expenses (dollars in thousands):
General and administrative expense
(9.0
(11.4
Percentage of sales
General and administrative expenses for the three months ended October 2, 2026 decreased 9.0% from the same period of 2025 due to decreased bonus and stock-based compensation expenses, partially offset by increased amortization of our cloud-based software and outside services associated with supporting our ERP system.
General and administrative expenses for the nine months ended October 2, 2026 decreased 11.4% from the same period of 2025 due to decreased bonus and stock-based compensation expenses and salary-related and payroll tax expenses, partially offset by increased amortization of our cloud-based software.
Selling and Marketing Expense
The following table presents our selling and marketing expenses (dollars in thousands):
Selling and marketing expense
3.6
(1.2
Selling and marketing expenses for the three months ended October 2, 2026 increased 3.6% from the same period of 2025 due to increased amortization of our cloud-based software and outside services associated with supporting our ERP system and advertising and promotional activities, partially offset by decreased bonus and stock-based compensation expenses.
24
Selling and marketing expenses for the nine months ended October 2, 2026 decreased 1.2% from the same period of 2025 due to decreased advertising and promotional activities, salary-related and payroll tax expenses and trade shows and sales meeting expenses, partially offset by increased amortization of our cloud-based software and outside services associated with supporting our ERP system, severance expenses tied to headcount reductions in Global Marketing and bad debt expense.
Research and Development Expense
The following table presents our research and development expenses (dollars in thousands):
Research and development expense
13.6
(1.6
Research and development expenses for the three months ended October 2, 2026 increased 13.6% from the same period of 2025, due mainly to increased amortization of our cloud-based software and outside services associated with supporting our ERP system, salary-related and payroll tax expenses, and other clinical and medical affairs outside service expenses.
Research and development expenses for the nine months ended October 2, 2026 decreased 1.6% from the same period of 2025, due mainly to decreased salary-related and payroll tax expense, clinical expenses and bonus and stock-based compensation, partially offset by increased amortization of our cloud-based software and outside services associated with supporting our ERP system.
Merger Transaction and Related Costs
At the special meeting of shareholders held on January 6, 2026, the Company’s shareholders voted against the merger with Alcon. Following the termination of the Merger Agreement, the Company entered into the Cooperation Agreement with Broadwood, which provided for the reimbursement of certain reasonable out-of-pocket fees and expenses to Broadwood, Yunqi Capital and Defender Capital related to the merger with Alcon. The following table presents our professional services expenses we incurred in connection with the proposed merger with Alcon and the Cooperation Agreement (dollars in thousands):
(100.0
13.8
The following table presents our restructuring, impairment and related charges (dollars in thousands):
(90.4
In the first half of 2025, we took a number of steps to change our leadership team, realign our leadership structure to better address market needs, reduce costs and discretionary spending, and better position the Company to return to sustainable growth. In addition, in 2026, as a result of the Cooperation Agreement with Broadwood, we incurred additional restructuring related charges related to leadership realignment as follows (in thousands):
25
Severance and reduction in workforce
Impairment on leasehold improvements and machinery and equipment(1)
Impairment on real property right-of-use assets(2)
Impairment on internally developed software(1)
Other Income, Net
The following table presents our other income, net (dollars in thousands):
*
(63.1
* Denotes change is greater than +100%.
The increase in other income, net for the three months ended October 2, 2026, was due mainly to lower foreign exchange losses and higher interest income. The decrease in other income, net for the nine months ended October 2, 2026, was due to higher foreign exchange losses and lower interest income.
Provision for Income Taxes
The following table presents our income tax provision (dollars in thousands):
(85.8
The effective tax rates for the three months ended October 2, 2026 and September 26, 2025 were 20.1% and 52.7%, respectively, and were 28.2% and (0.9)% for the nine months ended October 2, 2026 and September 26, 2025, respectively. Our effective tax rates differ from the U.S. federal statutory rate of 21%, primarily due to the income tax expense generated in foreign jurisdictions.
Our future effective income tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income. We carefully monitor these factors and adjust our effective income tax rate accordingly.
Liquidity and Capital Resources
Our principal sources of liquidity are cash, cash equivalents, investments available for sale (“AFS”) and cash flow from operating activities. We believe these sources of liquidity will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the financial statements. We expect that cash flow from operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, working capital needs, capital expenditures, and capital deployment decisions. In addition, future capital requirements will depend on many factors including our growth rate in net sales, the timing and extent of spending to support our growth strategy, the expansion of selling and marketing activities, the timing of introductions of new products, as well as global macroeconomic factors. If our anticipated future cash flow from operating
activities is insufficient to satisfy our future capital requirements in the long-term, we may need to seek additional capital. Our financial condition at October 2, 2026 and January 2, 2026 included the following (in thousands):
Investments available for sale
38,418
206,414
187,536
18,878
Current assets
41,885
Current liabilities
7,037
Working capital
277,889
243,041
34,848
Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions. Our investment policy’s primary objective is capital preservation while maximizing our return on investment. Investments available for sale may include U.S. government and corporate debt securities, commercial paper, certain certificates of deposit and related security types, that are rated by two nationally recognized statistical rating organizations with minimum investment grade ratings of AAA to A-/A-1+ to A-2, or the equivalent. The maturity of individual investments may not extend beyond 24 months from the date of purchase. There are also limits to the amount of credit exposure in any given security type. We do not have any off-balance sheet arrangements.
A summary of cash flows for the nine months ended October 2, 2026 and September 26, 2025 was as follows (in thousands):
Cash flows from:
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, at beginning of year
Cash and cash equivalents, at end of period
For the nine months ended October 2, 2026, net cash provided by operating activities consisted of $36.3 million in non-cash items primarily related to stock-based compensation, depreciation of property, plant and equipment and changes in inventory provision and $18.8 million in net income, partially offset by $29.8 million in working-capital changes primarily related to changes in accounts receivable and partially offset by changes in inventories. For the nine months ended September 26, 2025, net cash used in operating activities consisted of $62.1 million in net loss and $17.6 million in working-capital changes primarily related to changes in inventories, cloud-based software and accounts payable and other current and non-current liabilities and partially offset by changes in accounts receivable; this was partially offset by $49.4 million in in non-cash items primarily related to stock-based compensation and impairment on fixed assets and operating leases.
For the nine months ended October 2, 2026, net cash used in investing activities was $39.9 million which included $81.9 million of purchases of investments AFS, partially offset by $43.9 million of proceeds from the maturity and sale of investments AFS. For the nine months ended September 26, 2025, net cash provided by investing activities was $65.8 million which included $96.4 million of proceeds from the maturity and sale of investments AFS, partially offset by $26.5 million in purchases of investments AFS.
For the nine months ended October 2, 2026, net cash used in financing activities was $4.5 million which consisted of $5.9 million to repurchase employee common stock for taxes withheld, partially offset by $1.4 million of proceeds from the exercise of stock options. For the nine months ended September 26, 2025, net cash used in financing activities was $4.5 million which primarily consisted of $6.5 million of repurchases of common stock pursuant to our share repurchase program and $1.4 million to repurchase employee common stock for taxes withheld, partially offset by $3.4 million of proceeds from the exercise of stock options.
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Commitments
During the nine months ended October 2, 2026, there have been no material changes in the Company’s qualitative and quantitative market risk since the disclosure in the Company’s Annual Report on Form 10-K for the year ended January 2, 2026.
Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of the disclosure controls and procedures of the Company. Based on that evaluation, our CEO and CFO concluded, as of the end of the period covered by this quarterly report on Form 10-Q, that our disclosure controls and procedures were effective. For purposes of this statement, the term “disclosure controls and procedures” means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management, including the CEO and the CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud or material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, our internal control system can provide only reasonable assurance of achieving its objectives and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and can provide only reasonable, not absolute, assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended October 2, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
From time to time, the Company is involved in various legal proceedings, claims, regulatory actions and other matters arising in the normal course of business. These legal proceedings, claims, regulatory actions and other matters may relate to, among other things, contractual rights and obligations, vendor and distributor relationships, employment matters, and claims of product liability or medical device quality compliance. The Company maintains insurance coverage for various matters, including product liability and certain securities claims. While the Company does not believe that any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.
Our short and long-term success is subject to many factors that are beyond our control. Investors and prospective investors should consider carefully information contained in this report and the risks and uncertainties described in “Part I—Item 1A—Risk Factors” of the Company’s Form 10-K for the fiscal year ended January 2, 2026. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.
The following table summarizes the Company’s share repurchase activity for the three months ended October 2, 2026, on a monthly basis:
Period
Total Number of Shares (or Units) Purchased
Average Price Paid per Share (or Unit)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased Under the Plans or Programs (in thousands)(1)
July 6 - July 31, 2026
August - 1 - August 28, 2026
August 29 - October 2, 2026
50,000
During the quarter ended October 2, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated:
Exhibit Number
Description
3.1
Amended and Restated Certificate of Incorporation (incorporated by reference to Appendix 2 of the Company’s Proxy Statement on Form DEF 14A as filed with the Commission on April 26, 2018).
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the Commission on March 17, 2025).
4.1
Form of Certificate for Common Stock, par value $0.01 per share (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form 8-A/A as filed with the Commission on April 18, 2003).
10.1
Offer Letter, effective September 8, 2026, by and between the Company and David Bailey (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K/A as filed with the Commission on October 5, 2026).
31.1
Certifications Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32.1
**
Certification Pursuant to 18 U.S.C. Section 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Financial statements from the quarterly report on Form 10-Q of STAAR Surgical Company for the quarter ended October 2, 2026 formatted in Inline Extensible Business Reporting Language (iXBRL), are filed herewith and include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended October 2, 2026, has been formatted in Inline XBRL with applicable taxonomy extension information contained in Exhibit 101.
Filed herewith.
Certification furnished herewith solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350. Certification is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated:
November 4, 2026
By:
/s/ DEBORAH ANDREWS
Deborah Andrews
Executive Vice President and Chief Financial Officer
(on behalf of the Registrant and as its principal financial officer)
31