STAAR Surgical (NASDAQ:STAA) Exceeds Q1 Expectations

Medical lens company STAAR Surgical (NASDAQ: STAA) reported Q1 CY2025 results exceeding the market’s revenue expectations, but sales fell by 44.9% year on year to $42.59 million. Its GAAP loss of $1.10 per share was 65.2% below analysts’ consensus estimates.

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“STAAR’s first quarter sales were in line with expectations, but we can and will do better,” said STAAR Surgical CEO, Stephen C. Farrell.

Company Overview

With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ: STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, STAAR Surgical’s sales grew at a solid 12.8% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. STAAR Surgical’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.7% over the last two years.

We can dig further into the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 1.9% year-on-year declines. Because this number aligns with its normal revenue growth, we can see that STAAR Surgical has properly hedged its foreign currency exposure.

This quarter, STAAR Surgical’s revenue fell by 44.9% year on year to $42.59 million but beat Wall Street’s estimates by 5.5%.

Looking ahead, sell-side analysts expect revenue to grow 3.4% over the next 12 months. While this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.

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Operating Margin

STAAR Surgical was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.3% was weak for a healthcare business.

Looking at the trend in its profitability, STAAR Surgical’s operating margin decreased by 32.9 percentage points over the last five years. This performance was caused by more recent speed bumps as the company’s margin fell by 36 percentage points on a two-year basis. We’re disappointed in these results because it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, STAAR Surgical generated an operating profit margin of negative 135%, down 131.8 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for STAAR Surgical, its EPS declined by 49.2% annually over the last five years while its revenue grew by 12.8%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into STAAR Surgical’s earnings to better understand the drivers of its performance. As we mentioned earlier, STAAR Surgical’s operating margin declined by 32.9 percentage points over the last five years. Its share count also grew by 9.8%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q1, STAAR Surgical reported EPS at negative $1.10, down from negative $0.07 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects STAAR Surgical to improve its earnings losses. Analysts forecast its full-year EPS of negative $1.44 will advance to negative $0.83.

Key Takeaways from STAAR Surgical’s Q1 Results

We were impressed by how significantly STAAR Surgical blew past analysts’ revenue expectations this quarter. We were also glad its constant currency revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed significantly. Overall, we think this was a mixed quarter. The areas below expectations seem to be driving the move, and shares traded down 4.8% to $18.50 immediately after reporting.

So do we think STAAR Surgical is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.