# STAAR SURGICAL CO (STAA)

Informational only - not investment advice.

CIK: 0000718937
SIC: 3851 Ophthalmic Goods
SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 38](/major-group/38/) > [SIC 3851 Ophthalmic Goods](/industry/3851/)
Latest 10-K filed: 2026-03-03
SEC page: https://www.sec.gov/edgar/browse/?CIK=718937
Filing source: https://www.sec.gov/Archives/edgar/data/718937/000071893726000004/staa-20260102.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 239442000 | USD | 2026 | 2026-03-03 |
| Net income | -80448000 | USD | 2026 | 2026-03-03 |
| Assets | 451678000 | USD | 2026 | 2026-03-03 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-03. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000718937.json. Derived margins are computed from the extracted annual SEC facts.

| Metric | 2015 | 2016 | 2017 | 2018 | 2020 | 2021 | 2022 | 2023 | 2024 | 2026 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  | 82,432,000 | 90,611,000 | 123,954,000 | 150,185,000 | 230,472,000 | 239,442,000 | 322,415,000 | 313,901,000 | 239,442,000 |
| Net income | -8,392,000 | -12,129,000 | -2,139,000 | 4,968,000 | 14,048,000 | 27,511,000 | 39,665,000 | 21,347,000 | -20,208,000 | -80,448,000 |
| Operating income | -8,027,000 | -12,655,000 | -3,631,000 | 6,595,000 | 11,852,000 | 33,339,000 | 43,802,000 | 28,097,000 | -12,611,000 | -91,713,000 |
| Gross profit | 48,823,000 | 58,369,000 | 64,280,000 | 91,510,000 | 111,954,000 | 178,637,000 | 223,383,000 | 252,651,000 | 239,582,000 | 182,420,000 |
| Diluted EPS | -0.22 | -0.30 | -0.05 | 0.11 | 0.30 | 0.56 | 0.80 | 0.43 | -0.41 | -1.62 |
| Assets | 58,911,000 | 65,477,000 | 67,932,000 | 167,339,000 | 207,523,000 | 345,778,000 | 418,818,000 | 488,692,000 | 509,524,000 | 451,678,000 |
| Liabilities | 21,812,000 | 27,572,000 | 24,996,000 | 34,913,000 | 47,639,000 | 87,220,000 | 82,706,000 | 102,738,000 | 112,189,000 | 107,494,000 |
| Stockholders' equity | 37,099,000 | 37,905,000 | 42,936,000 | 132,426,000 | 159,884,000 | 261,568,000 | 336,112,000 | 385,954,000 | 397,335,000 | 344,184,000 |
| Cash and cash equivalents | 13,013,000 | 13,999,000 | 18,520,000 | 103,877,000 | 119,968,000 | 199,706,000 | 86,480,000 | 183,038,000 | 144,159,000 | 153,150,000 |
| Net margin |  | -14.71% | -2.36% | 4.01% | 9.35% | 11.94% | 16.57% | 6.62% | -6.44% | -33.60% |
| Operating margin |  | -15.35% | -4.01% | 5.32% | 7.89% | 14.47% | 18.29% | 8.71% | -4.02% | -38.30% |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000718937.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q1 | 2022-04-01 |  |  | 0.19 | reported discrete quarter |
| 2022-Q2 | 2022-07-01 |  |  | 0.26 | reported discrete quarter |
| 2022-Q3 | 2022-09-30 |  |  | 0.21 | reported discrete quarter |
| 2023-Q1 | 2023-06-30 | 92,306,000 | 6,064,000 | 0.12 | reported discrete quarter |
| 2023-Q3 | 2023-09-29 | 80,308,000 | 4,817,000 | 0.10 | reported discrete quarter |
| 2023-Q4 | 2023-12-29 | 76,273,000 | 7,756,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-29 | 77,356,000 | -3,339,000 | -0.07 | reported discrete quarter |
| 2024-Q2 | 2024-06-28 | 99,005,000 | 7,379,000 | 0.15 | reported discrete quarter |
| 2024-Q3 | 2024-09-27 | 88,590,000 | 9,980,000 | 0.20 | reported discrete quarter |
| 2024-Q4 | 2024-12-27 | 48,950,000 | -34,228,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-28 | 42,589,000 | -54,211,000 | -1.10 | reported discrete quarter |
| 2025-Q2 | 2025-06-27 | 44,320,000 | -16,812,000 | -0.34 | reported discrete quarter |
| 2025-Q3 | 2025-09-26 | 94,732,000 | 8,884,000 | 0.18 | reported discrete quarter |
| 2025-Q4 | 2026-01-02 | 57,801,000 | -18,309,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-04-03 | 93,522,000 | 5,206,000 | 0.10 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
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- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
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- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
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- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
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- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/718937/000071893726000023/staa-20260403.htm

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization.
Confidence: high
Filing date: 2026-05-13
Report date: 2026-04-03

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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; 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; 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; 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; and 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

18

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.

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 April 3, 2026, net sales were $93.5 million, up 119.6% from $42.6 million for the three months ended March 28, 2025. The increase was primarily driven by strong sales performance in China, while distributor inventory was maintained at or below contractual levels. Net sales to our two distributors in China were $47.4 million for the three months ended April 3, 2026, compared to net returns of $0.9 million in the prior-year period.

During the first quarter of 2026, we completed the launch of EVO+ ICL in China, which was met with strong market acceptance. EVO+ ICL carries a premium selling price, supporting potential margin expansion as production volumes increase over time. As previously disclosed, shipments to the two distributors in China were largely suspended during the first half of 2025 due to elevated inventory levels following a market slowdown in 2024, with procedure demand primarily fulfilled from existing inventory.

Gross margin increased year-over-year to 73.6% from 65.8%, reflecting cost reduction initiatives implemented in the first quarter of 2025. This improvement was partially offset by higher per-unit manufacturing costs associated with low production volumes at the new Swiss facility during 2025. As production in Switzerland has scaled in 2026, unit costs have begun to improve. By the end of fiscal 2026, we expect to manufacture and supply 100% of EVO and EVO+ ICL lenses for China from Switzerland without exposure to tariffs.

As a result of significantly increased sales, higher gross profit, and reduced operating expenses, GAAP net income for the first quarter of 2026 was $5.2 million or $0.10 per diluted share, up from a net loss of $(54.2) million or $(1.10) per share for the prior year quarter. Although cash and investments available for sale decreased to $163.9 million at April 3, 2026 from $187.5 million due to front-loaded payments for seasonal bonuses and other employee incentives, global sales meetings, severance, and costs associated with our Cooperation Agreement with Broadwood Partners, we expect to generate cash during the remainder of the year.

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 three months ended April 3, 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.

19

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

Three Months Ended

April 3, 2026

March 28, 2025

Net sales

100.0

%

100.0

%

Cost of sales

26.4

%

34.2

%

Gross profit

73.6

%

65.8

%

General and administrative

18.2

%

57.4

%

Selling and marketing

26.2

%

63.3

%

Research and development

10.6

%

26.6

%

Merger transaction and related costs

7.2

%

0.0

%

Restructuring, impairment and related charges

2.9

%

53.2

%

Total selling, general and administrative

65.1

%

200.5

%

Operating income (loss)

8.5

%

(134.7

)%

Total other income, net

0.3

%

6.8

%

Income (loss) before income taxes

8.8

%

(127.9

)%

Provision (benefit) for income taxes

3.2

%

(0.6

)%

Net income (loss)

5.6

%

(127.3

)%

Net Sales

The following table presents our net sales (dollars in thousands):

Three Months Ended

Percentage

Change

April 3, 2026

March 28, 2025

2026 vs. 2025

Net sales

$

93,522

$

42,589

—

*

* Denotes change is greater than +100%.

Net sales for the three months ended April 3, 2026 increased 119.6% from the same period of 2025, primari

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization.
Confidence: high

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to promote understanding of our financial condition and results of operations. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the Consolidated Financial Statements and the Notes to those statements included in this Annual Report. This discussion includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including those described in this Annual Report in Item 1A. “Risk Factors.”

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.

STAAR generates 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 market and sell our ICLs for refractive surgery to treat myopia (nearsightedness) as our “EVO” family of lenses. We believe our EVO lenses are an “Evolution in Visual Freedom” designed to provide premium refractive outcomes while optimizing patient comfort. Our EVO family of lenses includes our EVO ICL, EVO+ ICL, and EVO Visian ICL. Our newest offering, EVO Viva, has an extended depth of focus (EDoF) optic, which is designed to treat myopia with presbyopia (age-related loss of ability to focus). We also market and sell an ICL lens to treat hyperopia (farsightedness), which we call our Visian ICL. We make our ICL product offerings available in multiple models, powers and lengths, including some with toric ICL (TICL) versions to correct for astigmatism (blurred vision). Not all of our products are currently available in all markets where we sell ICLs today.

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. Historically, the Company also manufactured and sold intraocular lenses (or IOLs) for use in surgery to treat cataracts. As the Company has focused its business and strategy on its ICL product offerings, we have phased out our cataract IOL product line. For the fiscal year ended January 2, 2026, approximately 100% our net sales were generated from sales of ICLs.

Termination of Alcon Merger Agreement

As previously disclosed, on August 4, 2025, STAAR entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Alcon Research, LLC, a Delaware limited liability company (“Alcon”), and Rascasse Merger Sub, Inc., a Delaware corporation and a wholly owned direct subsidiary of Alcon (“Merger Sub”). The Merger Agreement provided, among other things, that subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Alcon. The Company and Alcon entered into two amendments to the Merger Agreement, on November 7, 2025 and December 9, 2025, and the Company held a special meeting of stockholders (the “Special Meeting”) to vote on the Merger on January 6, 2026. At the Special Meeting, the Company’s stockholders voted against the Merger, and the Merger Agreement was terminated in accordance with its terms effective January 6, 2026. None of the Company, Alcon or Merger Sub was required to pay any termination fee as a result of the termination of the Merger Agreement, and the parties are responsible for their respective costs and expenses related to the Merger Agreement and the transactions contemplated thereby. During fiscal 2025, we incurred $17.1 million in professional fees and expenses related to the Merger, which are recorded as Merger transaction and related costs on the Consolidated

37

Statement of Operations. Following the termination of the Merger Agreement, on January 14, 2026, STAAR entered into a letter agreement (the “Cooperation Agreement”) with Broadwood Partners, L.P. and its affiliates (“Broadwood”), the Company’s largest stockholder. The Cooperation Agreement provided for certain governance and leadership changes, as well as reimbursement by the Company of approximately $7.0 million in expenses incurred by Broadwood and other stockholders in connection with their engagement with the Company, including the Special Meeting. See Note 1 – Organization and Description of Business and Accounting Policies – Termination of Alcon Merger Agreement and Note 19 – Subsequent Events to the Consolidated Financial Statements for information about the Merger Agreement and the Cooperation Agreement.

Business Environment and Factors Affecting Comparability

Given the size of the Company’s business in China relative to its net sales in the rest of the world, macroeconomic conditions in China have a significant impact on the Company’s business, operations, and financial results. We reported net sales of $239.4 million, $313.9 million, and $322.4 million for fiscal years 2025, 2024, and 2023, respectively. The significant decreases in net sales were primarily due to the dynamics within our business in China where the continued sluggish economy and weak consumer consumption contributed to fluctuating demand for ICL procedures. We incurred net losses of $80.4 million and $20.2 million for fiscal years 2025 and 2024, respectively. Prior to fiscal 2024, we had reported over ten years of annual net sales growth, and we had delivered net income profitability since 2018.

Aggregate net sales to our two distributors in China were $77.8 million for fiscal year 2025, compared to $162.3 million for fiscal year 2024. China net sales for fiscal year 2025 included $27.5 million related to the previously disclosed December 2024 ICL shipment that was subject to extended payment terms, and which was paid in full in fiscal 2025 pursuant to such payment terms (the “December China Shipment”). As previously disclosed, we shipped $27.5 million of ICLs in December 2024 to one of our distributors in China for which the distributor requested extended payment terms through September 2025. Given the extended payment terms, net sales for the shipment were not recognized by us until payments were received. As the cost of sales associated with the December China Shipment was recognized in December 2024, the payments, when made, were recognized at 100% gross margin in the applicable quarter.

During fiscal 2025, our distributors in China purchased fewer ICLs, as they were able to satisfy procedural demand largely from their existing inventory. Our distributors in China have historically purchased products from us in bulk shipments in advance of anticipated demand, which they use to satisfy orders from hospital customers based on scheduled surgeries. During fiscal 2024, our distributors in China purchased lenses above contracted minimums in anticipation of higher procedural volumes during what is typically a summer “high season” in China. Due to dynamic macroeconomic conditions and other factors, the number of ICL procedures performed during the high season and the second half of 2024 overall was lower than expected. Accordingly, our distributors in China held, as of December 27, 2024, elevated levels of ICL product inventory. The level of inventory owned by our distributors in China has decreased substantially since December 27, 2024, and has returned to contractual levels. As anticipated, we reported lower China ICL sales in fiscal 2025 compared to fiscal 2024.

In April 2025, in response to the announcement of tariffs by the United States on Chinese goods, China announced retaliatory tariffs on U.S.-origin goods. In order to mitigate potential financial exposure from such tariffs, we negotiated and implemented consignment agreements with our two distributors in China, and we delivered consigned inventory to China in advance of the implementation of tariffs and delivered additional consignment inventory throughout fiscal 2025. While the tariff situation is evolving, we believe that these efforts to increase the amount of ICLs in China reduce the Company’s tariff risk in China in the near-term. In addition, we are rapidly ramping up our production capabilities in Switzerland to supplement our manufacturing capacity in the United States to provide optionality under multiple tariff scenarios.

Given that we maintained consigned inventory in China in 2025, purchases by our distributors were satisfied in part from our consigned inventory, rather than through bulk purchases. As our China distributor inventory levels have normalized, we intend to reduce our consigned inventory levels in China going forward. We reduced our China inventory levels in 2025, and we have taken steps to mitigate the risk of elevated inventory buildup by our distributors, while at the same time maintaining sufficient ICL inventory in China to support quick and efficient delivery and fulfillment for surgical procedures.

In 2025, we expanded our manufacturing capabilities for our ICL products in our Nidau, Switzerland facility. As we ramp up ICL manufacturing in Nidau, Switzerland, our costs are expected to increase given the expense of operating two sites and lower site utilization impacts cost absorption. The on-going operation of two manufacturing

38

sites will create pressure on gross margins. Over the longer term, as we grow revenue and align sales with manufacturing production, we would expect our gross margin to improve. We also expect the operation of two manufacturing sites will lead to higher inventory levels in the near-term.

During fiscal 2026, we will continue to assess appropriate inventory levels, both inventory held by us and inventory held by our distributors. We generally keep sufficient inventory on hand to ship product immediately or shortly after receipt of an order. In addition, our distributors hold their own inventory in-country based on forecasted demand. During fiscal 2026, we expect to adjust our production output based on forecasted demand and optimize the level of inventory held by us and held by our distributors.

See Item 1. “Business,” for a discussion of:

•
Operations

•
Principal Products

•
Distribution and Customers

•
Competition

•
Regulatory Matters

•
Research and Development

Strategic Imperatives for 2026

We believe we have a significant opportunity to fundamentally transform how myopia and other refractive conditions are treated. We want to be the first choice for doctors and for patients seeking visual freedom from wearing eyeglasses or contact lenses.

The Company is navigating market headwinds, geopolitical factors and a dynamic environment in key regions, including China. In 2026, we are aligned around three focused priorities to allow us to advance around this goal.

Focused growth – we are focused on revenue growth in our key markets, with a strong emphasis on execution. This includes sharpening commercial focus, prioritizing where we can win, and improving consistency across markets. Across markets, we intend to maximize the impact of our strategic customer agreements and develop relationships with customers that position EVO ICLs to treat refractive error more broadly.

Focused investment – we believe growth must be sustainable. In 2026, we will continue to prioritize investments that support long-term value creation, with a clear focus on what drives results and expands profits by investing wisely in key markets. Across our markets, we recognize the need to further educate and train ophthalmic surgeons about our ICLs and our ICL procedure. We also plan to leverage the EVO Experience Center at our headquarters in Lake Forest, California, to conduct additional hands-on training and education in lens-based vision correction. In addition, we are continuing to invest in enhanced systems and tools to make ordering and fulfillment faster and easier. In 2026, we will also continue to drive awareness of the ICL procedure to reach even more potential patients and effectively communicate the clinical benefits of our ICLs.

Focused innovation – innovation remains central to the Company’s future. We are focused on accelerating our innovation pipeline with rigor, prioritizing programs that deliver meaningful clinical and commercial impact. We are driving innovation through focused development, execution with key milestones, and innovative thinking around market needs. Our innovation pipeline footprint will be expanded in 2026 with the full launch of EVO+ in China to allow more patients to have access to this premium, larger optic lens. We also intend to expand our product offering with the launch of additional lens sizes to allow for greater surgeon flexibility.

39

Results of Operations

The following table sets forth the percentage of total sales represented by certain items reflected in the Company’s Consolidated Statement of Operations for the period indicated.

Percentage of Net Sales

2025

2024

2023

Net sales(1)

100.0

%

100.0

%

100.0

%

Cost of sales(1)

23.8

%

23.7

%

21.6

%

Gross profit(1)

76.2

%

76.3

%

78.4

%

General and administrative

35.8

%

28.6

%

22.4

%

Selling and marketing

42.8

%

37.3

%

34.7

%

Research and development

16.7

%

14.4

%

12.5

%

Merger transaction and related costs

7.2

%

0.0

%

0.0

%

Restructuring, impairment and related charges

12.0

%

0.0

%

0.0

%

Total selling, general and administrative

114.5

%

80.3

%

69.6

%

Operating income (loss)

(38.3

)%

(4.0

)%

8.8

%

Total other income, net

3.9

%

1.0

%

1.7

%

Income (loss) before income taxes

(34.4

)%

(3.0

)%

10.5

%

Provision (benefit) for income taxes

(0.8

)%

3.6

%

3.8

%

Net income (loss)

(33.6

)%

(6.6

)%

6.7

%

(1) For fiscal 2025, amounts include $27.5 million of net sales related to December China Shipment. As the associated cost of sales was recognized upon shipment in December 2024, these amounts were recognized at 100% gross margin for fiscal 2025.

Net Sales

The following table presents our net sales (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Net sales

$

239,442

$

313,901

$

322,415

(23.7

)%

(2.6

)%

Net sales for 2025 decreased 23.7% from 2024. Net sales for 2025 included $27.5 million of sales related to the previously disclosed December China Shipment, of which payment was received during 2025. The composition of our net sales is primarily related to ICL sales. Net sales also include sales of delivery system sales and normal recurring sales adjustments such as sales return allowances, and for fiscal 2023, IOL sales. The sales decrease was driven by decreased sales in China. The Asia Pacific (“APAC”) region, decreased 32% with ICL units down 35%. The decrease in the APAC region was driven by decreased sales in China, partially offset by sales growth in Japan and Korea. The Europe, Middle East and Africa (“EMEA”) region sales increased 3% with ICL unit growth up 10%, due primarily to sales increases in our distributor markets partially offset by an increase in sales return allowances in our distributor markets. The Americas region sales increased 14%, with ICL unit increase of 10%, due primarily to sales growth in the U.S. Changes in foreign currency favorably impacted net sales by $2.0 million, which impacted our Japan and EMEA markets.

Net sales for 2024 decreased 2.6% from 2023. The sales decrease was driven by the APAC region, which decreased 6%, with ICL units down 9%. This decrease was driven by decreased sales in China, primarily related to the $27.5 million December China Shipment, partially offset by sales growth in India, Japan and Korea. The EMEA region sales increased 9% with ICL unit growth of 17%, due to sales growth in our distributor markets. The Americas region sales increased 13%, with ICL unit increase of 17%, due primarily to sales growth in the U.S. Changes in foreign currency unfavorably impacted net sales by $2.8 million, which impacted our Japan and EMEA markets.

40

Gross Profit

The following table presents our gross profit and gross profit margin for the fiscal years presented (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Gross profit

$

182,420

$

239,582

$

252,651

(23.9

)%

(5.2

)%

Gross profit margin

76.2

%

76.3

%

78.4

%

Gross profit for 2025 decreased 23.9% from 2024. Gross profit margin decreased to 76.2% of revenue for 2025 compared to 76.3% of revenue for 2024, due to higher manufacturing costs per unit due to lower production volume and increased excess and obsolete inventory reserves, offset by decreased period costs as a result of our cost reductions implemented in the quarter ended March 28, 2025 and timing and recognition of the cost of sales associated with the December China Shipment.

Gross profit for 2024 decreased 5.2% from 2023. Gross profit margin decreased to 76.3% of revenue for 2024 compared to 78.4% of revenue for 2023. The decrease in gross profit margin was primarily due to the recognition of $3.9 million of cost of sales associated with our shipment of $27.5 million of ICLs to one of our distributors in China in the quarter ended December 27, 2024, for which we did not recognize revenue due to extended payment terms with the distributor. Gross profit margin for fiscal 2024 were also negatively impacted by period costs associated with the expansion of the Company’s manufacturing capabilities in its Nidau, Switzerland facility, as well as the temporary idling of its U.S. manufacturing facility during the holiday season and for facility upgrades.

General and Administrative Expense

The following table presents our general and administrative expense for the fiscal years presented (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

General and administrative expense

$

85,783

$

89,898

$

72,319

(4.6

)%

24.3

%

Percentage of sales

35.8

%

28.6

%

22.4

%

General and administrative expenses for 2025 decreased 4.6% from 2024, due to decreased outside services partially offset by increased bonus and stock-based compensation expenses, salary-related and payroll tax expenses and facilities costs.

General and administrative expenses for 2024 increased 24.3% from 2023, due to increased outside services, facilities costs, salary-related and payroll tax expenses and bonus and stock-based compensation expenses.

Selling and Marketing Expense

The following table presents our selling and marketing expense for the fiscal years presented (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Selling and marketing expense

$

102,528

$

116,978

$

111,757

(12.4

)%

4.7

%

Percentage of sales

42.8

%

37.3

%

34.7

%

Selling and marketing expenses for 2025 decreased 12.4% from 2024, due to decreased advertising and promotional activities, travel expenses and trade shows and sales meetings and as a result of costs and charges in the prior year period associated with the opening of our new experience center, partially offset by increased bonus and stock-based compensation expenses.

Selling and marketing expenses for 2024 increased 4.7% from 2023, due to increased salary-related payroll tax expenses, trade shows and sales meeting expenses, travel expenses, costs and charges associated with the opening of our new experience enter and sales commission expenses, offset by decreased advertising and promotional activities.

41

Research and Development Expense

The following table presents our research and development expense for the fiscal years presented (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Research and development expense

$

40,055

$

45,317

$

40,478

(11.6

)%

12.0

%

Percentage of sales

16.7

%

14.4

%

12.5

%

Research and development expenses for 2025 decreased 11.6% from 2024 due to purchases of in-process research and development in the prior year period related to external AI tools for measurement and lens size selection and decreased clinical expenses associated with our U.S. post-approval clinical trials and outside services related to regulatory and medical affairs, partially offset by increased bonus and stock-based compensation expenses.

Research and development expenses for 2024 increased 12.0% from 2023 due to increased salary-related and payroll tax expenses, purchases of in-process research and development related to external AI tools for measurement and lens size selection and outside services related to medical affairs, partially offset by decreased clinical expenses associated with our U.S. post-approval clinical trials.

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new and existing products, quality assurance and post-market surveillance activities, the regulatory and clinical activities required to acquire and maintain product approvals globally and medical affairs expenses. Research and development expenses associated with the development of new and existing products were $9.6 million, $12.8 million and $8.9 million for fiscal 2025, 2024 and 2023, respectively. All research and development costs are expensed as incurred.

Merger Transaction and Related Costs

The following table presents professional service expenses we incurred in connection with our proposed Merger with Alcon for the fiscal years presented (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Merger transaction and related costs

$

17,135

$

—

$

—

—

*

—

*

Percentage of sales

7.2

%

0.0

%

0.0

%

* Denotes change is greater than +100%.

During fiscal year 2025, we incurred costs related to our proposed Merger with Alcon, including fees and expenses for legal, financial, communications and proxy advisory services. At the Special Meeting, the Company’s stockholders voted against the Merger, and the Merger Agreement was terminated in accordance with its terms effective January 6, 2026. We did not incur any merger transaction and related costs in fiscal years 2024 or 2023.

Restructuring, Impairment and Related Charges

The following table presents our restructuring, impairment and related charges for the fiscal years presented (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Restructuring, impairment and related charges

$

28,632

$

—

$

—

—

*

—

*

Percentage of sales

12.0

%

0.0

%

0.0

%

* Denotes change is greater than +100%.

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. As part of this leadership realignment and related efforts, during fiscal 2025, we recognized costs

42

related to severance and reduction in workforce of $12.4 million; consulting expenses of $0.9 million; impairment expenses on leasehold improvements and machinery and equipment of $7.7 million, as we will no longer be using these assets; and impairment on real property right-of-use assets of $4.9 million, as we are actively pursuing subleasing opportunities for two of our leased properties. In addition, we also recognized impairment of $2.7 million during fiscal 2025, for internally developed software that we will no longer be using as we will transition to a cloud-based software solution. The restructuring effort was substantially completed as of June 27, 2025.

Other Income, Net

The following table presents our other income, net for the fiscal years presented (dollars in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Other income, net

$

9,450

$

3,559

$

5,599

—

*

(36.4

)%

Percentage of sales

3.9

%

1.0

%

1.7

%

* Denotes change is greater than +100%.

Other income, net, increased for 2025 due to foreign exchange gains (primarily euro and Japanese Yen) and a recovery of a previously impaired deposit of $1.5 million, partially offset by decreased interest income as a result of lower balances of investments available for sale and overall lower interest rates. The change in other income, net for 2024 was due to increased foreign exchange losses (primarily Japanese Yen and euro) and lower interest income as a result of lower balances of investments available for sale.

Other income, net generally relates to interest income earned on cash, cash equivalents and investments available for sale, interest expense on finance lease obligations, gains or losses on foreign currency transactions, and royalty income. The table below summarizes the year over year changes in other income, net (dollars in thousands):

Favorable (Unfavorable)

2025 vs. 2024

2024 vs. 2023

Interest income, net

$

(1,317

)

$

(1,075

)

Foreign exchange

6,278

(1,766

)

Royalty income

(508

)

434

Other

1,438

367

Net change in other income, net

$

5,891

$

(2,040

)

Provision (Benefit) for Income Taxes

The following table presents our provision for income taxes for the fiscal years presented (in thousands):

Percentage Change

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Provision (benefit) for income taxes

$

(1,815

)

$

11,156

$

12,349

—

*

(9.7

)%

Effective tax rate

2.2

%

(123.2

)%

36.6

%

* Denotes change is greater than +100%.

Our effective tax rates differ from the U.S. federal statutory rate of 21% for 2025, 2024 and 2023 respectively, primarily due to the income taxes generated in foreign jurisdictions and realizability of deferred tax assets. Tax benefits of $1.8 million generated in 2025 is mainly due to the loss recognized in the Company’s operation at Switzerland and a favorable uncertain tax position adjustment. The Company’s operation in Switzerland was profitable in 2024 and 2023 contributing to the majority of tax expense of $11.2 million and $12.3 million, respectively. The Company has maintained a full valuation allowance position on its U.S. operation as of fiscal year 2025.

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 included in this Annual Report. 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

43

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 January 2, 2026, December 27, 2024 and December 29, 2023 included the following (in thousands):

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

Cash and cash equivalents

$

153,150

$

144,159

$

183,038

$

8,991

$

(38,879

)

Investments available for sale

34,386

86,335

49,391

(51,949

)

36,944

Total

$

187,536

$

230,494

$

232,429

$

(42,958

)

$

(1,935

)

Current assets

$

311,545

$

367,940

$

365,269

$

(56,395

)

$

2,671

Current liabilities

$

68,504

$

70,306

$

65,039

$

(1,802

)

$

5,267

Working capital

$

243,041

$

297,634

$

300,230

$

(54,593

)

$

(2,596

)

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 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 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.

Our current liquidity and capital resources, as discussed above, will enable us to meet our known contractual obligations as of January 2, 2026 (in thousands):

Payments Due by Period

Contractual Obligations

Total

1 Year

2 – 3 Years

4 – 5 Years

More than 5 Years

Operating lease obligations (Note 9)*

$

48,707

$

8,194

$

14,557

$

13,323

$

12,633

Pension benefit payments (Note 11)*

6,375

148

4,213

1,118

896

Asset retirement obligation (Note 13)*

45

—

27

18

—

Open purchase orders (Note 13)*

18,069

17,049

1,020

—

—

Total

$

73,196

$

25,391

$

19,817

$

14,459

$

13,529

* Refer to the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K.

Overview of changes in cash and cash equivalents and other working capital accounts

The following table presents a summary of cash flows for the fiscal years presented (in thousands):

2025

2024

2023

Cash flows from:

Operating activities

$

(34,230

)

$

15,725

$

14,594

Investing activities

46,339

(59,217

)

74,347

Financing activities

(4,555

)

5,724

7,415

Effect of exchange rate changes

1,437

(1,111

)

202

Net change in cash and cash equivalents

8,991

(38,879

)

96,558

Cash and cash equivalents, at beginning of year

144,159

183,038

86,480

Cash and cash equivalents, at end of year

$

153,150

$

144,159

$

183,038

For 2025, cash provided by operating activities consisted of a net loss of $80.4 million and $16.3 million in working-capital charges primarily related to the capitalization of cloud-based software and changes in inventories and accounts receivable; partially offset by $62.5 million in non-cash items primarily related to stock-based compensation expenses and impairment of fixed assets and operating lease right-of-use assets. For 2024, cash provided by operating activities consisted of $44.9 million in non-cash items primarily related to stock-based compensation expenses, partially offset by a $20.2 million net loss and $9.0 million in working-capital changes primarily related to the capitalization of cloud-based software and changes in inventories, partially offset by changes in accounts receivable.

44

For 2023, cash provided by operating activities consisted of $37.3 million in non-cash items primarily related to stock-based compensation expenses and $21.3 million in net income, offset by $44.0 million in working-capital changes primarily related to changes in accounts receivable and inventories.

For 2025, cash provided by investing activities resulted from $124.1 million in proceeds from the maturity of investments available for sale used to supplement working capital, partially offset by $75.4 million in purchases of investments available for sale and $5.8 million in purchases of property, plant and equipment. For 2024, cash used in investing activities resulted from $80.2 million in purchases of investments available for sale and $23.4 million in purchases of property, plant and equipment, partially offset from proceeds from the sale or maturity of investments available for sale of $43.1 million that was used to supplement working-capital. For 2023, cash provided by investment activities resulted from proceeds from the sale or maturity of investments available for sale of $143.5 million that was used to supplement working-capital, partially offset by $52.3 million in purchases of investments available for sale and $18.2 million in purchases of property, plant and equipment. Our investment in property, plant and equipment during 2025, 2024 and 2023, was primarily due to investments in manufacturing facilities.

For 2025, cash used in financing activities of $4.6 million consisted of $6.5 million of repurchases of common stock pursuant to our share repurchase program and $1.5 million to repurchase employee common stock for taxes withheld, partially offset by proceeds from the exercise of stock options of $3.5 million. For 2024, cash provided by financing activities of $5.7 million consisted primarily from the exercise of stock options of $7.4 million, partially offset by $1.5 million to repurchase employee common stock for taxes withheld. For 2023, cash provided by financing activities of $7.4 million consisted primarily from the exercise of stock options of $9.7 million, partially offset by $2.1 million to repurchase employee common stock for taxes withheld.

Accounts receivable, net was $50.1 million and $77.9 million at January 2, 2026 and December 27, 2024, respectively. Days’ Sales Outstanding (DSO) was 85 and 145 days for 2025 and 2024, respectively. As of January 2, 2026 and December 27, 2024, the Company’s China distributors accounted for 33% and 58%, respectively, of the Company’s consolidated trade receivables. Our DSO is at a normalized level for 2025. During fiscal 2024, the Company’s China distributors increased their purchases in anticipation of higher procedural volumes during what is typically a summer “high season” in China. Due to dynamic macroeconomic conditions and other factors, the number of ICL procedures performed during the high season and the second half of 2024 overall was lower than expected. Accordingly, our distributors in China held, as of December 27, 2024, elevated levels of ICL product inventory. Our distributor agreements typically provide for payment terms between 30 and 90 days. Our DSO was higher in 2024, in part, due to the higher levels of purchases by our China distributors during the year and the lower than anticipated procedural volumes.

Inventories, net was $55.5 million and $43.3 million at January 2, 2026 and December 27, 2024, respectively. Effective in the fourth quarter of 2025, we changed our methodology for calculating Days’ Inventory on Hand (DOH), from using actual cost of sales for the quarter to using the next quarter’s projected cost of sales. DOH was 219 and 367 days for 2025 and 2024, respectively, for finished goods, including consignment inventory. In fiscal 2023 and fiscal 2024, we increased our production and inventory to support anticipated sales growth of ICL products and to support quick and efficient delivery and fulfillment for surgical procedures. In fiscal 2024, due to the macroeconomic and other conditions in China, our distributors in China held, as of December 27, 2024, elevated levels of ICL product inventory, and accordingly, we reported minimal China ICL sales in the first half of fiscal 2025. In fiscal 2025, we expanded our manufacturing capabilities for our ICL products in our Nidau, Switzerland facility, which contributed to an increase in inventory. We also increased inventory in fiscal 2025 to supply consignment inventory in China, to reduce the Company’s tariff risk in China in the near-term. Increasing our inventory levels also helps mitigate risks associated with potential disruptions to our manufacturing and production process. We intend to continue to assess appropriate inventory levels, and during fiscal 2026, we expect to adjust our production output based on forecasted demand and optimize the level of inventory held by us and held by our distributors.

Critical Accounting Estimates

Our accounting policies are more fully described in Note 1– Organization and Description of Business and Accounting Policies of the Consolidated Financial Statements. As disclosed in Note 1 – Organization and Description of Business and Accounting Policies, the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make significant estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ, significantly at times, from these estimates if actual conditions differ from our assumptions.

We believe the following discussion represents our most critical accounting estimates, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

45

Sales Return Reserves

We provide allowances for sales returns such that returns are matched against the sales from which they originated. While such allowances have historically been within our expectations, we cannot guarantee that we will continue to experience the same return rates that we have in the past. Measurement of such returns is based on an expected loss model which requires consideration of, among other factors, historical returns experience and current/anticipated trends, including the need to adjust for current conditions and product lines, the entry of a competitor, and judgments about the probable effects of relevant observable data. We consider all available information in our quarterly assessments of the adequacy of the allowance for sales returns.

Stock-Based Compensation

We account for the issuance of stock options by estimating the fair value using the Black-Scholes pricing model. This model’s calculations include the exercise price, the market price of shares on grant date, risk-free interest rates, expected term of the award, expected volatility of our stock and expected dividend yield. Stock-based compensation expense for other stock-based awards is measured at the date of grant based on the fair value of the award, which is the closing price of our common stock on the date of grant. For those awards which contain a performance condition, stock-based compensation expense will be recognized when it is probable that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures, over the requisite service period based on the grant-date fair value of the stock. We reassess the probability of vesting at each reporting period and adjust stock-based compensation expense based on our probability assessment.

Income Taxes

In evaluating our ability to recover the deferred tax assets within a jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions including overall current and projected business and industry conditions, projected sales growth, margins, costs and income by jurisdiction, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the successful implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates management uses to manage its businesses. In evaluating the objective evidence that historical results provide, we also consider three years of cumulative operating results. Valuation allowances, or reductions to deferred tax assets, are recognized if, based on the weight of all the available evidence, it is more likely than not that some portion or all of the deferred tax asset may not be realized.

Inventories

We provide estimated inventory allowances for excess, slow moving, expiring and obsolete inventory as well as inventory whose carrying value is more than net realizable value. These reserves are based on current assessments about future demands, market conditions and related management initiatives. If market conditions and actual demands are less favorable than those projected by management, additional inventory write-downs may be required. We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on the expiration of products with a shelf life of less than four months, estimated forecasts of product demand and production requirements for the next twelve months. Several factors may influence the realizability of our inventories, including significant changes in demand, decisions to exit a product line, technological change, and new product development. While such inventory losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same loss rates that we have in the past.

Employee Defined Benefit Plans - Pension

The liabilities and annual income or expense of our pension plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, expected years of service, salary increases and the expected long-term rate of asset return. The fair values of plan assets are determined based on prevailing market prices.

Foreign Exchange Rate Impact

Management does not believe that the fluctuation in the value of the dollar in relation to the currencies of its suppliers or customers in the last three fiscal years has materially adversely affected our ability to purchase or sell products at agreed upon prices. However, currency exchange fluctuations do impact our net sales and results of operations as discussed under Item 7A. Quantitative and Qualitative Disclosures About Market Risk. No assurance

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can be given that adverse currency exchange rate fluctuations will not occur in the future, which could significantly affect our operating results. We do not currently hedge transactions to offset changes in foreign currency.

Inflation

Management believes inflation has not had a significant impact on our net sales and revenues and on income from continuing operations during the past three years.

Recent Accounting Pronouncements

See “Part II. Item 8. “Financial Statements and Supplementary Data – Note 1 – Organization and Description of Business and Accounting Policies – Recent Accounting Pronouncements Not Yet Adopted” of this Annual Report on Form 10-K.