STAAR Surgical Company

Star Surgical Second Quarter Financial Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. If you have a question, please press the star followed by the one on your touchtone phone. If you are using speaker equipment today, please lift the handset before making your selection. This call is being recorded today, Wednesday, August 4, 2021. At this time, I would like to turn the conference over to Mr. Brian Moore, Vice President, Investor, Media Relations and Corporate Development for Star Surgical.

Thank you, operator, and good afternoon, everyone. Thank you for joining us on the Star Surgical conference call this afternoon to discuss the company's financial results for the second quarter ended July 2nd, 2021. On the call today are Karen Mason, President and Chief Executive Officer, and Patrick Williams, Chief Financial Officer. The press release of our second quarter results was issued just after 4 p.m. Eastern Time and is now available on STAR's website at www.star.com. Before we begin, let me quickly remind you that during the course of this conference call, the company will make forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs, and prospects. These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risk and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risk and uncertainties associated with the forward-looking statements made in this conference call and webcast are described in the Safe Harbor Statement in today's press release, as well as SAR's public periodic filings with the SEC. Except as required by law, SAR seems no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition, to supplement the GAAP numbers, we have provided non-GAAP adjusted net income and adjusted earnings per share and sales in constant currency. We believe that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance. A table reconciling the GAAP information to the non-GAAP information is included in today's press release. Following our prepared remarks, we will open the line to questions from publishing analysts. We ask analysts limit themselves to two initial questions, then re-queue with any follow-ups. We thank everyone in advance for their cooperation with this process. And with that, I'd now like to turn the call over to Karen Mason, President and CEO of STAR.

Thank you, Brian. Good afternoon, everyone, and thank you for joining us on today's call. This afternoon, we reported record results for the second quarter of 2021 as business momentum in all of our major markets globally accelerated from the already robust levels in the second half of 2020 and the record-breaking levels we reported to you on our call for the first quarter of 2021. My thanks once again to the entire STAR team and particularly those in manufacturing and our commercial organization for tremendous results in the second quarter and first half of 2021. In the second quarter of 2021, we continued to significantly outperform industry averages by achieving strong ICO unit growth globally, including China up 65%, Japan up 95%, South Korea up 57%, APAC distributor markets up 88%, India up 173%, Spain up 118%, Germany up 65%, European distributor markets up 81%, the Middle East and North Africa up 378%, and the US up 255%, all as compared to the prior year quarter. All told, Global ICL unit growth for the second quarter of 2021 was up 79% year over year, which drove company net sales growth up 77% year over year to $62.4 million. In China, the largest market for refractive surgery in the world, the busy implant season began in earnest in June. We kicked off the season with new, exciting, and innovative marketing campaigns. The marketing campaigns were designed to amplify the message of glasses-free visual freedom with our lenses and to increase Evo ICL brand awareness among our target demographics. One marketing campaign where we supported our largest customer was an Evo 5K running event co-branded with a popular video game theme. Several weeks of mall-based advertisements and other promotions led up to and surrounded the 5K run, which was held at the Oriental Sports Center in Shanghai. The day of the 5K, our customer had on-site EVO patient education supported by us and ophthalmology consultations including eye exams available to the runners and spectators. This 5K run marketing campaign in China resulted in more than 3 million media impressions, further elevating awareness of our EVO lenses. Our China business is also benefiting from many of our customers who have created or plan to create additional EVO operating rooms and train additional surgeons to increase ICL implantation capacity. As an example, There are now five WOW Vision Evo clinics in China, which only offer Evo ICL lenses to their patients. The operator of the clinics has a stated goal of opening at least five new Evo-only clinics each year as we move forward. In Spain, our Evo ICL lenses achieved record-breaking levels of units sold with unit growth, up 118% year-over-year for the second quarter. We observed certain refractive femtosecond laser vision correction procedures being de-emphasized by surgeons despite the fact that several LVC companies and providers discounted their offerings at levels greater than we have previously observed. In contrast, our premium EVO family of lenses allowed our surgeons and their clinics to maintain premium pricing during the second quarter due to the differentiation and benefits associated with our lens technology. Removability, excellent night vision, and no dry eye syndrome, just to name a few. We anticipate surgeons in Spain and globally will increasingly focus on premium lens-based business and greater revenue per procedure. During the quarter, we continued the controlled rollout of our VIVA lens as select surgeons implanted more of our lenses in our targeted early presbyopia market for patients who are generally ages 45 to 55. We believe that surgeons' efforts to define best practices in terms of patient education, selection, and implantation will serve patients, surgeons, and us well in the future as we prepare for broader commercialization. Regulatory pathway work towards marketing approval of the Viva lens outside of European geographies also continues. In the U.S., trade shows are resuming. In early July, STAR leadership attended and participated in the Octane OC Ophthalmology Technology Summit in Southern California. It was the first in-person conference for many of those in our industry since the first quarter of 2020. In July, we attended the American European Congress of Ophthalmic Surgery, ACOS meeting, the ASCRS annual meeting, and the Icelerator Conference at ASCRS. As many of you know, these in-person meetings and trade shows are an important component of advancing our commercialization strategies. It is encouraging that these meetings have resumed and even more encouraging that STARS lenses were highlighted at these events prominently and positively. Also in the U.S., the FDA received in late April our U.S. clinical trial data for marketing approval of our EVO family of myopia lenses. Our submission is now under customary interactive FDA review. We will not provide further comment on the process with the FDA until permitted and prudent to do so. We continue to anticipate pending FDA approval that our evil family of myopia lenses will be available to the U.S. market in the fourth quarter of this year. As we look ahead, the growth opportunity for STAR remains significant. In June, a third party independent research firm named STAR, the fastest growing company in ophthalmology among a list of peers, including all of the publicly traded ophthalmology companies with which many of you are already familiar. We anticipate surge in focus globally on higher dollar patient pay procedures such as our ICL may grow particularly as we consider the recent headwinds associated with reimbursed ophthalmic procedures. If we are correct, our sales opportunity may broaden to the large number of cataract surgeons, but in the U.S., for example, is more than double the number of refractive surgeons we currently target. As we look to the second half of 2021, We are mindful that COVID-19 is still with us and that we have an upcoming cold and flu season in the northern hemisphere. However, we remain confident our surgeons and their patients will want to secure visual freedom with our EVO lenses, similar to our experience since the pandemic began. Further, given the accelerating sales momentum we achieved once again in the second quarter, and our visibility into the key drivers of growth in several major markets in the second half of 2021, we are today increasing our net sales outlook for the full year fiscal 2021. For the full year fiscal 2021, we now expect total net sales to be in the range of $227 million to $230 million, up from our previously provided outlook of $215 million to $217 million that we shared on May 5th. The higher sales outlook we are introducing today represents a growth rate at the midpoint of approximately 40% year over year. I will now turn the call over to Patrick to discuss our financial performance in more detail. Patrick?