STAAR Surgical Company

Good day and welcome to the STAR Surgical Company fourth quarter 2025 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the STAR key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press STAR then 1 on your telephone keypad. To withdraw your question, please press STAR then 2. Please note, this event is being recorded. I would now like to turn the conference over to Connie Johnson, Director, Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, and thank you for joining us. On the call today are Warren Faust, Interim Co-CEO, President and Chief Operating Officer of Star Surgical, and Deborah Andrews, Interim Co-CEO and Chief Financial Officer of Star Surgical. Earlier today, we reported our fourth quarter and fiscal 2025 results via press release and Form 8K. We posted our results, release, and shareholder letter to our investor website at investors.star.com. Today's call is scheduled for one hour and will include Q&A for publishing analysts. Webcast participants can also send questions for today's Q&A session to ir.star.com. Before we get started, I want to remind you that during today's discussion, we will be making forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. I encourage you to read the disclaimers in today's release, the shareholder letter, as well as disclosures in our filings with the SEC. Except as required by law, STAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes. In addition, during today's discussion, we will reference certain non-GAAP financial measures including adjusted EBITDA and constant currency sales. Please refer to today's release for definitions and reconciliations of non-GAAP metrics. For brevity, unless otherwise specified, all comparisons on today's call will be on a year-over-year basis versus the relevant period. Finally, a quick reminder. We intend to use our website as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website in the Investor Relations section. Accordingly, investors should monitor our investor website in addition to following our press releases, SEC filings, and public conference calls and webcasts. And with that, I'd like to turn the presentation over to the Interim Co-CEO, Warren Faust. Warren?

Good afternoon, everyone, and thank you for joining us. Deborah and I are pleased to be with you today on our first quarterly results call as interim co-CEOs. Before we dive in, I'd like to address our leadership structure. Deborah and I stepped into the shared role of co-CEOs effective February 1st, and we are jointly leading the organization on an interim basis. We bring continuity to this transition. Deborah and I have worked very closely and collaboratively over the past year in our roles as Chief Financial Officer and President and Chief Operating Officer, respectively, and that partnership has positioned us well for this next chapter. We complement each other's capabilities and areas of expertise, and we are aligned on both priorities and execution. STAR's Board of Directors has engaged Agon Zender, a leading global executive search and leadership advisory firm, to conduct the search for STAR's next Chief Executive Officer. The search will include both internal and external candidates. 2025 was a difficult year of transition for STAR. We expect 2026 to be a much better year, a year of growth, improving profitability, and meaningful progress across our innovation pipeline, all of which we plan to discuss on today's call. As Connie indicated, along with today's results release, we have issued a shareholder letter that provides commentary on 2025 and discusses our plans and approach for 2026. Deborah and I have the benefit of being deeply familiar with and embedded in the operations of STAR. We are working with our teams to evaluate our portfolio and roadmap after a period of uncertainty, setting clear expectations on both operational front and in terms of financial performance in order to unlock the power of our 2026 growth, profit, and innovation plan. We are encouraged by the start of 2026. The team is energized and productive. Days are filled with customer engagements, distributor meetings, internal town halls, leadership alignment sessions, and global commercial kickoffs focused on clinical training, commercial readiness, sales effectiveness, and message discipline. Our teams are excited because across most markets, refractive surgery continues to move toward lens-based procedures and away from laser vision correction procedures that require corneal tissue removal. EvoICL continues to gain share even as the broader laser vision correction market struggles. Consequently, STAR remains well-positioned to re-accelerate growth in existing markets and unlock opportunities with our new product offerings. In China, our largest market, after several years of macroeconomic volatility driven by COVID, housing market weakness, and uneven consumer spending, conditions stabilized in 2025 as policy support increased and the stock market rose sharply. In-market EVO ICL demand recovered at mid-single-digit rates, and procedures improved as we exited the year. This recovery did not translate into China net sales growth for Star in 2025, as our distributors reduced inventory levels, but it does provide us with optimism about 2026. Market conditions in China appear to be positioned for a rebound, which will help drive growth for Star. Outside China, we also have reason to be optimistic about Star's future growth. We are seeing momentum in our U.S. business despite the ongoing decline in laser vision correction procedures, and with our recently announced expanded age range indication for Evo in the United States, which is now approved for myopia treatment in adults aged 21 to 60, our opportunity is even bigger. This expanded indication equates to roughly 8 million more potential candidates for Evo in the United States. Our efforts to expand our Evo labeling are helping fuel our growth in other parts of the world as well. For example, in Brazil, EVO had previously been approved for use down to minus 6 diopters and can now be used for treatment of myopia down to minus 0.5 diopters. Our growth remains steady across the Americas, and we expect to see additional expansion in Canada in 2026. In 2025, we went direct in Canada, and while the team is small, our efforts there are already paying off. In 2026, we're targeting solid growth of Evo in EMEA and in our Asia Pacific markets, such as Japan, Korea, and India. India in particular, where we're laying a foundation, represents a growing opportunity for us as its economy is growing quickly and a rising portion of its population can afford refractive surgery. We're also excited about the market opportunities in Taiwan where we've received regulatory approval in 2025. In terms of profitability, we made a lot of progress in 2025 and profitability will continue to be a focus in 2026. In 2025, we took costs out and reduced our annualized adjusted operating expense run rate. And we beat our second half $225 million target communicated to investors back in Q1 2025. As revenue grows, we expect cost discipline to drive operating leverage. We are focused on enterprise-wide impacts, not isolated improvements, and on new ways of working that increase the velocity of decision-making so actions can translate more quickly into results and returns. Profitability expansion comes from reducing costs enterprise-wide, but it also comes from disciplined investing. We are focused on opportunities big and small, including manufacturing and infrastructure improvements. and we continually look for margin improvement opportunities in our sales and distribution network. We also believe that optimizing ASPs can contribute to increased profitability. We are allocating capital where it makes the greatest impact, the right programs in the right markets, supported by the right people and infrastructure. To that point, we are in the final stages of our Oracle ERP implementation, which will modernize the way we operate enterprise-wide. Full deployment is expected early in the second half of the year. Alongside ERP, we are advancing Stella, our next-generation online sizing and ordering platform, which reduces friction in the adoption of EvoICL technology. We are also advancing additional IT initiatives spanning from manufacturing process improvements to Salesforce enablement. We believe these investments will not only benefit our surgeon, customers, and patients, but will drive efficiency and profitability across the organization. Our 2026 growth, profit, and innovation plan also reflects a renewed focus on innovation. I'm proud to report that we have launched EVO Plus in China and we are progressing with our rollout plan as we scale Swiss manufacturing to meet demand. EVO Plus represents our first new lens in China in more than a decade. Early demand has been encouraging and we are working to increase supply as production scales. Over time, we expect higher ASPs and margin expansion from EVO Plus in China. In 2026, we are also expanding the commercial availability of the Lioli injector for evil ICL procedures. The Lioli injector has been well-established in the United States, and we are pleased to bring this new injector option to our surgeons in EMEA. We're excited about these near-term launches, but we're also focused on our pipeline for the longer term. We are building new capabilities, and our teams are establishing clear milestones and timelines for future advancements as well as the operational discipline and accountability required to stay on track in a rapidly evolving market. Before I hand things over to Deborah, I think it's important to recognize that 2025 is now in the rearview mirror, and the disruption associated with our proposed merger with Alcon is behind us. Our shareholders have spoken, supporting a long-term approach, and we are listening to them, embracing the opportunities for Star as a standalone company. We firmly believe that STAR has everything it takes to deliver on our growth, profitability, and innovation goals. We have superior technology. Our differentiated columnar material is the foundation for our EVO technology and is unmatched in the market. Only STAR has 40 plus years of history treating myopia with our innovative lens-based procedure. And the myopia and dry eye disease epidemics are only getting worse. We have trusted relationships with our partners. The STAR Surgeon community is passionate about EVO-ICLs and bringing the benefits of limbs-based vision correction without corneal tissue removal to their patients. The power of this devoted customer base is real and tangible. We have a talented team. Our dedicated employees and the STAR leadership team are aligned, focused, and have the capabilities to execute our goals and objectives and drive stockholder value creation. Now, I would like to turn things over to my co-CEO, Deborah, for additional commentary and to discuss our financial results. Deborah?