Third quarter 2026
Filed Nov 4, 2026Third-quarter net sales were $83.4 million, net income was $5.6 million, or $0.11 per diluted share, and Adjusted EBITDA was $14.4 million, or $0.28 per diluted share.
Reported sales, gross margin, operating income, net income and Adjusted EBITDA declined year over year because the prior-year quarter included $25.9 million of deferred China sales recognized at 100% gross margin. Excluding that deferred revenue, third-quarter net sales increased 21%, China sales increased 31%, and free cash flow increased to $26.4 million.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Third-quarter net salesGAAP | $83,411 (in 000's) | – | (12.0)% |
| Third-quarter constant currency total salesnon-GAAP | $84,389 (in 000's) | – | (10.9)% |
| Third-quarter cost of salesGAAP | $24,276 (in 000's) | – | (44.0)% |
| Third-quarter gross profitGAAP | $59,135 (in 000's) | – | (24.1)% |
| Third-quarter gross profit marginGAAP | 70.9% | – | – |
| Third-quarter general and administrative expensesGAAP | $18,899 (in 000's) | – | 9.0% |
| Third-quarter selling and marketing expensesGAAP | $24,316 (in 000's) | – | (3.6)% |
| Third-quarter research and development expensesGAAP | $10,461 (in 000's) | – | (13.6)% |
| Third-quarter merger transaction and related costsGAAP | - | – | 100.0% |
| Third-quarter restructuring, impairment and related chargesGAAP | - | – | 100.0% |
| Third-quarter total operating expensesGAAP | $53,676 (in 000's) | – | 9.6% |
| Third-quarter operating incomeGAAP | $5,459 (in 000's) | – | (70.5)% |
| Third-quarter total other income, netGAAP | $1,521 (in 000's) | – | 407.0% |
| Third-quarter income before provision for income taxesGAAP | $6,980 (in 000's) | – | (62.9)% |
| Third-quarter provision for income taxesGAAP | $1,405 (in 000's) | – | 85.8% |
| Third-quarter net incomeGAAP | $5,575 (in 000's) | – | (37.2)% |
| Third-quarter diluted net income per shareGAAP | $0.11 | – | – |
| Third-quarter weighted average shares outstanding - dilutedGAAP | 51,449 | – | – |
| Third-quarter Adjusted EBITDAnon-GAAP | $14,358 (in 000's) | – | – |
| Third-quarter Adjusted EBITDA marginnon-GAAP | 17.2% | – | – |
| Third-quarter Adjusted EBITDA per diluted sharenon-GAAP | $0.28 | – | – |
| Third-quarter net cash provided by operating activitiesGAAP | $27,315 (in 000's) | – | – |
| Third-quarter free cash flownon-GAAP | $26,380 (in 000's) | – | – |
| First nine months net salesGAAP | $270,468 (in 000's) | – | 48.9% |
| First nine months constant currency total salesnon-GAAP | $271,045 (in 000's) | – | 49.2% |
| First nine months gross profitGAAP | $197,721 (in 000's) | – | 42.6% |
| First nine months gross profit marginGAAP | 73.1% | – | – |
| First nine months total operating expensesGAAP | $174,182 (in 000's) | – | 16.1% |
| First nine months operating income (loss)GAAP | $23,539 (in 000's) | – | 134.2% |
| First nine months net income (loss)GAAP | $18,839 (in 000's) | – | 130.3% |
| First nine months diluted net income (loss) per shareGAAP | $0.37 | – | – |
| First nine months Adjusted EBITDAnon-GAAP | $58.8M | – | – |
| First nine months Adjusted EBITDA per diluted sharenon-GAAP | $1.14 per diluted share | – | – |
| First nine months net cash provided by (used in) operating activitiesGAAP | $25,310 (in 000's) | – | – |
| First nine months free cash flownon-GAAP | $23,438 (in 000's) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ChinaPrior-year sales included $25.9 million of deferred sales; excluding those sales, China net sales grew 31% compared with $29.9 million in the prior-year quarter. | $39.3M | – | (30)% |
| AmericasGrowth was led by U.S. sales. | $8,244 (in 000's) | – | 14% |
| United StatesThis was the third consecutive quarter of U.S. sales exceeding $6 million. | $6.5M | – | 15% |
| EMEAStrong double-digit growth in Spain, Germany, the UK, and distributor operations; sales increased 51% excluding the Middle East. | $13,619 (in 000's) | – | 31% |
| APACGrowth in India, Taiwan, and other APAC markets was partially offset by declines in Japan, primarily due to currency headwinds, and South Korea, due to overall market weakness. | $61,548 (in 000's) | – | (20)% |
| JapanThe decline was primarily due to currency headwinds. | $10,376 (in 000's) | – | (8)% |
| South KoreaThe decline reflected overall market weakness. | $5,174 (in 000's) | – | (6)% |
| Global Sales Ex ChinaGrowth reflected increased sales in India, Taiwan, other APAC markets, and double-digit percentage growth in the Americas and EMEA. | $44,111 (in 000's) | – | 13% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fourth quarter 2026 and full year 2026 outlook
- Gross marginfourth-quarter 2026 gross margins above third-quarter levels
- Operating expenses$225 million operating expense target
- NoteChina seasonality should moderate revenue and earnings, but not free cash flow.
- NoteUnit costs will likely stay elevated for the rest of the year as STAAR sells through inventory produced in the second quarter of 2026.
- NoteWith both production facilities now running at full capacity, unit costs are expected to improve further in 2027.
Capital returns
- In September 2026, the Board authorized a share repurchase program under which the Company may repurchase up to $50 million of its outstanding common stock.
- Repurchase of employee common stock for taxes withheld was $1,323 (in 000's) in the third quarter and $5,931 (in 000's) in the first nine months.
What drove it
- Third-quarter 2025 included $25.9 million of previously deferred China sales, recognized with no corresponding cost of sales and producing a 100% gross margin on that revenue.
- Excluding the deferred China sales, third-quarter 2026 net sales increased 21% against a $68.8 million prior-year base.
- China sales excluding deferred sales increased 31%, supported by public-hospital performance, a mix shift to EVO+ and toric lenses, and higher distributor average selling prices.
- EMEA sales increased 31%, or 51% excluding the Middle East.
- All China-bound ICL manufacturing transitioned to Switzerland by the end of the quarter, reducing exposure to tariffs on U.S.-origin products entering China.
- Third-quarter operating cash flow was supported by $12,097 (in 000's) of accounts receivable cash flow and $5,828 (in 000's) of other current and long-term liabilities cash flow.
Concerns
- Reported third-quarter net sales declined 12.0%, gross profit margin declined to 70.9% from 82.2%, and operating income declined 70.5% from the prior-year quarter.
- Gross margin was negatively affected by higher manufacturing costs from low second-quarter production volumes during the ERP implementation, higher freight costs, tariffs on U.S. goods produced for China, and increased inventory provisions from expiring inventory.
- U.S. product in inventory and sold to China will continue to be subject to tariffs.
- STAAR was not yet fully able to meet lens demand during the third quarter; the Company stated that all China sales increase in the quarter was attributable to increased average selling prices.
- Japan declined primarily due to currency headwinds and South Korea declined due to overall market weakness.
What to watch
- Whether fourth-quarter gross margins rise above third-quarter levels as lower tariffs and smaller inventory provisions take effect.
- The pace at which manufacturing capacity closes the China supply gap and enables company shipments to reflect underlying in-market demand.
- China distributor inventory, which ended the third quarter below the Company's six-month target while in-market volume grew.
- Execution of the $225 million operating expense target.
- First-in-human clinical trial patient enrollment for two next-generation presbyopia products, expected in the next few months subject to remaining required regulatory authorizations.
- Utilization of the up to $50 million share repurchase authorization.
Balance sheet and cash flow
- Cash, cash equivalents, and investments available for sale as of October 2, 2026 totaled $206.4 million, compared to $181.5 million at the end of the second quarter 2026.
- Cash and cash equivalents were $133,610 (in 000's) as of October 2, 2026, compared with $153,150 (in 000's) as of January 2, 2026.
- Investments available for sale were $72,804 (in 000's) as of October 2, 2026, compared with $34,386 (in 000's) as of January 2, 2026.
- The Company has no outstanding debt.
- Accounts receivable trade, net were $86,528 (in 000's) as of October 2, 2026, compared with $50,064 (in 000's) as of January 2, 2026.
- Inventories, net were $45,017 (in 000's) as of October 2, 2026, compared with $55,496 (in 000's) as of January 2, 2026.
- Total assets were $485,156 (in 000's) as of October 2, 2026, compared with $451,678 (in 000's) as of January 2, 2026.
Analysis
STAAR reported third-quarter net sales of $83.4 million, down 12% from $94.7 million. The reported comparison was distorted by $25.9 million of previously deferred China sales recognized in the third quarter of 2025. Excluding that prior-year item, third-quarter 2026 sales increased 21% from a $68.8 million base. China sales were $39.3 million and declined 30% on a reported basis, but increased 31% excluding deferred sales. Sales outside China were $44.1 million, up 13% from $38.9 million.
Regional execution outside the reported China comparison was constructive. EMEA sales increased 31%, or 51% excluding the Middle East, while Americas sales increased 14% and U.S. sales were $6.5 million, marking a third consecutive quarter above $6 million. APAC sales declined 20%, with growth in India, Taiwan and other APAC markets offset by Japan currency headwinds and South Korea market weakness. The Company said China in-market unit volume shipments by distributors grew 12.4% through the first nine months, while third-quarter China sales growth was entirely driven by higher average selling prices because STAAR could not yet fully meet lens demand.
Profitability was materially lower on a reported basis. Gross margin was 70.9%, compared with 82.2%, while operating income was $5.5 million versus $18.5 million and net income was $5.6 million versus $8.9 million. The prior-year deferred China revenue increased third-quarter 2025 gross profit margin by 6.7 percentage points. The current quarter also absorbed higher manufacturing costs related to low second-quarter production during the ERP implementation, higher freight costs, tariffs and inventory provisions. Adjusted EBITDA was $14.4 million, compared with $34.7 million in the prior-year quarter, which included the deferred China revenue impact.
Cash generation strengthened. Third-quarter operating cash flow was $27.3 million and free cash flow was $26.4 million, compared with $2.7 million and $1.8 million, respectively, in the prior-year quarter. Cash, cash equivalents and investments available for sale totaled $206.4 million at October 2, 2026, compared with $181.5 million at the end of the second quarter, and the Company reported no outstanding debt. The Board authorized a program to repurchase up to $50 million of common stock in September 2026.
Management expects fourth-quarter gross margins to exceed third-quarter levels as the China manufacturing transition to Switzerland reduces tariff exposure and inventory provisions decline, although unit costs will likely remain elevated for the rest of the year as lower-volume second-quarter inventory is sold through. STAAR remains on track for its $225 million operating expense target. The operational focus is on expanding Swiss production, improving manufacturing yields, increasing Monrovia machining capacity and closing the China supply gap. Product expansion is also advancing, with first-in-human enrollment for two next-generation presbyopia technologies expected in the next few months subject to remaining regulatory authorizations.
Management, verbatim
Our record nine-month performance keeps us firmly on track to deliver strong full-year GAAP net income with free cash flow and a debt-free balance sheet.
Deborah Andrews, Executive Vice President and Chief Financial Officer
Temporary gross margin pressures are expected to abate beginning in the fourth quarter, while China seasonality should moderate revenue and earnings, but not free cash flow.
Deborah Andrews, Executive Vice President and Chief Financial Officer
Not in the filing
stated, not guessed- Quantitative full-year 2026 revenue guidance was not provided.
- Quantitative fourth-quarter 2026 revenue guidance was not provided.
- Quantitative gross-margin guidance was not provided.
- Quantitative tax-rate guidance was not provided.
- A quarterly GAAP effective tax rate was not provided.
- A quantitative dividend declaration was not provided.
- Previous outlook was not provided; therefore, no comparison of actual results with prior guidance is available.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.