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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: April 3, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-11634

STAAR Surgical Company

(Exact Name of Registrant as Specified in its Charter)


Delaware	95-3797439
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
25510 Commercentre Drive Lake Forest, California	92630
(Address of Principal Executive Offices)	(Zip Code)

(626) 303-7902

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	STAA	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The registrant has 49,788,495 shares of common stock, par value $0.01 per share, outstanding as of May 8, 2026.

STAAR SURGICAL COMPANY

INDEX


		PAGE NUMBER

PART I – FINANCIAL INFORMATION		1

ITEM 1	FINANCIAL STATEMENTS	1

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24

ITEM 4.	CONTROLS AND PROCEDURES	24

PART II – OTHER INFORMATION		24

ITEM 1.	LEGAL PROCEEDINGS	24

ITEM 1A.	RISK FACTORS	25

ITEM 5.	OTHER INFORMATION	25

ITEM 6.	EXHIBITS	26

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)


	April 3, 2026			January 2, 2026
ASSETS
Current assets:
Cash and cash equivalents	$	131,864		$	153,150
Investments available for sale (amortized cost basis of $32,028 and $34,385 at April 3, 2026 and January 2, 2026, respectively)		32,025			34,386
Accounts receivable trade, net of allowance for credit losses of $799 and $83 at April 3, 2026 and January 2, 2026, respectively		81,172			50,064
Inventories, net		49,784			55,496
Prepayments, deposits and other current assets		17,553			18,449
Total current assets		312,398			311,545
Property, plant and equipment, net		71,738			73,323
Operating lease right-of-use assets, net		28,572			29,609
Cloud-based software		34,265			30,700
Goodwill		1,786			1,786
Deferred income taxes		1,088			3,365
Other assets		1,271			1,350
Total assets	$	451,118		$	451,678
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,696		$	11,574
Obligations under operating leases		6,102			5,872
Allowance for sales returns		13,190			10,199
Other current liabilities		33,006			40,859
Total current liabilities		60,994			68,504
Obligations under operating leases		31,189			32,481
Asset retirement obligations		44			45
Deferred rent		89			89
Pension liability		6,436			6,375
Total liabilities		98,752			107,494
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 50,156 shares issued and 49,780 shares outstanding at April 3, 2026 and 49,779 shares issued and 49,403 outstanding at January 2, 2026		502			498
Additional paid-in capital		507,921			504,682
Treasury stock, 376 and 376 shares at April 3, 2026 and January 2, 2026, respectively		(6,461	)		(6,461	)
Accumulated other comprehensive loss		(6,778	)		(6,511	)
Accumulated deficit		(142,818	)		(148,024	)
Total stockholders’ equity		352,366			344,184
Total liabilities and stockholders’ equity	$	451,118		$	451,678

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	April 3, 2026			March 28, 2025
Net sales	$	93,522		$	42,589
Cost of sales		24,663			14,584
Gross profit		68,859			28,005
Selling, general and administrative expenses:
General and administrative		17,022			24,458
Selling and marketing		24,509			26,945
Research and development		9,925			11,339
Merger transaction and related costs		6,743			—
Restructuring, impairment and related charges		2,681			22,664
Total selling, general and administrative expenses		60,880			85,406
Operating income (loss)		7,979			(57,401	)
Other income (expense), net:
Interest income, net		907			1,366
Gain (loss) on foreign currency transactions		(1,111	)		1,418
Other income, net		443			131
Total other income, net		239			2,915
Income (loss) before income taxes		8,218			(54,486	)
Provision (benefit) for income taxes		3,012			(275	)
Net income (loss)	$	5,206		$	(54,211	)
Net income (loss) per share:
Basic	$	0.10		$	(1.10	)
Diluted	$	0.10		$	(1.10	)
Weighted average shares outstanding:
Basic		49,908			49,344
Diluted		50,900			49,344

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	Three Months Ended
	April 3, 2026			March 28, 2025
Net income (loss)	$	5,206		$	(54,211	)
Other comprehensive income (loss):
Defined benefit plans:
Net change in plan assets		(43	)		950
Reclassification into other income (expense), net		(6	)		16
Investments available for sale:
Change in unrealized gain (loss)		(5	)		(1	)
Foreign currency translation gain (loss)		(321	)		801
Tax effect		108			(339	)
Other comprehensive income (loss), net of tax		(267	)		1,427
Comprehensive income (loss)	$	4,939		$	(52,784	)

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Three Months Ended
	Common Stock Shares			Common Stock Par Value		Additional Paid-In Capital			Treasury Stock Shares			Treasury Stock			Accumulated Other Comprehen- sive Income (Loss)			Accumulated Deficit			Total
Balance, at January 2, 2026		49,779		$	498	$	504,682			(376	)	$	(6,461	)	$	(6,511	)	$	(148,024	)	$	344,184
Net income		—			—		—			—			—			—			5,206			5,206
Other comprehensive loss		—			—		—			—			—			(267	)		—			(267	)
Common stock issued upon exercise of options		20			—		170			—			—			—			—			170
Stock-based compensation		—			—		4,936			—			—			—			—			4,936
Repurchase of employee common stock for taxes withheld		(96	)		—		(1,867	)		—			—			—			—			(1,867	)
Vested restricted and performance stock units		453			4		—			—			—			—			—			4
Balance, at April 3, 2026		50,156		$	502	$	507,921			(376	)	$	(6,461	)	$	(6,778	)	$	(142,818	)	$	352,366

Balance, at December 27, 2024		49,294		$	493	$	471,449			—		$	—		$	(7,031	)	$	(67,576	)	$	397,335
Net loss		—			—		—			—			—			—			(54,211	)		(54,211	)
Other comprehensive income		—			—		—			—			—			1,427			—			1,427
Common stock issued upon exercise of options		52			1		375			—			—			—			—			376
Stock-based compensation		—			—		6,327			—			—			—			—			6,327
Repurchase of employee common stock for taxes withheld		(66	)		—		(1,283	)		—			—			—			—			(1,283	)
Vested restricted and performance stock units		243			1		—			—			—			—			—			1
Balance, at March 28, 2025		49,523		$	495	$	476,868			—		$	—		$	(5,604	)	$	(121,787	)	$	349,972

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended
	April 3, 2026			March 28, 2025
Cash flows from operating activities:
Net income (loss)	$	5,206		$	(54,211	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of property, plant, and equipment		2,107			2,337
Amortization of cloud-based software		104			53
Non-cash operating lease expense		857			1,028
Impairment of fixed assets and operating lease right-of-use assets		—			13,216
Accretion/Amortization of investments available for sale		(232	)		(129	)
Deferred income taxes		2,810			(1,029	)
Change in net pension liability		31			(2,457	)
Stock-based compensation expense		4,823			6,015
Provision for sales returns and credit losses		3,712			(910	)
Inventory provision		1,575			2,031
Changes in working capital:
Accounts receivable		(31,921	)		38,170
Inventories		4,088			(6,304	)
Prepayments, deposits, and other assets		353			305
Cloud-based software		(3,668	)		(2,167	)
Accounts payable		(2,957	)		(5,961	)
Other current and non-current liabilities		(8,583	)		4,279
Net cash used in operating activities		(21,695	)		(5,734	)
Cash flows from investing activities:
Acquisition of property and equipment		(443	)		(1,468	)
Purchase of investments available for sale		(4,519	)		(14,691	)
Proceeds from maturity of investments available for sale		5,459			51,148
Proceeds from sale of investments available for sale		1,650			362
Net cash provided by investing activities		2,147			35,351
Cash flows from financing activities:
Repayment of finance lease obligations		—			(42	)
Repurchase of employee common stock for taxes withheld		(1,867	)		(1,283	)
Proceeds from the exercise of stock options		170			376
Proceeds from vested restricted and performance stock units		4			1
Net cash used in financing activities		(1,693	)		(948	)
Effect of exchange rate changes on cash and cash equivalents		(45	)		286
Increase (decrease) in cash and cash equivalents		(21,286	)		28,955
Cash and cash equivalents, at beginning of the year		153,150			144,159
Cash and cash equivalents, at end of the period	$	131,864		$	173,114

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 — Basis of Presentation and Significant Accounting Policies

STAAR Surgical Company, a Delaware corporation, was first incorporated in 1982, and together with its subsidiaries designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. The accompanying Condensed Consolidated Financial Statements present the financial position, results of operations, and cash flows of STAAR Surgical Company and its wholly owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations, certain information and footnote disclosures normally included in the Comprehensive Financial Statements have been condensed or omitted pursuant to such rules and regulations. The Consolidated Balance Sheet as of January 2, 2026 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2026.

The Condensed Consolidated Financial Statements for the three months ended April 3, 2026 and March 28, 2025, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition and results of operations. The results of operations for the three months ended April 3, 2026 and March 28, 2025, are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

Each of the Company’s fiscal reporting periods ends on the Friday nearest to the quarter ending date and generally consists of 13 weeks. Unless the context indicates otherwise “we,” “us,” the “Company,” and “STAAR” refer to STAAR Surgical Company and its consolidated subsidiaries.

Reclassifications

The Company reclassified certain personnel costs including salary-related and payroll tax expenses, bonus and stock-based compensation related expenses and travel related expenses previously included in research and development to selling and marketing. These costs support internal and external training and education of the Company’s existing products, and as such, the Company determined that classification of these costs in selling and marketing better reflects the nature of the costs and financial performance of the Company as it operates. The Company has made certain reclassification adjustments to conform prior period amounts to current presentation, which include reclassification adjustments between Research and development expenses and Selling and marketing expenses on its Condensed Consolidated Statements of Operations as follows (in thousands):


	Three Months Ended March 28, 2025
	Prior Presentation		Reclassification			New Presentation
Selling and marketing	$	24,621	$	2,324		$	26,945
Research and development		13,663		(2,324	)		11,339

The reclassification adjustments did not have a material impact on previously recorded amounts and had no impact on the Company’s Total selling, general and administrative expenses, Operating income (loss), Net income (loss) or Net earnings (loss) per share. The Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows were not affected by changes in the presentation of these costs.

Additionally, non-cash lease expense is now presented on its own line in the Company’s Condensed Consolidated Statements of Cash Flows instead of combined with the changes in other current and non-current liabilities as follows (in thousands):


	Three Months Ended March 28, 2025
	Prior Presentation		Reclassification			New Presentation
Non-cash operating lease expense	$	—	$	1,028		$	1,028
Other current and non-current liabilities		5,307		(1,028	)		4,279

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Net cash used in operating activities presented in the Condensed Consolidated Statements of Cash Flows was not affected by this change in presentation.

Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)

Restructuring, Impairment and Related Charges

In the first half of 2025, the Company took a number of steps to change its leadership team, realign its leadership structure to better address market needs, reduce costs and discretionary spending, and better position the Company to return to sustainable growth. In addition, as a result of the termination of the Agreement and Plan of Merger (the “Merger Agreement” with Alcon Research, LLC, a Delaware limited liability company (“Alcon”) in January 2026 and the entry into a letter agreement (the “Cooperation Agreement”) with Broadwood Partners, L.P. and its affiliates (“Broadwood”), the Company incurred additional restructuring related charges due to leadership realignment. Restructuring, impairment and related charges were as follows (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Severance and reduction in workforce(1)	$	1,614	$	8,808
Consulting expenses		1,067		639
Impairment on leasehold improvements and machinery and equipment(2)		—		7,059
Impairment on real property right-of-use assets(3)		—		3,407
Impairment on internally developed software(2)		—		2,751
	$	2,681	$	22,664

(1)

See also Note 7 – Other Current Liabilities

(2)

The Company will no longer be using these assets, see Note 5 – Property, Plant and Equipment.

(3)

The Company is actively pursuing subleasing opportunities, see Note 8 – Operating Leases.

Merger Transactions and Related Costs

In connection with the proposed merger with Alcon and the Cooperation Agreement, the Company incurred professional service expenses of $6,743,000 for the three months ended April 3, 2026. The Cooperation Agreement provided for the reimbursement of certain reasonable out-of-pocket fees and expenses to Broadwood, Yunqi Capital and Defender Capital related to the merger with Alcon. See Note 16 – Related Party Transactions.

Vendor Concentration

There were three vendors and two vendors that accounted for over 60% and 30%, respectively, of the Company’s consolidated accounts payable as of April 3, 2026 and January 2, 2026, respectively.

Segment Reporting

The Company’s chief operating decision maker (“CODM”) has been identified as the Co-Chief Executive Officers. The Company’s CODM manages and allocates resources to the operations of the Company on a consolidated basis. The CODM assesses performance by comparing actual results to forecasts and decides how to allocate resources, i.e., headcount and compensation, based on net income or on operating results, if a net loss. Significant segment expenses are consistent with those presented on the Condensed Consolidated Statements of Operations.

The measure of segment assets is reported on the balance sheet as total consolidated assets and the expenditures for additions to long-lived assets, and depreciation and amortization expense is consistent with those presented on the Condensed Statement of Cash Flows.

See Note 14 – Disaggregation of Sales, Geographic Sales and Product Sales and Note 15 – Geographic Assets for specific information regarding the Company’s sales and long-lived assets.

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 1 — Basis of Presentation and Significant Accounting Policies (Continued)

Recent Accounting Pronouncements Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).” ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 requires footnote disclosure about specific expenses to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil- and gas-production activities or other types of depletion expenses. The tabular disclosure also would include certain other expenses, when applicable. ASU 2024-03 does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company adopted the annual disclosure requirements of ASU 2024-03 at the beginning of fiscal year 2026 and will adopt the interim disclosure requirement beginning in fiscal year 2027. The Company is currently evaluating the annual disclosure requirements and its effect on its annual report for fiscal year 2026.

Note 2 — Investments Available for Sale

Investments available for sale (“AFS”) and the related fair value measurement consisted of the following (dollars in thousands):


	April 3, 2026
										Fair Value Measurements
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Level 1		Level 2
Commercial paper	$	11,525	$	—	$	(2	)	$	11,523	$	—	$	11,523
Certificates of deposit		1,549		1		—			1,550		—		1,550
U.S. Treasury securities		999		—		—			999		999		—
Corporate debt securities		17,955		2		(4	)		17,953		—		17,953
Total investments AFS	$	32,028	$	3	$	(6	)	$	32,025	$	999	$	31,026

	January 2, 2026
										Fair Value Measurements
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Level 1		Level 2
Commercial paper	$	14,682	$	1	$	(1	)	$	14,682	$	—	$	14,682
Certificates of deposit		816		—		—			816		—		816
U.S. Treasury securities		990		—		—			990		990		—
Corporate debt securities		17,897		3		(2	)		17,898		—		17,898
Total investments AFS	$	34,385	$	4	$	(3	)	$	34,386	$	990	$	33,396

The Company obtains the fair value from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers and other industry and economic events.

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 2 — Investments Available for Sale (Continued)

The Company assessed each debt security in a gross unrealized loss position to determine whether the decline in fair value below amortized cost was a result of credit losses or other factors, whether the Company expects to recover the amortized cost of the debt security, the Company’s intent to sell and whether it is more-likely-than-not that the Company will not be required to sell the debt security before the recovery of the amortized cost basis. There has been no allowance for expected credit losses recorded for the three months ended April 3, 2026 and March 28, 2025.

The following table shows the fair value of investments AFS by contractual maturity (in thousands):


	As of April 3, 2026
	Within one year		After one year through five years		Total
Commercial paper	$	11,523	$	—	$	11,523
Certificates of deposit		1,550		—		1,550
U.S. Treasury securities		999		—		999
Corporate debt securities		17,953		—		17,953
Total investments AFS	$	32,025	$	—	$	32,025

During the three months ended April 3, 2026, several of the Company’s investments AFS with an aggregate fair value of $1,650,000 was subject to early redemption. The Company recognized a gain of less than $1,000 for the three months ended April 3, 2026. During the three months ended March 28, 2025, one of the Company’s investments AFS with an aggregate fair value of $362,000 was subject to early redemption. The Company recognized a gain of less than $1,000 for the three months ended March 28, 2025.

Note 3 — Inventories

Inventories, net are stated at the lower of cost and net realizable value, determined on a first-in, first-out basis and consisted of the following (in thousands):


	April 3, 2026			January 2, 2026
Raw materials and purchased parts	$	10,718		$	10,238
Work in process		6,959			8,514
Finished goods(1)		34,979			39,673
Total inventories, gross		52,656			58,425
Less inventory reserves		(2,872	)		(2,929	)
Total inventories, net	$	49,784		$	55,496

(1)

Finished goods inventory includes consigned inventory of $7,146,000 and $9,619,000 for April 3, 2026 and January 2, 2026, respectively. See also Note 14 – Disaggregation of Sales, Geographic Sales and Product Sales to the Condensed Consolidated Financial Statements for further details.

Note 4 — Prepayments, Deposits, and Other Current Assets

Prepayments, deposits, and other current assets consisted of the following (in thousands):


	April 3, 2026		January 2, 2026
Prepayments and deposits	$	6,968	$	7,965
Prepaid insurance		2,575		3,269
Prepaid income taxes		785		1,917
Value added tax (VAT) receivable		4,522		4,242
BVG (Swiss Pension) prepayment		1,852		—
Other(1)		851		1,056
Total prepayments, deposits and other current assets	$	17,553	$	18,449

(1)

No individual category in “Other” exceeds 5% of the total prepayments, deposits and other current assets.

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 5 — Property, Plant and Equipment

Property, plant and equipment, net consisted of the following (in thousands):


	April 3, 2026			January 2, 2026
Machinery and equipment	$	49,014		$	45,137
Computer equipment and software		10,485			10,525
Furniture and fixtures		7,462			7,483
Leasehold improvements		24,475			19,403
Construction in process		21,872			30,340
Total property, plant and equipment, gross		113,308			112,888
Less accumulated depreciation		(41,570	)		(39,565	)
Total property, plant and equipment, net	$	71,738		$	73,323

As discussed in Note 1 – Basis of Presentation and Significant Accounting Policies, during the three months ended March 28, 2025, the Company recognized fixed asset impairment expense of $7,059,000 primarily on leasehold improvements and machinery and equipment as the Company will no longer be using these assets. The Company also recognized impairment of $2,751,000 for internally developed software that the Company will no longer be using as it will transition to a cloud-based software solution. These amounts are recorded in Restructuring, impairment and related charges on the Condensed Consolidated Statements of Operations.

Construction in process primarily consists of the build out and validation of machinery and equipment.

The Company recorded depreciation expense in the following categories as follows (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Cost of sales	$	875	$	868
General and administrative		841		1,075
Selling and marketing		182		175
Research and development		209		182
Total depreciation expense	$	2,107	$	2,300

Note 6 — Cloud-Based Software

The Company capitalized cloud-based software implementation costs related to several systems, including enterprise resource planning and customer relationship management systems, which were placed into service at the beginning of the second quarter of 2026. Capitalized cloud-based software costs, net consisted of the following (in thousands):


	April 3, 2026			January 2, 2026
Capitalized cloud-based software	$	35,196		$	31,527
Less accumulated amortization		(513	)		(409	)
Total capitalized cloud-based software, net	$	34,683		$	31,118

Capitalized cloud-based software included in prepayments, deposits and other current assets	$	418		$	418
Capitalized cloud-based software included in other assets	$	34,265		$	30,700

Activity related to cloud-based software was as follows (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Additions to cloud-based software	$	3,668	$	2,167
Amortization of cloud-based software		104		53
Capitalized software placed into service		—		1,256

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 7 — Other Current Liabilities

Other current liabilities consisted of the following (in thousands):


	April 3, 2026		January 2, 2026
Accrued salaries and wages	$	11,508	$	12,891
Accrued bonuses		3,912		9,424
Severance payable(1)		1,728		894
Marketing obligations		3,158		3,397
Other(2)		12,700		14,253
Total other current liabilities	$	33,006	$	40,859

(1)

As discussed in Note 1, during the three months ended April 3, 2026, the Company recognized costs in connection with its leadership realignment and related efforts. Of these costs, a total of $1,614,000 was recognized for severance costs related to leadership realignment. This amount is recorded in Restructuring, impairment and related charges on the Condensed Consolidated Statements of Operations. A majority of these severance payments will be paid monthly through mid-2027.

(2)

No individual category in “Other” exceeds 5% of the other current liabilities.

Note 8 — Operating Leases

The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ten years in length with options to extend. The Company does not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):


	April 3, 2026			January 2, 2026
Machinery and equipment	$	813		$	773
Computer equipment and software		373			413
Real property		39,095			39,824
Operating lease right-of-use assets, gross		40,281			41,010
Less accumulated depreciation		(11,709	)		(11,401	)
Operating lease right-of-use assets, net	$	28,572		$	29,609

Current operating lease obligations	$	6,102		$	5,872
Long-term operating lease obligations		31,189			32,481
Total operating lease liability	$	37,291		$	38,353
Weighted-average remaining lease term (in years)		6.5			6.7
Weighted-average discount rate		6.41	%		6.33	%

As discussed in Note 1, during the three months ended March 28, 2025, the Company recognized impairment on real property right-of-use assets of $3,407,000. The impairment relates to the Company’s decision to exit several of its leased properties, for which the Company has obtained a subtenant for one of its properties and is actively pursuing subleasing the remaining properties. The impairment was determined based on market comparables of similar subleased properties. The impairment is recorded in Restructuring, impairment and related charges on the Condensed Consolidated Statements of Operations.

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 8 — Operating Leases (Continued)

Supplemental cash flow information related to operating leases was as follows (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Operating lease cost	$	2,124	$	2,149
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows		1,982		1,652
Right-of-use assets obtained in exchange for new operating lease liabilities		449		304

Future Maturities of Lease Liabilities

Estimated future maturities of lease liabilities under operating leases having initial or remaining non-cancelable lease terms more than one year as of April 3, 2026 is as follows (in thousands):


As of April 3, 2026 12 Months Ended	Operating Leases
March 2027	$	8,380
March 2028		7,388
March 2029		7,114
March 2030		7,021
March 2031		5,922
Thereafter		11,261
Total future minimum lease payments		47,086
Less amounts representing interest		(9,795	)
Total lease liability	$	37,291

Note 9 — Income Taxes

The Company recorded an income tax provision (benefit) as follows (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Provision (benefit) for income taxes	$	3,012	$	(275	)

The effective tax rates for the three months ended April 3, 2026 and March 28, 2025 were 36.7% and 0.5%, respectively. The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% for the three months ended April 3, 2026 and March 28, 2025, respectively, primarily due to the income tax expense generated in foreign jurisdictions.

Note 10 — Defined Benefit Pension Plans

The Company has defined benefit plans covering employees of its Switzerland and Japan operations. The following table summarizes the components of net periodic pension cost recorded for the Company’s defined benefit pension plans (in thousands):


	Three Months Ended
	April 3, 2026			March 28, 2025
Service cost(1)	$	456		$	404
Interest cost(2)		92			62
Expected return on plan assets(2)		(163	)		(135	)
Prior service credit(2),(3)		(55	)		(53	)
Settlement gain(2),(3)		—			(4	)
Actuarial loss recognized in current period(2),(3)		49			73
Net periodic pension cost	$	379		$	347

(1)

Recognized in selling general and administrative expenses on the Condensed Consolidated Statements of Operations.

(2)

Recognized in other income, net on the Condensed Consolidated Statements of Operations.

(3)

Amounts reclassified from accumulated other comprehensive income (loss).

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 10 — Defined Benefit Pension Plans (Continued)

The Company currently is not required to and does not make contributions to its Japan pension plan. The Company’s contributions to its Swiss pension plan are as follows (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Employer contribution	$	353	$	265

Note 11 — Stockholders’ Equity

Incentive Plan

The Company maintains an Amended and Restated Omnibus Equity Incentive Plan, as amended (the “Equity Plan”). The Equity Plan allows for awards of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and other stock- and cash-based awards, including awards that are subject to service-based and performance-based vesting conditions. As of April 3, 2026, the Company had outstanding grants of stock options, RSUs and PSUs.

Stock options granted under the Equity Plan are granted at fair market value on the date of grant, become exercisable generally over a three-year period, or as determined by the Board of Directors (the “Board”), and expire over periods not exceeding 10 years from the date of grant. Certain stock options and stock-based awards provide for accelerated vesting if there is a change in control and pre-established financial metrics are met (as defined in the Equity Plan). Grants of restricted stock outstanding under the Equity Plan generally vest over periods of one to three years. Grants of RSUs and PSUs outstanding under the Equity Plan generally vest based on service, performance, or a combination of both. On June 19, 2024, stockholders approved a proposal to increase the number of shares under the Equity Plan by 2,600,000 shares, for a total of 22,805,000 shares. As of April 3, 2026, there were 344,635 shares available for grant under the Equity Plan.

Stock-Based Compensation

The cost that has been charged against income for stock-based compensation is set forth below (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Employee stock options	$	1,134	$	2,362
Restricted stock		—		157
RSUs		2,278		2,963
PSUs		1,193		396
Nonemployee stock options		103		137
Nonemployee RSUs		115		—
Total stock-based compensation expense	$	4,823	$	6,015

The Company recorded stock-based compensation costs in the following categories (in thousands):


	Three Months Ended
	April 3, 2026		March 28, 2025
Cost of sales	$	224	$	290
General and administrative		1,653		2,683
Selling and marketing		1,236		1,277
Research and development		1,710		1,765
Total stock-based compensation expense, net		4,823		6,015
Amounts capitalized as part of inventory		113		312
Total stock-based compensation expense, gross	$	4,936	$	6,327

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 11 — Stockholders’ Equity (Continued)

Stock-Based Compensation (Continued)

As of April 3, 2026, total unrecognized compensation cost related to non-vested stock-based compensation arrangements were as follows (in thousands):


	April 3, 2026
Stock options	$	3,499
RSUs and PSUs		32,214
Total unrecognized stock-based compensation cost	$	35,713

The cost is expected to be recognized over a weighted-average period of approximately two years.

Assumptions

The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model applying the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of the Company’s stock. The expected term of stock options granted is derived from the historical exercises and post-vesting cancellations and represents the period of time that stock options granted are expected to be outstanding. The Company has calculated a 15% estimated forfeiture rate based on historical forfeiture experience. The risk-free rate is based on the U.S. Treasury yield curve corresponding to the expected term at the time of the grant.


	Three Months Ended
	April 3, 2026			March 28, 2025
Expected dividend yield		0	%		0	%
Expected volatility		62	%		60	%
Risk-free interest rate		3.72	%		4.33	%
Expected term (in years)		4.86			5.05

Stock Options

A summary of stock option activity under the Equity Plan for three months ended April 3, 2026 is presented below:


	Stock Options (in 000’s)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in 000’s)
Outstanding at January 2, 2026		1,716		$	44.85
Granted		23			18.46
Exercised		(20	)		8.51
Forfeited or expired		(85	)		34.50
Outstanding at April 3, 2026		1,634		$	45.47		5.79	$	1,158
Exercisable at April 3, 2026		1,363		$	48.66		5.26	$	898

Restricted Stock, Restricted Stock Units and Performance Stock Units

A summary of RSU and PSU activity under the Equity Plan for the three months ended April 3, 2026 is presented below (shares in thousands):


	RSUs			PSUs
Unvested at January 2, 2026		1,459			802
Granted		456			414
Vested		(453	)		—
Forfeited or expired		(243	)		(178	)
Unvested at April 3, 2026		1,219			1,038

STAAR SURGICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Note 12 - Commitments and Contingencies

Executive Agreements

The Company has entered into agreements with certain of its executives that provide for severance payments and benefits upon termination of employment by the company without “cause” or by the executive for “good reason” as defined in the applicable agreements. Certain executives are also party to agreements that provide for enhanced payments and benefits in connection with a termination of employment upon a “change in control.”

Litigation and Claims

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. These legal proceedings and other matters may relate to, among other things, contractual rights and obligations, employment matters, or claims of product liability. The Company maintains insurance coverage for various matters, including product liability and certain securities claims. While the Company does not believe that any of the claims known is likely to have a material adverse effect on the Company’s financial condition or results of operations, new claims or unexpected results of existing claims could lead to significant financial harm.

Note 13 — Basic and Diluted Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands except per share amounts):


	Three Months Ended
	April 3, 2026		March 28, 2025
Numerator:
Net income (loss)	$	5,206	$	(54,211	)
Denominator:
Weighted average common shares:
Common shares outstanding		49,908		49,344
Denominator for basic calculation		49,908		49,344
Weighted average effects of potentially diluted common stock:
Stock options		48		—
RSUs		373		—
PSUs		571		—
Denominator for diluted calculation		50,900		49,344
Net income (loss) per share:
Basic	$	0.10	$	(1.10	)
Diluted	$	0.10	$	(1.10	)

Because the Company had a net loss for the three months ended March 28, 2025, the number of diluted shares is equal to the number of basic shares. The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, restricted stock, RSUs and PSUs with either exercise prices or unrecognized compensation cost per share greater than the average market price per share of the Company’s common stock, which were not included in the calculation of diluted per share amounts because the effects would be anti-dilutive.


	Three Months Ended
	April 3, 2026	March 28, 2025
Stock options

STAAR SURGICAL CO 10-Q