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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: September 26, 2025

☐ 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, 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 49,741,953 shares of common stock, par value $0.01 per share, issued and outstanding as of October 31, 2025.

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	22

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29

ITEM 4.	CONTROLS AND PROCEDURES	29

PART II – OTHER INFORMATION		30

ITEM 1.	LEGAL PROCEEDINGS	30

ITEM 1A.	RISK FACTORS	30

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

ITEM 4.	MINE SAFETY DISCLOSURES	32

ITEM 5.	OTHER INFORMATION	32

ITEM 6.	EXHIBITS	33

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)


	September 26, 2025			December 27, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	176,155		$	144,159
Investments available for sale (amortized cost basis of $16,504 and $86,346 at September 26, 2025 and December 27, 2024, respectively)		16,505			86,335
Accounts receivable trade, net of allowance for credit losses of $83 and $32 at September 26, 2025 and December 27, 2024, respectively		60,105			77,897
Inventories, net		53,302			43,305
Prepayments, deposits and other current assets		15,142			16,244
Total current assets		321,209			367,940
Property, plant and equipment, net		72,605			84,889
Finance lease right-of-use assets, net		—			37
Operating lease right-of-use assets, net		31,339			36,850
Goodwill		1,786			1,786
Deferred income taxes		1,977			788
Other assets		27,446			17,234
Total assets	$	456,362		$	509,524
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,180		$	16,704
Obligations under finance leases		—			42
Obligations under operating leases		5,314			3,894
Allowance for sales returns		7,526			6,579
Other current liabilities		39,617			43,087
Total current liabilities		61,637			70,306
Obligations under operating leases		33,803			34,807
Deferred income taxes		—			297
Asset retirement obligations		43			42
Deferred rent		89			—
Pension liability		7,010			6,737
Total liabilities		102,582			112,189
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 60,000 shares authorized: 49,730 and 49,294 shares issued and outstanding at September 26, 2025 and December 27, 2024, respectively		497			493
Additional paid-in capital		495,986			471,449
Treasury stock, 376 and 0 shares at September 26, 2025 and December 27, 2024, respectively		(6,461	)		—
Accumulated other comprehensive loss		(6,527	)		(7,031	)
Accumulated deficit		(129,715	)		(67,576	)
Total stockholders’ equity		353,780			397,335
Total liabilities and stockholders’ equity	$	456,362		$	509,524

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					Nine Months Ended
	September 26, 2025			September 27, 2024		September 26, 2025			September 27, 2024
Net sales	$	94,732		$	88,590	$	181,641		$	264,951
Cost of sales		16,857			20,103		42,962			57,017
Gross profit		77,875			68,487		138,679			207,934
Selling, general and administrative expenses:
General and administrative		20,763			21,685		66,190			68,554
Selling and marketing		23,461			28,872		76,689			88,535
Research and development		9,209			12,248		30,811			35,546
Merger transaction and related costs		5,926			—		5,926			—
Restructuring, impairment and related charges		26			—		27,938			—
Total selling, general and administrative expenses		59,385			62,805		207,554			192,635
Operating income (loss)		18,490			5,682		(68,875	)		15,299
Other income (expense), net:
Interest income, net		790			1,407		3,522			4,358
Gain (loss) on foreign currency transactions		(843	)		5,931		3,138			585
Royalty income		—			—		—			508
Other income, net		353			139		604			532
Total other income, net		300			7,477		7,264			5,983
Income (loss) before income taxes		18,790			13,159		(61,611	)		21,282
Provision for income taxes		9,906			3,179		528			7,262
Net income (loss)	$	8,884		$	9,980	$	(62,139	)	$	14,020
Net income (loss) per share:
Basic	$	0.18		$	0.20	$	(1.26	)	$	0.29
Diluted	$	0.18		$	0.20	$	(1.26	)	$	0.28
Weighted average shares outstanding:
Basic		49,633			49,199		49,499			49,078
Diluted		50,549			49,731		49,499			49,614

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						Nine Months Ended
	September 26, 2025			September 27, 2024			September 26, 2025			September 27, 2024
Net income (loss)	$	8,884		$	9,980		$	(62,139	)	$	14,020
Other comprehensive income (loss):
Defined benefit plans:
Net change in plan assets		(514	)		(1,708	)		(184	)		(1,573	)
Reclassification into other income (expense), net		17			(17	)		49			(51	)
Investments available for sale:
Change in unrealized gain (loss)		3			134			11			101
Reclassification into other income (expense), net		1			—			2			2
Foreign currency translation gain (loss)		(639	)		1,856			866			(182	)
Tax effect		250			(404	)		(240	)		214
Other comprehensive income (loss), net of tax		(882	)		(139	)		504			(1,489	)
Comprehensive income (loss)	$	8,002		$	9,841		$	(61,635	)	$	12,531

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 June 27, 2025		49,546		$	495	$	484,801		(261	)	$	(4,479	)	$	(5,645	)	$	(138,599	)	$	336,573
Net income		—			—		—		—			—			—			8,884			8,884
Other comprehensive loss		—			—		—		—			—			(882	)		—			(882	)
Common stock issued upon exercise of options		157			1		2,963		—			—			—			—			2,964
Stock-based compensation		—			—		8,222		—			—			—			—			8,222
Repurchase of common stock		—			—				(115	)		(1,982	)		—			—			(1,982	)
Repurchase of employee common stock for taxes withheld		(2	)		—		—		—			—			—			—			—
Vested restricted and performance stock units		29			1		—		—			—			—			—			1
Balance, at September 26, 2025		49,730		$	497	$	495,986		(376	)	$	(6,461	)	$	(6,527	)	$	(129,715	)	$	353,780

Balance, at June 28, 2024		49,161		$	492	$	457,402		—		$	—		$	(5,463	)	$	(43,328	)	$	409,103
Net income		—			—		—		—			—			—			9,980			9,980
Other comprehensive loss		—			—		—		—			—			(139	)		—			(139	)
Common stock issued upon exercise of options		105			1		1,656		—			—			—			—			1,657
Stock-based compensation		—			—		7,521		—			—			—			—			7,521
Vested restricted and performance stock units		5			—		—		—			—			—			—			—
Balance, at September 27, 2024		49,271		$	493	$	466,579		—		$	—		$	(5,602	)	$	(33,348	)	$	428,122

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Nine 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 December 27, 2024		49,294		$	493		$	471,449			—		$	—		$	(7,031	)	$	(67,576	)	$	397,335
Net loss		—			—			—			—			—			—			(62,139	)		(62,139	)
Other comprehensive income		—			—			—			—			—			504			—			504
Common stock issued upon exercise of options		210			2			3,349			—			—			—			—			3,351
Stock-based compensation		—			—			22,543			—			—			—			—			22,543
Repurchase of common stock		—			—			—			(376	)		(6,461	)		—			—			(6,461	)
Repurchase of employee common stock for taxes withheld		(71	)		(1	)		(1,355	)		—			—			—			—			(1,356	)
Vested restricted and performance stock units		297			3			—			—			—			—			—			3
Balance, at September 26, 2025		49,730		$	497		$	495,986			(376	)	$	(6,461	)	$	(6,527	)	$	(129,715	)	$	353,780

Balance, at December 29, 2023		48,839		$	488		$	436,947			—		$	—		$	(4,113	)	$	(47,368	)	$	385,954
Net income		—			—			—			—			—			—			14,020			14,020
Other comprehensive loss		—			—			—			—			—			(1,489	)		—			(1,489	)
Common stock issued upon exercise of options		310			3			7,349			—			—			—			—			7,352
Stock-based compensation		—			—			23,679			—			—			—			—			23,679
Repurchase of employee common stock for taxes withheld		(40	)		—			(1,396	)		—			—			—			—			(1,396	)
Unvested restricted stock		16			—			—			—			—			—			—			—
Forfeited restricted stock		(5	)		—			—			—			—			—			—			—
Vested restricted and performance stock units		151			2			—			—			—			—			—			2
Balance, at September 27, 2024		49,271		$	493		$	466,579			—		$	—		$	(5,602	)	$	(33,348	)	$	428,122

See accompanying notes to the condensed consolidated financial statements.

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 26, 2025			September 27, 2024
Cash flows from operating activities:
Net income (loss)	$	(62,139	)	$	14,020
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment		6,312			4,516
Non-cash operating lease expense		2,665			2,589
Impairment of fixed assets and operating lease right-of-use assets		14,593			—
Accretion/Amortization of investments available for sale		(55	)		(410	)
Deferred income taxes		(718	)		47
Change in net pension liability		43			(162	)
Loss on disposal of property and equipment		23			1,668
Stock-based compensation expense		21,975			22,541
Change in asset retirement obligation		—			24
Provision for sales returns and credit losses		975			1,947
Inventory provision		3,261			1,873
Changes in working capital:
Accounts receivable		18,004			(9,703	)
Inventories		(12,449	)		(5,962	)
Prepayments, deposits, and other assets		(9,709	)		(12,237	)
Accounts payable		(7,911	)		(2,031	)
Other current and non-current liabilities		(5,186	)		(3,637	)
Net cash provided by (used in) operating activities		(30,316	)		15,083
Cash flows from investing activities:
Acquisition of property and equipment		(4,143	)		(17,669	)
Purchase of investments available for sale		(26,464	)		(61,194	)
Proceeds from maturity of investments available for sale		92,984			38,291
Proceeds from sale of investments available for sale		3,377			850
Net cash provided by (used in) investing activities		65,754			(39,722	)
Cash flows from financing activities:
Repayment of finance lease obligations		(42	)		(124	)
Repurchase of common stock		(6,461	)		—
Repurchase of employee common stock for taxes withheld		(1,356	)		(1,396	)
Proceeds from the exercise of stock options		3,351			7,352
Proceeds from vested restricted and performance stock units		3			2
Net cash provided by (used in) financing activities		(4,505	)		5,834
Effect of exchange rate changes on cash and cash equivalents		1,063			(230	)
Increase (decrease) in cash and cash equivalents		31,996			(19,035	)
Cash and cash equivalents, at beginning of the year		144,159			183,038
Cash and cash equivalents, at end of the period	$	176,155		$	164,003

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 December 27, 2024 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 December 27, 2024.

The Condensed Consolidated Financial Statements for the three and nine months ended September 26, 2025 and September 27, 2024, 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 and nine months ended September 26, 2025 and September 27, 2024, 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.

Proposed Merger with Alcon

On August 4, 2025, the Company 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 provides, 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 Board of Directors has unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby are fair to, and in the best interests of, the Company and its stockholders (b) approved and declared advisable the Merger Agreement and the transactions contemplated thereby and (c) resolved to recommend that the Company’s stockholders adopt the Merger Agreement.

On September 24, 2025, Broadwood Partners, L.P. and certain of its affiliates (collectively, the “Broadwood Group”) filed a definitive proxy statement with the SEC to solicit votes of STAAR stockholders in opposition to the Board’s recommendation that stockholders should vote to adopt the Merger Agreement.

The stockholders of the Company will be asked to vote on the adoption of the Merger Agreement at a special meeting of stockholders (the “Special Meeting”). The Special Meeting was originally scheduled for October 23 2025, but was adjourned and later postponed to December 3, 2025. See Note 16 for further details.

Under the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of the Company issued and outstanding immediately prior to the Effective Time (other than certain excluded shares as described in the Merger Agreement) will be cancelled and converted into the right to receive $28.00 in cash, without interest.

STAAR SURGICAL COMPANY

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

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

Proposed Merger with Alcon (Continued)

The respective obligations of the Company, Alcon and Merger Sub to consummate the transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver of a number of conditions, including: (1) the adoption of the Merger Agreement by the Company’s stockholders; (2) the absence of any law or order prohibiting consummation of the Merger in specified jurisdictions in which the Company, Alcon or their respective subsidiaries have business operations; (3) certain specified regulatory approvals; (4) the accuracy of the other party’s representations and warranties, subject to certain materiality standards set forth in the Merger Agreement; and (5) compliance by the other party in all material respects with such other party’s obligations under the Merger Agreement. In addition, Alcon’s and Merger Sub’s obligation to consummate the transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver of a condition that there has not occurred a material adverse effect on the Company since the date of the Merger Agreement that is continuing. The availability of financing is not a condition to the consummation of the Merger.

If the Merger Agreement is terminated under specified circumstances, the Company may be required to pay Alcon a termination fee of up to $43.4 million, and if the Merger Agreement is terminated under certain other circumstances, Alcon may be required to pay the Company a termination fee equal to $72.4 million.

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 sales 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 sales 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 Sales and marketing expenses on its Condensed Consolidated Statements of Operations as follows (in thousands):


	Three Months Ended September 27, 2024							Nine Months Ended September 27, 2024
	Prior Presentation		Reclassification			New Presentation		Prior Presentation		Reclassification			New Presentation
Sales and marketing	$	26,623	$	2,249		$	28,872	$	82,150	$	6,385		$	88,535
Research and development		14,497		(2,249	)		12,248		41,931		(6,385	)		35,546

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):


	Nine Months Ended September 27, 2024
	Prior Presentation			Reclassification			New Presentation
Non-cash operating lease expense	$	—		$	2,589		$	2,589
Other current and non-current liabilities		(1,048	)		(2,589	)		(3,637	)

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

STAAR SURGICAL COMPANY

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

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

Merger Transaction and Related Costs

In connection with the proposed merger with Alcon, the Company incurred professional service expenses of $5,926,000 during the three months ended September 26, 2025, which are included in Merger transaction and related costs on the Condensed Consolidated Statements of Operations. The Company expects to continue to incur professional service expenses until the Merger is finalized.

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. As part of this leadership realignment and related efforts, during the three and nine months ended September 26, 2025, the Company recognized costs related to severance and reduction in workforce of $18,000 and $12,471,000, respectively; consulting expenses of $8,000 and $874,000, respectively; impairment expenses on leasehold improvements and machinery and equipment of $0 and $7,759,000, respectively, as the Company will no longer be using these assets; and impairment on real property right-of-use assets of $0 and $4,083,000, respectively, as the Company is actively pursuing subleasing opportunities for two of its leased properties. In addition, the Company also recognized impairment of $0 and $2,751,000, respectively during the three and nine months ended September 26, 2025 for internally developed software that it will no longer be using as it will transition to a cloud-based software solution. An aggregate of $26,000 and $27,938,000 for such costs, expenses and charges is included in Restructuring, impairment and related charges on the Condensed Consolidated Statements of Operations for the three and nine months ended September 26, 2025. The restructuring effort was substantially completed as of June 27, 2025. For more detail, see Notes 5, 7 and 8.

Vendor Concentration

There was one vendor that accounted for over 10% of the Company’s consolidated accounts payable as of September 26, 2025 and December 27, 2024. There was one vendor that accounted for over 10% of the Company’s purchases for the three months ended September 26, 2025.

Segment Reporting

The Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer. 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 consolidated 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 Revenues, 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 Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740).” ASU 2023-09 improves the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. It also includes certain other amendments to improve the effectiveness of income tax disclosures regarding (a) income or loss from continuing operations disaggregated between domestic and foreign and (b) income tax expense or benefit from continuing operations disaggregated by federal, state and foreign. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.

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 would also 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 will adopt the annual disclosure requirements of ASU 2024-03 at the beginning of fiscal year 2026 and will adopt the interim disclosure requirement beginning fiscal year 2027. The Company is currently evaluating the disclosure requirements and its effect on the Condensed Consolidated Financial Statements.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA introduces changes in U.S. tax law, with certain provisions applicable to the Company beginning in 2025. These changes include the immediate expensing of domestic research and experimental expenditures, accelerated tax deductions for qualified property, and modifications to certain international tax frameworks. The Company has incorporated OBBBA into the income tax provision as of September 26, 2025 resulting in an immaterial impact to the effective tax rate. The Company continues to evaluate the impact the new legislation will have on its Condensed Consolidated Financial Statements.

STAAR SURGICAL COMPANY

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

Note 2 — Investments Available for Sale

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


	September 26, 2025
										Fair Value Measurements
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Level 1		Level 2
Commercial paper	$	14,373	$	2	$	(2	)	$	14,373	$	—	$	14,373
Certificates of deposit		1,524		1		—			1,525		—		1,525
Corporate debt securities		607		—		—			607		—		607
Total investments AFS	$	16,504	$	3	$	(2	)	$	16,505	$	—	$	16,505

	December 27, 2024
										Fair Value Measurements
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Level 1		Level 2
Commercial paper	$	21,466	$	4	$	(2	)	$	21,468	$	—	$	21,468
Certificates of deposit		1,997		—		—			1,997		—		1,997
U.S. Treasury securities		11,356		3		(4	)		11,355		11,355		—
Corporate debt securities		51,527		14		(26	)		51,515		—		51,515
Total investments AFS	$	86,346	$	21	$	(32	)	$	86,335	$	11,355	$	74,980

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.

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 and nine months ended September 26, 2025 and September 27, 2024, respectively.

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


	As of September 26, 2025
	Within one year		After one year through five years		Total
Commercial paper	$	14,373	$	—	$	14,373
Certificates of deposit		1,525		—		1,525
Corporate debt securities		607		—		607
Total investments AFS	$	16,505	$	—	$	16,505

STAAR SURGICAL COMPANY

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

Note 2 — Investments Available for Sale (Continued)

During the nine months ended September 26, 2025, several of the Company’s investments AFS with an aggregate fair value of $3,377,000, were subject to early redemption. The Company recognized a gain upon redemption of $2,000 during the nine months ended September 26, 2025. During the nine months ended September 27, 2024, two of the Company’s investments AFS with an aggregate fair value of $850,000 were subject to early redemption. The Company recognized a realized gain upon sale of $2,000 during the nine months ended September 27, 2024.

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):


	September 26, 2025			December 27, 2024
Raw materials and purchased parts	$	8,759		$	9,705
Work in process		11,429			8,168
Finished goods(1)		34,900			26,710
Total inventories, gross		55,088			44,583
Less inventory reserves		(1,786	)		(1,278	)
Total inventories, net	$	53,302		$	43,305

(1)

Finished goods inventory includes consigned inventory of $13,811,000 and $1,958,000 at September 26, 2025 and December 27, 2024, respectively. See also Note 14 for further details.

Note 4 — Prepayments, Deposits, and Other Current Assets

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


	September 26, 2025		December 27, 2024
Prepayments and deposits	$	8,813	$	7,887
Prepaid rent		234		2,910
Prepaid insurance		520		2,432
Value added tax (VAT) receivable		3,464		1,359
Other(1)		2,111		1,656
Total prepayments, deposits and other current assets	$	15,142	$	16,244

(1)

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

Note 5 — Property, Plant and Equipment

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


	September 26, 2025			December 27, 2024
Machinery and equipment	$	44,514		$	46,113
Computer equipment and software		11,387			12,976
Furniture and fixtures		7,723			7,627
Leasehold improvements		19,342			19,766
Construction in process		28,957			32,014
Total property, plant and equipment, gross		111,923			118,496
Less accumulated depreciation		(39,318	)		(33,607	)
Total property, plant and equipment, net	$	72,605		$	84,889

STAAR SURGICAL COMPANY

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

Note 5 — Property, Plant and Equipment (Continued)

As discussed in Note 1, during the nine months ended September 26, 2025, the Company recognized fixed asset impairment expense of $7,759,000 primarily on leasehold improvements and machinery and equipment as the Company will no longer be using these assets. The Company also recognized impairment during the nine months ended September 26, 2025 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 Statement 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				Nine Months Ended
	September 26, 2025		September 27, 2024		September 26, 2025		September 27, 2024
Cost of sales	$	750	$	586	$	2,390	$	1,614
General and administrative		874		910		2,790		1,857
Selling and marketing		176		54		525		446
Research and development		200		171		570		489
Total depreciation expense	$	2,000	$	1,721	$	6,275	$	4,406

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 are recorded within Prepayments, deposits and other current assets or Other assets on the Condensed Consolidated Balance Sheets, depending upon the short- or long-term nature of such costs. Assets are expected to be placed into service throughout 2025 and 2026.

Capitalized cloud-based software costs, net consisted of the following (in thousands):


	September 26, 2025			December 27, 2024
Capitalized cloud-based software	$	26,827		$	15,763
Less accumulated amortization		(304	)		—
Total capitalized cloud-based software, net	$	26,523		$	15,763

Capitalized cloud-based software included in prepayments, deposits and other current assets	$	418		$	—
Capitalized cloud-based software included in other assets	$	26,105		$	15,763

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


	Three Months Ended				Nine Months Ended
	September 26, 2025		September 27, 2024		September 26, 2025		September 27, 2024
Additions to cloud-based software	$	3,963	$	4,094	$	11,064	$	9,791
Amortization of cloud-based software		104		—		304		—

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):


	September 26, 2025		December 27, 2024
Accrued salaries and wages	$	13,321	$	16,140
Accrued bonuses		8,156		1,300
Severance payable(1)		1,757		356
Accrued insurance		279		2,701
Income taxes payable		1,084		6,547
Marketing obligations		3,843		2,699
Other(2)		11,177		13,344
Total other current liabilities	$	39,617	$	43,087

(1)

STAAR SURGICAL CO 10-Q