STAAR Surgical (NASDAQ:STAA) Delivers Strong Q2 Numbers
Is now the time to buy STAAR Surgical? Find out in our full research report.
STAAR Surgical (STAA) Q2 CY2025 Highlights:
Revenue: $44.32 million vs analyst estimates of $40.45 million (55.2% year-on-year decline, 9.6% beat)
EPS (GAAP): -$0.34 vs analyst estimates of -$0.68 (49.9% beat)
Adjusted EBITDA: -$14.94 million vs analyst estimates of -$24.95 million (-33.7% margin, 40.1% beat)
Operating Margin: -67.6%, down from 12% in the same quarter last year
Free Cash Flow was -$29.04 million compared to -$16.65 million in the same quarter last year
Market Capitalization: $1.32 billion
Company Overview
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ:STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Revenue Growth
A company's long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, STAAR Surgical's 8.6% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. STAAR Surgical's recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 14.3% over the last two years.
This quarter, STAAR Surgical's revenue fell by 55.2% year on year to $44.32 million but beat Wall Street's estimates by 9.6%.
Looking ahead, sell-side analysts expect revenue to grow 44.4% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will spur better top-line performance.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
Adjusted Operating Margin
STAAR Surgical was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 1.1% was weak for a healthcare business.
Analyzing the trend in its profitability, STAAR Surgical's adjusted operating margin decreased by 62 percentage points over the last five years. The company's two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 57.3 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn't pass those costs onto its customers.
This quarter, STAAR Surgical generated an adjusted operating margin profit margin of negative 67.6%, down 79.6 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.
Earnings Per Share
Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for STAAR Surgical, its EPS declined by 70.2% annually over the last five years while its revenue grew by 8.6%. This tells us the company became less profitable on a per-share basis as it expanded.
We can take a deeper look into STAAR Surgical's earnings to better understand the drivers of its performance. As we mentioned earlier, STAAR Surgical's adjusted operating margin declined by 62 percentage points over the last five years. Its share count also grew by 9.2%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.
In Q2, STAAR Surgical reported EPS at negative $0.34, down from $0.15 in the same quarter last year. Despite falling year on year, this print easily cleared analysts' estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast STAAR Surgical's full-year EPS of negative $1.93 will reach break even.
Key Takeaways from STAAR Surgical's Q2 Results
We were impressed by how significantly STAAR Surgical blew past analysts' EPS expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates by a wide margin. Zooming out, we think this was a solid print. The stock remained flat at $26.85 immediately after reporting.
So should you invest in STAAR Surgical right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it's free.
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