STAAR Surgical Q2 2026 Earnings: China Rebound Restores Profitability

STAAR Surgical (NASDAQ: STAA) reported second-quarter 2026 net sales of $93.5 million for the quarter ended July 3, up 111% from $44.3 million a year earlier, while GAAP diluted EPS improved to $0.16 from a loss of $0.34. China’s shipment recovery drove most of the growth, helping operating income and adjusted EBITDA turn positive despite continued tariff and ERP-related costs.

Core financial results

The headline revenue increase reflects both improved business conditions and an unusually weak comparison: STAAR shipped minimal quantities to China in the prior-year quarter while distributors reduced excess inventory. Excluding China, second-quarter sales increased 6.0% to $41.2 million.

Higher gross profit and lower reported operating expenses moved the company back into profitability. However, the expense comparison benefited from $5.2 million of restructuring and merger-related costs in the prior-year period; excluding those items, operating expenses increased 3.7%.

Adjusted EBITDA is a non-GAAP measure that excludes items including stock-based compensation, restructuring and certain transaction-related costs.

Business and regional performance

China accounted for more than half of quarterly revenue and was the principal growth driver. Results outside China were more moderate, with double-digit growth in the Americas and EMEA excluding the Middle East.

In Japan, management attributed underlying demand partly to consumer-awareness programs launched in November 2025. In the United States, STAAR said EVO ICL continued gaining share while the broader laser vision-correction market declined.

Profitability and balance sheet

Gross margin rose only modestly despite the substantial increase in sales. Benefits included the elimination of costs associated with ramping manufacturing in Switzerland, lower Advanced Manufacturing expenses, reduced inventory provisions, and lower freight and other cost-of-sales expenses as a percentage of revenue.

Those gains were partly offset by tariffs on U.S.-manufactured products sold in China and higher unit costs attached to lenses produced during periods of lower production volume in 2025. STAAR expects tariffs to continue affecting margins until all products shipped to China are manufactured in Switzerland, which it expects by the end of 2026.

General and administrative expenses increased to $22.7 million from $21.0 million, mainly because of ERP amortization, ongoing ERP work and outside services. Selling and marketing expenses rose slightly to $26.9 million, while research and development expenses declined to $9.9 million.

Cash, cash equivalents and available-for-sale investments reached $181.5 million at quarter-end, up $17.6 million from $163.9 million at the end of the first quarter. STAAR reported no outstanding debt, although it did not provide quarterly operating or free cash flow figures.

China shipment normalization restored operating leverage

STAAR’s 111% revenue growth should not be interpreted as a comparable increase in underlying procedure demand. In Q2 2025, distributors were working through excess inventory, and the company’s China shipments therefore did not reflect surgical demand. By the end of Q2 2026, distributor inventory appeared to be within STAAR’s targeted range.

The current quarter nevertheless included more than shipment normalization. Management attributed sequential China growth to higher EVO ICL procedure volume, increased EVO+ adoption, market-share gains and improved average selling prices from the shift toward toric lenses. The resulting revenue scale, combined with a largely fixed cost base, helped operating income and adjusted EBITDA swing from losses to profits.

China’s contribution also creates concentration and seasonality considerations. The country generated $52.3 million of the company’s $93.5 million in quarterly sales, making its procedure trends, product mix and shipment timing central to STAAR’s results.

Management’s outlook

Management expects current demand conditions to continue through the remainder of 2026 but cautioned that China’s seasonal pattern has changed. The first and second quarters are now the peak periods, while third-quarter volumes typically step down and the fourth quarter remains the smallest seasonal period.

Reported Q3 2025 revenue of $94.7 million included $25.9 million from a non-recurring order originally placed in 2024. STAAR said investors should use $68.8 million as the adjusted comparison base for Q3 2026 and expects strong year-over-year growth when that order is excluded. Management also said it is planning for fourth-quarter growth from the clean Q4 2025 base of $57.8 million, but it did not provide a formal revenue or earnings range.

STAAR is continuing to invest in ERP, production and supply-chain efficiency. Management believes these investments can improve operating leverage as revenue grows, although the ERP program added costs during the quarter.

Recent insider transactions

The supplied insider data shows no purchase or sale transactions during the past six months and reports aggregate insider holdings of approximately 416,730 shares. It separately identifies one stock award with a reported value; an award is not an open-market purchase.

Risks investors should monitor

• China concentration and seasonality: China produced more than half of quarterly sales, while management expects volumes to decline sequentially after the first-half peak.
• Distorted comparisons: Minimal China shipments in Q2 2025 amplified the latest growth rate, while the one-time $25.9 million order recognized in Q3 2025 will complicate the next reported comparison.
• Tariff and manufacturing costs: Tariffs on U.S.-made products shipped to China and costs embedded in lenses produced at lower 2025 volumes could limit gross-margin expansion.
• Infrastructure spending: ERP amortization and implementation expenses contributed to higher G&A costs, and further production and supply-chain investments could keep expenses elevated.
• Regional weakness: Middle East turmoil reduced reported EMEA performance, while the company also cited softer growth across broader Asia-Pacific markets apart from India.

Summary

STAAR Surgical returned to profitability as China shipments normalized and improved procedure volume, EVO+ adoption and product mix lifted sales. The resulting scale produced a substantial operating and adjusted EBITDA recovery, while the balance sheet remained debt-free. The main questions for upcoming quarters are how China performs after its seasonal peak, how investors adjust for unusual prior-year comparisons, and whether tariff and ERP costs allow the company to convert continued revenue growth into further margin expansion.