Shares in Staar Surgical (NSDQ:STAA) opened down 5.1% today, but had clawed their way back to a more than 9% gain by the close of trading, after the implantable lens maker reported red ink for the 4th quarter and 2014 but came close to meeting Wall Street’s earnings expectations.
Monrovia, Calif.-based Staar’s Q4 losses gaped 189.7% to -$2.5 million, or -7¢ per share, on sales of $16.6 million for the 3 months ended Jan. 2, compared with Q4 2013. Adjusted to exclude 1-time items, per-share losses were -3¢, in line with The Street.
For the full year, Staar swung to a -$8.4 million loss, or -22¢ per share, from profits of nearly $400,000 in 2013, on sales growth of 3.8% to $75.0 million. Adjusted EPS reached 2¢, however, just missing the 3¢ analysts expected.
CFO Steve Brown told analysts during a conference call that Staar put a voluntary hold on about 2,000 implantable collamer lenses after discovering a manufacturing problem.
“The product was made during production runs where deposits were found on product during inspection, and that product was rejected and scrapped. The remainder of the product from those production runs all passed final inspection, and the root cause of the deposits has been identified," Brown said. "To make a cautious product quality decision, we put them on hold to put them to further testing, and we took advantage of the fact that the FDA was on site for the inspection, and we presented them with test protocols to verify that product met our standards for quality.
So, as [CEO Barry Caldwell] said, we’re waiting to learn if the FDA will provide any feedback on this protocols and the FDA may choose to offer no comment or may ask us to revise the protocol or otherwise. So, we’re not going to make any predictions regarding timing at this time."
The FDA last year issued a formal warning letter to California- and Switzerland-based Staar, citing the company for inadequate design protocols, quality control issues and its handling of patient complaints. Earlier this month Staar said that the FDA issued a Form 483 warning over problems at its Monrovia plant, after FDA inspections found 10 issues with the way Staar documents product changes.
Caldwell, who’s stepping down effective March 1 but will stick around to ease the transition as a consultant, said the FDA’s observations "focused primarily on the needs for adherence to an improved procedures, processes and documentation relating to design change, design transfer into specifications and production, improvement and good documentation practices and broader environmental monitoring."
"We plan to submit our response to these observations by tomorrow. As stated in our previous monthly updates to the FDA, we still continue to address issues from the May warning letter," he said during the call. "We have enhanced and will continue to enhance our overall quality and compliance program as we focus on these corrections. We are committed to a successful resolution and will continue to work towards that goal. So there can be no assurance the FDA will be satisfied with our response and they may take further action that may adversely impact us."
Staar’s search for his replacement is "in the advanced stages," he added.
"It’s been an honor to lead such a talented group of people and I believe great things remain in store for our company," Caldwell said.
STAA shares closed up 9.1% at $7.93 apiece today.