Management's Discussion and Analysis ofFinancial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to promote understanding of our financial condition and results of operations. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the Consolidated Financial Statements and the Notes to those statements included in this Annual Report. This discussion includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including those described in this Annual Report in Item 1A. "Risk Factors."

Overview

STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye and accessory delivery systems used to deliver the lenses into the eye. We are the leading manufacturer of phakic implantable lenses used worldwide in corrective or "refractive" surgery. We have been dedicated solely to ophthalmic surgery for over 40 years. Our goal is to position our refractive lenses throughout the world as primary and premium solutions for patients seeking visual freedom from wearing eyeglasses or contact lenses while achieving excellent visual acuity through refractive vision correction.

STAAR generates worldwide revenue almost exclusively from sales of our Implantable Collamer Lenses, or "ICLs." Our ICLs are made from Collamer, which is a proprietary collagen copolymer material created and exclusively used by STAAR to make our lenses soft, flexible and biocompatible with the eye. Our ICLs are phakic lenses, meaning that they are implanted into the eye without removing the eye's natural crystalline lens. This distinguishes an ICL procedure from other refractive procedures, as it does not involve the removal of corneal eye tissue. All of our ICLs are foldable, which allows the surgeon to insert them into the eye through a small incision during minimally invasive surgery. Further, while ICLs are intended to be permanent, our ICLs are reversible lens implants, meaning they can be removed by a doctor if desired.

We market and sell our ICLs for refractive surgery to treat myopia (nearsightedness) as our "EVO" family of lenses. We believe our EVO lenses are an "Evolution in Visual Freedom" designed to provide premium refractive outcomes while optimizing patient comfort. Our EVO family of lenses includes our EVO ICL, EVO+ ICL, and EVO Visian ICL. Our newest offering, EVO Viva, has an extended depth of focus (EDoF) optic, which is designed to treat myopia with presbyopia (age-related loss of ability to focus). We also market and sell an ICL lens to treat hyperopia (farsightedness), which we call our Visian ICL. We make our ICL product offerings available in multiple models, powers and lengths, including some with toric ICL (TICL) versions to correct for astigmatism (blurred vision). Not all of our products are currently available in all markets where we sell ICLs today.

STAAR employs a commercialization strategy that strives for sustainable, profitable growth. Our growth strategy includes making our complete ICL product line available in our existing geographic markets and expanding into attractive markets where we do not sell our products today. In addition, we are focused on driving awareness of the ICL procedure and the clinical benefits of our ICLs, and providing surgeon training, support and education, particularly in our newer markets. Historically, the Company also manufactured and sold intraocular lenses (or IOLs) for use in surgery to treat cataracts. As the Company has focused its business and strategy on its ICL product offerings, we have phased out our cataract IOL product line. For the fiscal year ended January 2, 2026, approximately 100% our net sales were generated from sales of ICLs.

Termination of Alcon Merger Agreement

As previously disclosed, on August 4, 2025, STAAR 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 provided, 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 Company and Alcon entered into two amendments to the Merger Agreement, on November 7, 2025 and December 9, 2025, and the Company held a special meeting of stockholders (the "Special Meeting") to vote on the Merger on January 6, 2026. At the Special Meeting, the Company's stockholders voted against the Merger, and the Merger Agreement was terminated in accordance with its terms effective January 6, 2026. None of the Company, Alcon or Merger Sub was required to pay any termination fee as a result of the termination of the Merger Agreement, and the parties are responsible for their respective costs and expenses related to the Merger Agreement and the transactions contemplated thereby. During fiscal 2025, we incurred $17.1 million in professional fees and expenses related to the Merger, which are recorded as Merger transaction and related costs on the Consolidated

Statement of Operations. Following the termination of the Merger Agreement, on January 14, 2026, STAAR entered into a letter agreement (the "Cooperation Agreement") with Broadwood Partners, L.P. and its affiliates ("Broadwood"), the Company's largest stockholder. The Cooperation Agreement provided for certain governance and leadership changes, as well as reimbursement by the Company of approximately $7.0 million in expenses incurred by Broadwood and other stockholders in connection with their engagement with the Company, including the Special Meeting. See Note 1 - Organization and Description of Business and Accounting Policies - Termination of Alcon Merger Agreement and Note 19 - Subsequent Events to the Consolidated Financial Statements for information about the Merger Agreement and the Cooperation Agreement.

Business Environment and Factors Affecting Comparability

Given the size of the Company's business in China relative to its net sales in the rest of the world, macroeconomic conditions in China have a significant impact on the Company's business, operations, and financial results. We reported net sales of $239.4 million, $313.9 million, and $322.4 million for fiscal years 2025, 2024, and 2023, respectively. The significant decreases in net sales were primarily due to the dynamics within our business in China where the continued sluggish economy and weak consumer consumption contributed to fluctuating demand for ICL procedures. We incurred net losses of $80.4 million and $20.2 million for fiscal years 2025 and 2024, respectively. Prior to fiscal 2024, we had reported over ten years of annual net sales growth, and we had delivered net income profitability since 2018.

Aggregate net sales to our two distributors in China were $77.8 million for fiscal year 2025, compared to $162.3 million for fiscal year 2024. China net sales for fiscal year 2025 included $27.5 million related to the previously disclosed December 2024 ICL shipment that was subject to extended payment terms, and which was paid in full in fiscal 2025 pursuant to such payment terms (the "December China Shipment"). As previously disclosed, we shipped $27.5 million of ICLs in December 2024 to one of our distributors in China for which the distributor requested extended payment terms through September 2025. Given the extended payment terms, net sales for the shipment were not recognized by us until payments were received. As the cost of sales associated with the December China Shipment was recognized in December 2024, the payments, when made, were recognized at 100% gross margin in the applicable quarter.

During fiscal 2025, our distributors in China purchased fewer ICLs, as they were able to satisfy procedural demand largely from their existing inventory. Our distributors in China have historically purchased products from us in bulk shipments in advance of anticipated demand, which they use to satisfy orders from hospital customers based on scheduled surgeries. During fiscal 2024, our distributors in China purchased lenses above contracted minimums in anticipation of higher procedural volumes during what is typically a summer "high season" in China. Due to dynamic macroeconomic conditions and other factors, the number of ICL procedures performed during the high season and the second half of 2024 overall was lower than expected. Accordingly, our distributors in China held, as of December 27, 2024, elevated levels of ICL product inventory. The level of inventory owned by our distributors in China has decreased substantially since December 27, 2024, and has returned to contractual levels. As anticipated, we reported lower China ICL sales in fiscal 2025 compared to fiscal 2024.

In April 2025, in response to the announcement of tariffs by the United States on Chinese goods, China announced retaliatory tariffs on U.S.-origin goods. In order to mitigate potential financial exposure from such tariffs, we negotiated and implemented consignment agreements with our two distributors in China, and we delivered consigned inventory to China in advance of the implementation of tariffs and delivered additional consignment inventory throughout fiscal 2025. While the tariff situation is evolving, we believe that these efforts to increase the amount of ICLs in China reduce the Company's tariff risk in China in the near-term. In addition, we are rapidly ramping up our production capabilities in Switzerland to supplement our manufacturing capacity in the United States to provide optionality under multiple tariff scenarios.

Given that we maintained consigned inventory in China in 2025, purchases by our distributors were satisfied in part from our consigned inventory, rather than through bulk purchases. As our China distributor inventory levels have normalized, we intend to reduce our consigned inventory levels in China going forward. We reduced our China inventory levels in 2025, and we have taken steps to mitigate the risk of elevated inventory buildup by our distributors, while at the same time maintaining sufficient ICL inventory in China to support quick and efficient delivery and fulfillment for surgical procedures.

In 2025, we expanded our manufacturing capabilities for our ICL products in our Nidau, Switzerland facility. As we ramp up ICL manufacturing in Nidau, Switzerland, our costs are expected to increase given the expense of operating two sites and lower site utilization impacts cost absorption. The on-going operation of two manufacturing

sites will create pressure on gross margins. Over the longer term, as we grow revenue and align sales with manufacturing production, we would expect our gross margin to improve. We also expect the operation of two manufacturing sites will lead to higher inventory levels in the near-term.

During fiscal 2026, we will continue to assess appropriate inventory levels, both inventory held by us and inventory held by our distributors. We generally keep sufficient inventory on hand to ship product immediately or shortly after receipt of an order. In addition, our distributors hold their own inventory in-country based on forecasted demand. During fiscal 2026, we expect to adjust our production output based on forecasted demand and optimize the level of inventory held by us and held by our distributors.

See Item 1. "Business," for a discussion of:

Strategic Imperatives for 2026

We believe we have a significant opportunity to fundamentally transform how myopia and other refractive conditions are treated. We want to be the first choice for doctors and for patients seeking visual freedom from wearing eyeglasses or contact lenses.

The Company is navigating market headwinds, geopolitical factors and a dynamic environment in key regions, including China. In 2026, we are aligned around three focused priorities to allow us to advance around this goal.

Focused growth - we are focused on revenue growth in our key markets, with a strong emphasis on execution. This includes sharpening commercial focus, prioritizing where we can win, and improving consistency across markets. Across markets, we intend to maximize the impact of our strategic customer agreements and develop relationships with customers that position EVO ICLs to treat refractive error more broadly.

Focused investment - we believe growth must be sustainable. In 2026, we will continue to prioritize investments that support long-term value creation, with a clear focus on what drives results and expands profits by investing wisely in key markets. Across our markets, we recognize the need to further educate and train ophthalmic surgeons about our ICLs and our ICL procedure. We also plan to leverage the EVO Experience Center at our headquarters in Lake Forest, California, to conduct additional hands-on training and education in lens-based vision correction. In addition, we are continuing to invest in enhanced systems and tools to make ordering and fulfillment faster and easier. In 2026, we will also continue to drive awareness of the ICL procedure to reach even more potential patients and effectively communicate the clinical benefits of our ICLs.

Focused innovation - innovation remains central to the Company's future. We are focused on accelerating our innovation pipeline with rigor, prioritizing programs that deliver meaningful clinical and commercial impact. We are driving innovation through focused development, execution with key milestones, and innovative thinking around market needs. Our innovation pipeline footprint will be expanded in 2026 with the full launch of EVO+ in China to allow more patients to have access to this premium, larger optic lens. We also intend to expand our product offering with the launch of additional lens sizes to allow for greater surgeon flexibility.

Results of Operations

The following table sets forth the percentage of total sales represented by certain items reflected in the Company's Consolidated Statement of Operations for the period indicated.

(1)For fiscal 2025, amounts include $27.5 million of net sales related to December China Shipment. As the associated cost of sales was recognized upon shipment in December 2024, these amounts were recognized at 100% gross margin for fiscal 2025.

Net Sales

The following table presents our net sales (dollars in thousands):

Net sales for 2025 decreased 23.7% from 2024. Net sales for 2025 included $27.5 million of sales related to the previously disclosed December China Shipment, of which payment was received during 2025. The composition of our net sales is primarily related to ICL sales. Net sales also include sales of delivery system sales and normal recurring sales adjustments such as sales return allowances, and for fiscal 2023, IOL sales. The sales decrease was driven by decreased sales in China. The Asia Pacific ("APAC") region, decreased 32% with ICL units down 35%. The decrease in the APAC region was driven by decreased sales in China, partially offset by sales growth in Japan and Korea. The Europe, Middle East and Africa ("EMEA") region sales increased 3% with ICL unit growth up 10%, due primarily to sales increases in our distributor markets partially offset by an increase in sales return allowances in our distributor markets. The Americas region sales increased 14%, with ICL unit increase of 10%, due primarily to sales growth in the U.S. Changes in foreign currency favorably impacted net sales by $2.0 million, which impacted our Japan and EMEA markets.

Net sales for 2024 decreased 2.6% from 2023. The sales decrease was driven by the APAC region, which decreased 6%, with ICL units down 9%. This decrease was driven by decreased sales in China, primarily related to the $27.5 million December China Shipment, partially offset by sales growth in India, Japan and Korea. The EMEA region sales increased 9% with ICL unit growth of 17%, due to sales growth in our distributor markets. The Americas region sales increased 13%, with ICL unit increase of 17%, due primarily to sales growth in the U.S. Changes in foreign currency unfavorably impacted net sales by $2.8 million, which impacted our Japan and EMEA markets.

Gross Profit

The following table presents our gross profit and gross profit margin for the fiscal years presented (dollars in thousands):

Gross profit for 2025 decreased 23.9% from 2024. Gross profit margin decreased to 76.2% of revenue for 2025 compared to 76.3% of revenue for 2024, due to higher manufacturing costs per unit due to lower production volume and increased excess and obsolete inventory reserves, offset by decreased period costs as a result of our cost reductions implemented in the quarter ended March 28, 2025 and timing and recognition of the cost of sales associated with the December China Shipment.

Gross profit for 2024 decreased 5.2% from 2023. Gross profit margin decreased to 76.3% of revenue for 2024 compared to 78.4% of revenue for 2023. The decrease in gross profit margin was primarily due to the recognition of $3.9 million of cost of sales associated with our shipment of $27.5 million of ICLs to one of our distributors in China in the quarter ended December 27, 2024, for which we did not recognize revenue due to extended payment terms with the distributor. Gross profit margin for fiscal 2024 were also negatively impacted by period costs associated with the expansion of the Company's manufacturing capabilities in its Nidau, Switzerland facility, as well as the temporary idling of its U.S. manufacturing facility during the holiday season and for facility upgrades.

General and Administrative Expense

The following table presents our general and administrative expense for the fiscal years presented (dollars in thousands):

General and administrative expenses for 2025 decreased 4.6% from 2024, due to decreased outside services partially offset by increased bonus and stock-based compensation expenses, salary-related and payroll tax expenses and facilities costs.

General and administrative expenses for 2024 increased 24.3% from 2023, due to increased outside services, facilities costs, salary-related and payroll tax expenses and bonus and stock-based compensation expenses.

Selling and Marketing Expense

The following table presents our selling and marketing expense for the fiscal years presented (dollars in thousands):

Selling and marketing expenses for 2025 decreased 12.4% from 2024, due to decreased advertising and promotional activities, travel expenses and trade shows and sales meetings and as a result of costs and charges in the prior year period associated with the opening of our new experience center, partially offset by increased bonus and stock-based compensation expenses.

Selling and marketing expenses for 2024 increased 4.7% from 2023, due to increased salary-related payroll tax expenses, trade shows and sales meeting expenses, travel expenses, costs and charges associated with the opening of our new experience enter and sales commission expenses, offset by decreased advertising and promotional activities.

Research and Development Expense

The following table presents our research and development expense for the fiscal years presented (dollars in thousands):

Research and development expenses for 2025 decreased 11.6% from 2024 due to purchases of in-process research and development in the prior year period related to external AI tools for measurement and lens size selection and decreased clinical expenses associated with our U.S. post-approval clinical trials and outside services related to regulatory and medical affairs, partially offset by increased bonus and stock-based compensation expenses.

Research and development expenses for 2024 increased 12.0% from 2023 due to increased salary-related and payroll tax expenses, purchases of in-process research and development related to external AI tools for measurement and lens size selection and outside services related to medical affairs, partially offset by decreased clinical expenses associated with our U.S. post-approval clinical trials.

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new and existing products, quality assurance and post-market surveillance activities, the regulatory and clinical activities required to acquire and maintain product approvals globally and medical affairs expenses. Research and development expenses associated with the development of new and existing products were $9.6 million, $12.8 million and $8.9 million for fiscal 2025, 2024 and 2023, respectively. All research and development costs are expensed as incurred.

Merger Transaction and Related Costs

The following table presents professional service expenses we incurred in connection with our proposed Merger with Alcon for the fiscal years presented (dollars in thousands):

* Denotes change is greater than +100%.

During fiscal year 2025, we incurred costs related to our proposed Merger with Alcon, including fees and expenses for legal, financial, communications and proxy advisory services. At the Special Meeting, the Company's stockholders voted against the Merger, and the Merger Agreement was terminated in accordance with its terms effective January 6, 2026. We did not incur any merger transaction and related costs in fiscal years 2024 or 2023.

Restructuring, Impairment and Related Charges

The following table presents our restructuring, impairment and related charges for the fiscal years presented (dollars in thousands):

* Denotes change is greater than +100%.

In the first half of 2025, we took a number of steps to change our leadership team, realign our 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 fiscal 2025, we recognized costs

related to severance and reduction in workforce of $12.4 million; consulting expenses of $0.9 million; impairment expenses on leasehold improvements and machinery and equipment of $7.7 million, as we will no longer be using these assets; and impairment on real property right-of-use assets of $4.9 million, as we are actively pursuing subleasing opportunities for two of our leased properties. In addition, we also recognized impairment of $2.7 million during fiscal 2025, for internally developed software that we will no longer be using as we will transition to a cloud-based software solution. The restructuring effort was substantially completed as of June 27, 2025.

Other Income, Net

The following table presents our other income, net for the fiscal years presented (dollars in thousands):

* Denotes change is greater than +100%.

Other income, net, increased for 2025 due to foreign exchange gains (primarily euro and Japanese Yen) and a recovery of a previously impaired deposit of $1.5 million, partially offset by decreased interest income as a result of lower balances of investments available for sale and overall lower interest rates. The change in other income, net for 2024 was due to increased foreign exchange losses (primarily Japanese Yen and euro) and lower interest income as a result of lower balances of investments available for sale.

Other income, net generally relates to interest income earned on cash, cash equivalents and investments available for sale, interest expense on finance lease obligations, gains or losses on foreign currency transactions, and royalty income. The table below summarizes the year over year changes in other income, net (dollars in thousands):

Provision (Benefit) for Income Taxes

The following table presents our provision for income taxes for the fiscal years presented (in thousands):

* Denotes change is greater than +100%.

Our effective tax rates differ from the U.S. federal statutory rate of 21% for 2025, 2024 and 2023 respectively, primarily due to the income taxes generated in foreign jurisdictions and realizability of deferred tax assets. Tax benefits of $1.8 million generated in 2025 is mainly due to the loss recognized in the Company's operation at Switzerland and a favorable uncertain tax position adjustment. The Company's operation in Switzerland was profitable in 2024 and 2023 contributing to the majority of tax expense of $11.2 million and $12.3 million, respectively. The Company has maintained a full valuation allowance position on its U.S. operation as of fiscal year 2025.

Liquidity and Capital Resources

Our principal sources of liquidity are cash, cash equivalents, investments available for sale ("AFS") and cash flow from operating activities. We believe these sources of liquidity will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the financial statements included in this Annual Report. We expect that cash flow from operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating

results, working capital needs, capital expenditures, and capital deployment decisions. In addition, future capital requirements will depend on many factors including our growth rate in net sales, the timing and extent of spending to support our growth strategy, the expansion of selling and marketing activities, the timing of introductions of new products, as well as global macroeconomic factors. If our anticipated future cash flow from operating activities is insufficient to satisfy our future capital requirements in the long-term, we may need to seek additional capital. Our financial condition at January 2, 2026, December 27, 2024 and December 29, 2023 included the following (in thousands):

Cash and cash equivalents include cash and balances in deposits and money market accounts held at banks and financial institutions. Our investment policy's primary objective is capital preservation while maximizing our return on investment. Investments available for sale may include U.S. government and corporate debt securities, commercial paper, certain certificates deposit and related security types, that are rated by two nationally recognized statistical rating organizations with minimum investment grade ratings of AAA to A-/A-1+ to A-2, or the equivalent. The maturity of individual investments may not extend 24 months from the date of purchase. There are also limits to the amount of credit exposure in any given security type. We do not have any off-balance sheet arrangements.

Our current liquidity and capital resources, as discussed above, will enable us to meet our known contractual obligations as of January 2, 2026 (in thousands):

* Refer to the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K.

Overview of changes in cash and cash equivalents and other working capital accounts

The following table presents a summary of cash flows for the fiscal years presented (in thousands):

For 2025, cash provided by operating activities consisted of a net loss of $80.4 million and $16.3 million in working-capital charges primarily related to the capitalization of cloud-based software and changes in inventories and accounts receivable; partially offset by $62.5 million in non-cash items primarily related to stock-based compensation expenses and impairment of fixed assets and operating lease right-of-use assets. For 2024, cash provided by operating activities consisted of $44.9 million in non-cash items primarily related to stock-based compensation expenses, partially offset by a $20.2 million net loss and $9.0 million in working-capital changes primarily related to the capitalization of cloud-based software and changes in inventories, partially offset by changes in accounts receivable.

For 2023, cash provided by operating activities consisted of $37.3 million in non-cash items primarily related to stock-based compensation expenses and $21.3 million in net income, offset by $44.0 million in working-capital changes primarily related to changes in accounts receivable and inventories.

For 2025, cash provided by investing activities resulted from $124.1 million in proceeds from the maturity of investments available for sale used to supplement working capital, partially offset by $75.4 million in purchases of investments available for sale and $5.8 million in purchases of property, plant and equipment. For 2024, cash used in investing activities resulted from $80.2 million in purchases of investments available for sale and $23.4 million in purchases of property, plant and equipment, partially offset from proceeds from the sale or maturity of investments available for sale of $43.1 million that was used to supplement working-capital. For 2023, cash provided by investment activities resulted from proceeds from the sale or maturity of investments available for sale of $143.5 million that was used to supplement working-capital, partially offset by $52.3 million in purchases of investments available for sale and $18.2 million in purchases of property, plant and equipment. Our investment in property, plant and equipment during 2025, 2024 and 2023, was primarily due to investments in manufacturing facilities.

For 2025, cash used in financing activities of $4.6 million consisted of $6.5 million of repurchases of common stock pursuant to our share repurchase program and $1.5 million to repurchase employee common stock for taxes withheld, partially offset by proceeds from the exercise of stock options of $3.5 million. For 2024, cash provided by financing activities of $5.7 million consisted primarily from the exercise of stock options of $7.4 million, partially offset by $1.5 million to repurchase employee common stock for taxes withheld. For 2023, cash provided by financing activities of $7.4 million consisted primarily from the exercise of stock options of $9.7 million, partially offset by $2.1 million to repurchase employee common stock for taxes withheld.

Accounts receivable, net was $50.1 million and $77.9 million at January 2, 2026 and December 27, 2024, respectively. Days' Sales Outstanding (DSO) was 85 and 145 days for 2025 and 2024, respectively. As of January 2, 2026 and December 27, 2024, the Company's China distributors accounted for 33% and 58%, respectively, of the Company's consolidated trade receivables. Our DSO is at a normalized level for 2025. During fiscal 2024, the Company's China distributors increased their purchases in anticipation of higher procedural volumes during what is typically a summer "high season" in China. Due to dynamic macroeconomic conditions and other factors, the number of ICL procedures performed during the high season and the second half of 2024 overall was lower than expected. Accordingly, our distributors in China held, as of December 27, 2024, elevated levels of ICL product inventory. Our distributor agreements typically provide for payment terms between 30 and 90 days. Our DSO was higher in 2024, in part, due to the higher levels of purchases by our China distributors during the year and the lower than anticipated procedural volumes.

Inventories, net was $55.5 million and $43.3 million at January 2, 2026 and December 27, 2024, respectively. Effective in the fourth quarter of 2025, we changed our methodology for calculating Days' Inventory on Hand (DOH), from using actual cost of sales for the quarter to using the next quarter's projected cost of sales. DOH was 219 and 367 days for 2025 and 2024, respectively, for finished goods, including consignment inventory. In fiscal 2023 and fiscal 2024, we increased our production and inventory to support anticipated sales growth of ICL products and to support quick and efficient delivery and fulfillment for surgical procedures. In fiscal 2024, due to the macroeconomic and other conditions in China, our distributors in China held, as of December 27, 2024, elevated levels of ICL product inventory, and accordingly, we reported minimal China ICL sales in the first half of fiscal 2025. In fiscal 2025, we expanded our manufacturing capabilities for our ICL products in our Nidau, Switzerland facility, which contributed to an increase in inventory. We also increased inventory in fiscal 2025 to supply consignment inventory in China, to reduce the Company's tariff risk in China in the near-term. Increasing our inventory levels also helps mitigate risks associated with potential disruptions to our manufacturing and production process. We intend to continue to assess appropriate inventory levels, and during fiscal 2026, we expect to adjust our production output based on forecasted demand and optimize the level of inventory held by us and held by our distributors.

Critical Accounting Estimates

Our accounting policies are more fully described in Note 1- Organization and Description of Business and Accounting Policies of the Consolidated Financial Statements. As disclosed in Note 1 - Organization and Description of Business and Accounting Policies, the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make significant estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ, significantly at times, from these estimates if actual conditions differ from our assumptions.

We believe the following discussion represents our most critical accounting estimates, which are those that are most important to the portrayal of our financial condition and results of operations and require management's most difficult, subjective and complex judgments.

Sales Return Reserves

We provide allowances for sales returns such that returns are matched against the sales from which they originated. While such allowances have historically been within our expectations, we cannot guarantee that we will continue to experience the same return rates that we have in the past. Measurement of such returns is based on an expected loss model which requires consideration of, among other factors, historical returns experience and current/anticipated trends, including the need to adjust for current conditions and product lines, the entry of a competitor, and judgments about the probable effects of relevant observable data. We consider all available information in our quarterly assessments of the adequacy of the allowance for sales returns.

Stock-Based Compensation

We account for the issuance of stock options by estimating the fair value using the Black-Scholes pricing model. This model's calculations include the exercise price, the market price of shares on grant date, risk-free interest rates, expected term of the award, expected volatility of our stock and expected dividend yield. Stock-based compensation expense for other stock-based awards is measured at the date of grant based on the fair value of the award, which is the closing price of our common stock on the date of grant. For those awards which contain a performance condition, stock-based compensation expense will be recognized when it is probable that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures, over the requisite service period based on the grant-date fair value of the stock. We reassess the probability of vesting at each reporting period and adjust stock-based compensation expense based on our probability assessment.

Income Taxes

In evaluating our ability to recover the deferred tax assets within a jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions including overall current and projected business and industry conditions, projected sales growth, margins, costs and income by jurisdiction, the amount of future federal, state, and foreign pretax operating income, the reversal of temporary differences and the successful implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates management uses to manage its businesses. In evaluating the objective evidence that historical results provide, we also consider three years of cumulative operating results. Valuation allowances, or reductions to deferred tax assets, are recognized if, based on the weight of all the available evidence, it is more likely than not that some portion or all of the deferred tax asset may not be realized.

Inventories

We provide estimated inventory allowances for excess, slow moving, expiring and obsolete inventory as well as inventory whose carrying value is more than net realizable value. These reserves are based on current assessments about future demands, market conditions and related management initiatives. If market conditions and actual demands are less favorable than those projected by management, additional inventory write-downs may be required. We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on the expiration of products with a shelf life of less than four months, estimated forecasts of product demand and production requirements for the next twelve months. Several factors may influence the realizability of our inventories, including significant changes in demand, decisions to exit a product line, technological change, and new product development. While such inventory losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same loss rates that we have in the past.

Employee Defined Benefit Plans - Pension

The liabilities and annual income or expense of our pension plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, expected years of service, salary increases and the expected long-term rate of asset return. The fair values of plan assets are determined based on prevailing market prices.

Foreign Exchange Rate Impact

Management does not believe that the fluctuation in the value of the dollar in relation to the currencies of its suppliers or customers in the last three fiscal years has materially adversely affected our ability to purchase or sell products at agreed upon prices. However, currency exchange fluctuations do impact our net sales and results of operations as discussed under Item 7A. Quantitative and Qualitative Disclosures About Market Risk. No assurance

can be given that adverse currency exchange rate fluctuations will not occur in the future, which could significantly affect our operating results. We do not currently hedge transactions to offset changes in foreign currency.

Inflation

Management believes inflation has not had a significant impact on our net sales and revenues and on income from continuing operations during the past three years.

Recent Accounting Pronouncements

See "Part II. Item 8."Financial Statements and Supplementary Data - Note 1 - Organization and Description of Business and Accounting Policies - Recent Accounting Pronouncements Not Yet Adopted" of this Annual Report on Form 10-K.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, our operations are exposed to risks associated with fluctuations in interest rates and foreign currency exchange rates. The Company manages its risks based on management's judgment of the appropriate trade-off between risks, opportunity, and costs and does not generally enter into interest rate or foreign exchange rate hedge instruments.

Foreign Currency Exchange Risk

Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies in which we transact business could adversely affect our financial results. Activities outside the U.S. accounted for approximately 91% of our total sales during fiscal 2025. The results of operations and the financial position of our Japanese subsidiary are reported in Japanese yen and then translated into U.S. dollars at the applicable exchange rates for inclusion in our Consolidated Financial Statements, exposing us to translation risk. In addition, we are exposed to transaction risk because we incur some of our sales and expenses in currencies other than the U.S. dollar. Our most significant currency exposures are to the Japanese yen, the euro, and the Swiss franc, and the exchange rates between these currencies and the U.S. dollar may fluctuate substantially. We do not actively hedge our exposure to currency rate fluctuations.

As our international subsidiaries operate in and are net recipients of currencies other than the U.S. dollar, our sales benefit from a weaker dollar and are reduced by a stronger dollar relative to major currencies worldwide (primarily, the euro and the Japanese yen). Accordingly, changes in exchange rates, and particularly the strengthening of the U.S. dollar, may negatively affect our consolidated sales and gross profit as expressed in U.S. dollars. Fluctuations during any given reporting period result in the re-measurement of our foreign currency denominated cash, receivables, and payables, generating currency transaction gains or losses and are reported in total other income, net in our Consolidated Statements of Operations. In the normal course of business, we also face risks that are either non-financial or non-quantifiable. Such risks include those set forth in Item 1A. "Risk Factors."

We price some of our products in U.S. dollars, and thus changes in exchange rates can make our products more expensive in some offshore markets and reduce our sales. Our sales in China, for example, are denominated in U.S. dollars. Our China distributors, who sell into China and Hong Kong, collectively accounted for approximately 32% of our consolidated net sales during fiscal 2025. If the U.S. dollar strengthens relative to the Chinese yuan, it becomes more expensive for our China distributor to purchase ICLs and to pay prior accounts receivable balances. In the event of significant foreign exchange volatility in the future, the Company may extend or modify payment or other terms with its customers to mitigate the potential impact on our sales.

ITEM 8. Financial Statements and Supplementary Data

Financial Statements and the Report of Independent Registered Public Accounting Firm are filed with this Annual Report on Form 10-K in a separate section following Part IV, as shown on the index under Item 15 of this Annual Report.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A. Controlsand Procedures

Attached as exhibits to this Annual Report on Form 10-K are certifications of STAAR's Interim Co-Chief Executive Officers, our principal executive officers (PEOs), and Chief Financial Officer, our principal financial officer

(PFO), which are required to be made by Rule 13a-14 or Rule 15d-14 of the Securities Exchange Act of 1934, as amended (the Exchange Act). This item includes information concerning the controls and controls evaluation referred to in the certifications. This item should be read in conjunction with the certifications for a more complete understanding of the certifications.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our PEOs and PFO, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of the end of the period covered by this Annual Report, our management carried out an evaluation, with the participation of our PEOs and PFO, of the effectiveness of the disclosure controls and procedures of the Company. Based on that evaluation, our PEOs and PFO concluded, as of January 2, 2026, that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change during the fiscal quarter ended January 2, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management's Annual Report on Internal Control over Financial Reporting

The Company's management, including our PEOs and PFO, is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles in the United States of America.

Because of its inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements and can provide only reasonable, not absolute assurance, that its objectives will be achieved. Further, because of changing conditions, effectiveness of internal control over financial reporting may vary over time. The Company's processes contain self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

Management has assessed the effectiveness of the Company's internal control over financial reporting as of January 2, 2026, based on the criteria for effective internal control described in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that the Company's internal control over financial reporting was effective as of January 2, 2026.

The report of BDO USA, P.C., our independent registered public accounting firm, regarding its audit of the Company's internal control over financial reporting follows below.

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

STAAR Surgical Company

Lake Forest, California

Opinion on Internal Control over Financial Reporting

We have audited STAAR Surgical Company's (the "Company's") internal control over financial reporting as of January 2, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO criteria"). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2026, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated balance sheets of the Company as of January 2, 2026 and December 27, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for each of the three fiscal years in the period ended January 2, 2026, and the related notes and financial statement schedule listed in the accompanying index and our report dated March 3, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, P.C.

Los Angeles, California

March 3, 2026