Broadwood Partners (27.5% Shareholder) Accuses STAAR Surgical (STAA) of Manipulating Forecasts to Justify Undervalued Sale to Alcon (ALC)

Broadwood Partners Questions Integrity of STAAR Surgical’s Last-Minute Forecast Change and Fairness Opinion in Sale to Alcon

Conflicted Management Team Sharply Revised Its Financial Projections Downward Just Days Before Board Vote on Sale to Alcon

Continues to Urge STAAR Shareholders to Vote “AGAINST” the Proposed Transaction

October 8, 2025

Dear Fellow Shareholders:

As STAAR’s largest shareholder and one of the Company’s most committed investors for more than 30 years, we are strong believers in STAAR’s opportunity to deliver significant and enduring value for shareholders. Just a few short months ago, it appeared that STAAR’s Board of Directors and management team shared our confidence.1 In fact, management spent most of 2025 publicly touting the progress on its turnaround plan, while assuring investors that short-term challenges were abating and that STAAR’s future was bright.2

That was before the management team realized it could make tens of millions of dollars quickly by selling STAAR to Alcon, even for a woefully inadequate price of $28 per share.

As recently as July 23, 2025, management projected that the Company would generate twice as much EBITDA in 2027 as the most profitable year in STAAR’s history.3 Then, just ten days later — notably, after Alcon agreed to pay $28 per share for STAAR, triggering the accelerated vesting of management’s unearned shares and $55 million in compensation upon closing of the deal — management suddenly revised its forecast, sharply reducing its 2027 EBITDA forecast by 20%.4

Despite what the Board now claims, creating two sets of projections within ten days during an M&A process — one for enticing a counterparty to bid, and another to justify an otherwise inadequate price that resulted from a cursory and failed negotiation — is highly unusual and suspect.

We believe that STAAR’s management lowered its projections to justify a low-ball valuation in a deal that would yield great financial rewards for management but not STAAR’s shareholders. The Company’s CEO alone stands to receive approximately $24 million in compensation if the deal closes, even though he had been serving in his role for just five months at the time the agreement with Alcon was signed.

The Company also now admits that the Board’s financial advisor conjured out of whole cloth its critical cost-of-capital assumption, which had the effect of dramatically ratcheting down the range of STAAR’s “fair” value. According to the Company’s own statements, its financial advisor did not properly derive that assumption from a mathematical model or market observation, as is conventional.5

1 Source: STAAR Q1 2025 earnings call, May 7, 2025.
2 Source: William Blair Growth Stock Conference, June 4, 2025.
3 Source: STAAR proxy statement on Form DEFM14A, filed with the SEC on September 16, 2025, at 44 and 62.
4 Id. at 45 and 61.
5 Source: STAAR press release filed with the SEC on October 6, 2025.

In our view, the combination of the new, strategically pessimistic projections and the highly dubious cost-of-capital assumption allowed the Company’s financial advisor to engineer its “fairness opinion” to justify the deal. That opinion purported to show that the agreed upon $28 per share was, very conveniently, almost exactly at the midpoint of the “fair” value range.6

Importantly, based on management’s initial projections and STAAR’s actual cost of capital (as calculated by independent data providers Bloomberg, FactSet and Capital IQ), STAAR’s “fair” value range is much, much higher, with a midpoint above $41 per share.7

A more sophisticated board surely would have objected to late, self-serving and unexplained changes to the Company’s financial model and to a weighted-average cost-of-capital assumption that differed wildly from the easily verifiable (and widely available) metric. But as best as we can tell, only one of the STAAR independent directors has ever been a director at a public company that underwent a sale process. Given their lack of M&A experience, it is possible that this Board simply could not recognize the obvious process and calculation flaws.

But we should not ignore them.

The reality is that this Board failed to protect us from a management team and financial advisor with misaligned incentives. We must now protect ourselves. It is critically important that we reject this inadequate and manipulated sale to Alcon by voting “AGAINST” this proposed transaction.

After this proposed deal fails, it will fall to us collectively as shareholders to identify and elect new directors who are able and dedicated to serving shareholder interests and committed to appointing capable and experienced executives. We need a team that can help STAAR run a proper strategic alternatives process and achieve the Company’s full potential. We are prepared to help.

Sincerely,

Neal C. Bradsher
Founder and President
Broadwood Capital, Inc., General Partner of Broadwood Partners, L.P.

Source:

https://www.sec.gov/Archives/edgar/data/718937/000121390025097463/ea0260692-dfan14a_broadwood.htm