Healthcare Investor Exits $13 Million Stake STAAR Surgical Stake as Alcon Deal Drama Looms

Palo Alto Investors fully exited its position in STAAR Surgical Company (NASDAQ:STAA), reducing its stake by 791,879 shares in the third quarter, a net change of approximately $13.3 million, according to a November 14 SEC filing.

What Happened

Palo Alto Investors disclosed in a November 1, SEC filing that it sold out of STAAR Surgical Company during the third quarter. The fund reported a sale of 791,879 shares, representing an estimated $13.3 million reduction in position value. The position previously represented 2.8% of the fund’s assets under management.

What Else to Know

Top holdings after the filing:

• NASDAQ:INSM: $70.8 million (13.1% of AUM)
• NASDAQ:PTCT: $52.9 million (9.8% of AUM)
• NASDAQ:ACAD: $52.6 million (9.7% of AUM)
• NASDAQ:FOLD: $42.3 million (7.8% of AUM)
• NASDAQ:BMRN: $40.8 million (7.6% of AUM)

As of Wednesday, shares of STAAR Surgical Company were priced at $26.25, down 1% over the past year and well underperforming the S&P 500, which is up 13% in the same period.

Company Overview

Company Snapshot

• STAAR Surgical designs and manufactures implantable lenses for the eye, including the Visian ICL product family for myopia, hyperopia, astigmatism, and presbyopia, as well as preloaded cataract intraocular lenses and injector systems.
• The company generates revenue primarily through the sale of its proprietary ophthalmic implants and related delivery systems to healthcare providers and distributors worldwide.
• Primary customers include ophthalmic surgeons, vision and surgical centers, hospitals, government facilities, and international distributors, with a focus on both direct and partner-based sales channels.

STAAR Surgical Company designs, develops, manufactures, and sells implantable lenses for the eye, serving a global market from its base in Lake Forest, California.

The company leverages proprietary technology to address a range of visual disorders through its innovative lens products and delivery systems.

With a diversified international customer base, STAAR Surgical markets its products worldwide to ophthalmic surgeons, surgical centers, hospitals, and distributors.

Foolish Take

This exit seems like a strong potential signal of rising uncertainty around STAAR Surgical’s next chapter. The company is navigating both operational volatility and the complexities of its pending acquisition by Alcon—an evolving situation that may be reshaping how some specialists size their risk. Palo Alto’s complete departure also stands out given STAAR’s improving fundamentals last quarter: Revenue grew 6.9% year over year, and gross margin expanded to 82.2%. Still, net income slipped to $8.9 million as higher taxes weighed on results.

The merger backdrop adds another wrinkle. STAAR’s amended deal with Alcon clarified valuation mechanics and extended closing timelines—important details that may influence near-term trading dynamics. For a fund like Palo Alto, which concentrates assets in high-conviction biotech positions, reallocating away from a name facing both regulatory reviews and distributor inventory normalization may simply reflect a preference for cleaner catalysts. What plays out in the upcoming months will be crucial.

Glossary

Assets Under Management (AUM): The total market value of investments managed by a fund or investment firm.
13F Reportable Assets: Securities that institutional investment managers must disclose quarterly to the SEC if above a certain threshold.
Liquidated: Sold off an entire investment position, reducing the holding to zero.
Alpha: A measure of an investment's performance compared to a benchmark, indicating outperformance or underperformance.
Proprietary Technology: Unique technology owned and developed by a company, often protected by patents or trade secrets.
Ophthalmic Implants: Medical devices surgically placed in the eye to correct vision or treat eye conditions.
Distributor: An entity that buys products from a manufacturer to resell them to retailers or end customers.
Partner-based Sales Channels: Sales strategies involving third-party companies or organizations to distribute products.
TTM: The 12-month period ending with the most recent quarterly report.
Marketed: Actively promoted and sold to customers or clients.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends BioMarin Pharmaceutical. The Motley Fool has a disclosure policy.