COOPER COMPANIES, INC. Q1 FY2025 earnings call

• CooperVision: Had record Q1 revenues and earnings. Overcame currency impact. Outperformed operational plans with increased availability and accelerated product launch activity, e.g., moving up international launch dates for MyDay Energous, increasing availability of MyDay multifocal and extended toric ranges. Myopia management portfolio grew 20% with MySite up 27%. Private label business is a core part of long-range strategic growth plan. - Cooper Surgical: Revenues were $319 million, slightly ahead of internal expectations despite tough comps. Fertility posted revenues of $120 million, up 1%, with strong demand for innovative products and services. Office in surgical products and services posted sales of $199 million, up 4%, driven by strength in targeted minimally invasive gynecologic surgical devices and PARAGARD growth.

Consolidated revenues were $965 million. CooperVision reported quarterly revenues of $646 million, up 4% year over year and up 6% organically, accounting for approximately 67% of total revenues. Cooper Surgical posted quarterly revenues of $319 million, up 3% year over year and up 2% organically, accounting for approximately 33% of total revenues.

• CooperVision's revenue guidance range unchanged at $2.733 to $2.786 billion, up 6.5% to 8.5% organically. - Cooper Surgical's revenue guidance range unchanged at $1.347 to $1.372 billion, up 4% to 6% organically. - Consolidated revenues expected to be $4.08 to $4.158 billion, up roughly 6% to 8% organically. - Non-GAAP EPS guidance range raised to $3.94 to $4.02, up 7% to 9%, 11% to 13% excluding FX. - Free cash flow expected in the range of $350 to $400 million.

• FX fluctuations: The US dollar weakness over the past two days was not reflected in guidance, but if rates hold, it could impact earnings. - Market and competitive risks: New entrants in the market, such as the recent approval of a new IUD product, could pose challenges. - Regulatory risks: Product approvals and compliances in different markets may take time and have an impact on product launches and market entry.

Q: Can you quantify markets you've been out of that could contribute to MyDay growth?

A: Yes, there are markets and accounts where demand exists and increasing availability will result in sales growth.

Q: How has private label business been growing relative to branded?

A: Private label growth has been in line with branded, and expected to grow a bit faster going forward.

Q: Why was growth below peers in Q1 and how to think about acceleration?

A: Q1 started slow due to channel inventory reductions, but January and February were strong, and Q3 and Q4 have potential for better growth.

Q: What's assumed for competition to PARAGARD in guidance?

A: Perrigo's product is expected to be down a couple percent to up a couple percent this year.

Q: Any color on gross margin sustainability?

A: Gross margin sustainability is due to efficiency gains from higher production utilization, better overhead absorption, and product and regional mix advantages.

Q: Thoughts on price in contact lens business and pushback?

A: Price is expected to be 2%-3% on a global basis, with no significant pushback seen due to strong demand for premium products.

Q: On MyDay, MySite launch planning and pricing?

A: There is regulatory work and strategy development ongoing, including considering pricing to make the product accessible to children.

Q: Target penetration for toric in different markets?

A: Penetration is highest in the US, mid in Europe, low in Asia Pac, and growing in all areas.

Q: Thoughts on PARAGARD strategy with new entrance?

A: Continue to execute, keep heads down, and drive end-user unit growth.

Q: Views on fertility's return to double-digit growth?

A: Fertility was an anomaly, but with strong demand for products and services, it is expected to return to upper single-digit to low double-digit growth.

Q: Impact of China on APAC growth?

A: China is a small but important market, challenges in China are incorporated into guidance and offset by strength in other countries.

Q: FX impact on earnings and MySite outlook?

A: Interest expense assumptions are largely unchanged, and MyDay, MySite is a FY2026 story.

Q: Contact lens inventory trends risk?

A: There could be some risk of tighter inventory in spots, but it's not a significant risk for Cooper.

Q: Private label contracts and PARAGARD?

A: Private label contracts are diverse with long-term commitments, and on PARAGARD, will see what the competitor does.

Q: Sales force realignment in myopia management and PARAGARD pricing?

A: Sales force realignment benefits myopia management product, and on PARAGARD, it's a fully reimbursed product and will see how it plays out.