The Cooper Companies, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Consolidated Performance: Consolidated organic revenue growth was 7% with revenues at $1,002,000,000. Non-GAAP earnings were $0.96, up 14% year over year. Margins improved, and operating income increased 11%.
• CooperVision Details: Strong growth in daily silicone hydrogel lenses; MyDay and Clarity grew double digits. MiSight saw 35% growth. Increased capacity led to more product availability and new launches like MyDay Energous in Canada and upgraded Clarity in Japan.
• CooperSurgical Details: Fertility was impacted by softness in Asia Pac but long-term prospects remain bullish. Office and surgical segment was strong, with PARAGARD growth driven by channel fill.

Segment Performance

• CooperVision: Quarterly revenues were $670,000,000, up 5% or 7% organically. Americas grew 8%, EMEA 6%, Asia Pac 5%. Torics and multifocals grew 7%, spheres 6%. Daily silicone hydrogel lenses (MyDay, Clarity) grew 10%, silicone hydrogel FRP lenses (Biofinity, Avera) up 6%, myopia management portfolio up 19% with MiSight up 35%.
• CooperSurgical: Quarterly revenues were $333,000,000, up 8% or 7% organically. Surgical medical devices, labor and delivery portfolio, and PARAGARD drove growth. Fertility revenues $127,000,000 up 3% and 2% organically, impacted by Asia Pac softness. Office and surgical sales $206,000,000 up 13% or 10% organically, driven by minimally invasive gynecological devices and PARAGARD.

Guidance

• Revenue: Consolidated revenues are expected to be $4,110,000,000 to $4,150,000,000, up 5.5%-6.5% or 5%-6% organically. CooperVision's revenue range is $2,760,000,000 to $2,790,000,000, up 6%-7% organically. CooperSurgical's range is $1,350,000,000 to $1,360,000,000, up 5%-6% or 3.5%-4.5% organically.
• EPS: Non-GAAP EPS guidance raised to $4.05-$4.11, up 10%-11.5% year over year.
• Market Growth: Contact lens industry growth reduced to 4-6% from 5-7%, with CooperVision organic growth to 6-7%. Fertility market growth for CooperSurgical reduced to low single digits.

Risks

• Channel Inventory: Pressure on growth due to reduction in channel inventory affecting reported growth rates.
• Tariffs: $4,000,000 impact to cost of goods this year, with a potential 3% headwind to fiscal 2026 earnings if tariffs remain unchanged.
• Market Softness: Fertility market softness in Asia Pac and consumer pressure impacting growth in that segment.

Question and Answer

• Q: Jeff Johnson from Baird asked about contact lens end market and fitting activity. A: Al White responded that FIT data is strong, and fitting activity is accelerating.
• Q: Issie Kirby from Redburn Atlantic inquired about lower market growth assumption. A: Al White stated market growth is back to historical 4-6% range, with fitting activity improving.
• Q: Larry Biegelsen from Wells Fargo asked about inventory and Q3/Q4 guidance. A: Al White mentioned general market softness with Q4 expected stronger.
• Q: Jonathan Block from Stifel questioned fertility softness and inventory. A: Al White said fertility softness is temporary, with Q4 expected stronger.
• Q: Robbie Marcus from JPMorgan asked about margins and tariffs. A: Brian Andrews responded margins expected to improve, and tariffs impact discussed.
• Q: Craig Bijou from Bank of America asked about tariffs and market share. A: Al White said tariffs impact is being monitored, and the company continues to take market share.
• Q: Joanne Wuensch from Citibank asked about guidance and FX. A: Al White stated guidance includes conservatism and operational efficiencies.
• Q: Young Li from Jefferies asked about private label and tariffs. A: Al White discussed private label growth and tariffs mitigation planning.
• Q: Jason Bednar from Piper Sandler asked about channel inventory and April performance. A: Al White said April was the best month, but channel inventory impacts future months.
• Q: Brett Fishbin from KeyBanc Capital Markets asked about toric/multifocal growth. A: Al White noted toric/multifocal continue to do well, tied to bioaffinity shipments.
• Q: Steve Lichtman from Oppenheimer and Company asked about MiSight pretrial program. A: Al White explained the pretrial program is to get parents/kids comfortable, with high retainage.
• Q: David Saxon from Needham asked about MiSight promo impact and fertility margin. A: Al White said MiSight promo impact is expected, and fertility margins are in line with averages.
• Q: Navann Ty from BNP Paribas asked about fertility mix. A: Al White stated CooperSurgical has no fertility pharma products, differing from other companies' mixes.