The Cooper Companies, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Q3 Results: Consolidated revenues up 5.7% Y/Y, 2% organic; non-GAAP earnings up 15%; free cash flow $165 million; $52 million stock repurchased.
• CooperVision: Clarity orders hit by premium daily lens trend and Asia Pac e-commerce weakness; EMEA strong; MyDay resolved manufacturing constraints, renewed contracts, won private label agreements; Clarity expected to rebound with new launches; MiSight grew, MySite approved for Japan launch.
• CooperSurgical: Fertility market with headwinds but long-term optimism due to underlying fundamentals.
• Office and Surgical: Medical devices growth, OBP Surgical strong, PARAGARD decline.
• Q4 Guidance: CooperVision 2%-4% organic growth, CooperSurgical 2%-4% organic growth; Fiscal 2026 confidence in CooperVision's MyDay momentum and CooperSurgical's fertility rebound, operating margin expansion.

Segment Performance

• CooperVision: Q3 revenues were $718 million, with 6.3% reported growth and 2.4% organic growth. Clarity orders were impacted by premium daily lens favoritism and e-commerce weakness in Asia Pac, but EMEA had strong growth (14% growth, 6% organic) and became the largest revenue region. MyDay had double-digit growth but affected Clarity orders. Torics and multifocals grew 6%, spheres down 1%. Daily silicone hydrogel lenses (MyDay and Clarity) grew 7%, MiSight grew 23%.
• CooperSurgical: Q3 revenues were $342 million, up 4.5% (2% organic). Fertility revenues were $137 million, up 6% (3% organic), but clinics faced cash conservatism and cycle softness in Asia Pac.
• Office and Surgical: Sales were $205 million, up 3% (1% organic). Medical devices grew double digits, OBP Surgical (acquisition) grew 23%, while PARAGARD declined 10% due to price increase and one-handed inserter launch.

Guidance

• Q4: Consolidated revenue guidance $1.049B-$1.069B (2%-4% organic).
• Fiscal 2026: CooperVision expects to outpace market with MyDay and launches; CooperSurgical expects fertility rebound; Tariff impact $24M lower than expected; Productivity initiatives; Free cash flow expected ~$2B over next 3 years.

Risks

• Pure play e-commerce weakness in Asia Pac impacting CooperVision.
• Inventory contraction risks.
• Market pricing pressure, especially in Asia Pac.
• Uncertainty in MyDay fitting activity converting to revenue.
• Fertility market headwinds continuing.

Question and Answer

• Q: Jon Block asks about CooperVision's growth and MyDay's impact on Clarity. A: Al White responds about MyDay's success and Clarity transition, noting MyDay's bidding activity and Clarity's potential rebound.
• Q: Larry Biegelsen asks about fiscal 2026 EPS growth and tax rate. A: Brian Andrews mentions targeting low double-digit constant currency OI growth and tax rate update in December.
• Q: Jeff Johnson asks about MyDay clarity transition and its impact on 4Q. A: Al White discusses uncertainty in MyDay fitting activity converting to revenue and guidance reflecting similar quarter to Q3.
• Q: Issie Kirby asks about restructuring and MiSight in Asia. A: Al White talks about restructuring for efficiency and MiSight's performance in Europe and Japan launch.
• Q: Jason Bender asks about pricing and trade-up cycles. A: Al White discusses pricing pressure in Asia Pac and expected 1% price increase next year.
• Q: David Saxon asks about free cash flow and distributor inventory. A: Brian Andrews talks about free cash flow targets and Al White addresses distributor inventory normalization.
• Q: Robbie Marcus asks about gap between last earnings call and results. A: Al White attributes to e-commerce weakness in Asia Pac and Clarity order impact.
• Q: Brett Fishman asks about MiSight and TBI promotions. A: Al White discusses MiSight's success in Europe and TBI promotion progress in The US.
• Q: Chris Pasquale asks about MiSight growth and CapEx. A: Al White talks about MiSight's growth and Brian Andrews discusses CapEx and free cash flow targets.
• Q: Patrick Wood asks about how Clarity vs MyDay dynamic was identified. A: Al White mentions feedback from larger accounts and order cycle analysis.