COO Q2 Earnings Beat, 2025 Sales Outlook Tightened, Stock Down

Core Viewpoint - The Cooper Companies, Inc. reported strong second-quarter fiscal 2025 results, with adjusted earnings per share (EPS) of 96 cents, reflecting an 11.5% year-over-year increase, surpassing estimates. Revenue growth was driven by operational improvements and strong performance in its product segments [1][2][16]. Revenue Performance - Total revenues reached $1 billion, marking a 6.3% year-over-year increase on a reported basis, and a 7% increase at constant exchange rates (CER) and organically [1][2]. - The CooperVision (CVI) segment generated revenues of $669.6 million, up 5% year-over-year on a reported basis and 7% at CER and organically [4]. - The CooperSurgical (CSI) segment reported revenues of $332.7 million, an 8% increase on a reported basis, 9% at CER, and 7% organically [8]. Segment Analysis - In the CVI segment, Toric and multifocal revenues totaled $328.4 million, up 6% year-over-year on a reported basis, and up 7% organically and at CER [5]. - Sphere and other revenues reached $341.2 million, reflecting a 5% year-over-year increase on a reported basis and a 6% increase at CER and organically [6]. - Geographically, revenues from the Americas totaled $282.4 million, up 7% year-over-year on a reported basis, while EMEA revenues were $248.6 million, up 5% year-over-year [6][7]. Margin and Cost Trends - Adjusted gross profit increased by 2.4% to $681.9 million, with an adjusted gross margin expanding by 100 basis points to 68% [10]. - Selling, general, and administrative expenses rose by 4.9% to $399 million, while research and development expenses increased by 17% to $45.5 million [10]. Financial Position - The company ended the second quarter with cash and cash equivalents of $116.2 million, up from $100.9 million at the end of the previous quarter. Total debt increased to $2.77 billion from $2.59 billion [12]. Guidance and Outlook - The Cooper Companies updated its fiscal 2025 revenue guidance to a range of $4,107-$4,146 million, indicating an organic improvement of 5-6% from the prior year [13]. - The CVI segment's revenue is expected to be between $2,759-$2,786 million, suggesting a 6-7% organic improvement [13]. - The CSI segment's revenue is projected to be in the range of $1,347-$1,359 million, indicating a 3.5-4.5% organic improvement [14]. - Adjusted EPS for the fiscal year is anticipated to be in the range of $4.05-$4.11 [15]. Product Performance - CooperVision's growth was driven by strong demand for MyDay and Clarity daily silicone hydrogel lenses, as well as Biofinity and Avaira in the frequent replacement category [16]. - MySight, a myopia management solution, grew by 35%, supported by a new pricing strategy and a major private label deal [17]. - CooperSurgical's performance was bolstered by the office and surgical segment, with significant sales growth in specific products [18]. Market Context - Despite beating estimates, the company's shares fell by 4.9% in after-hours trading, reflecting a 13% decline year-to-date compared to a 0.8% decline in the industry [2]. - Tariffs are expected to impact earnings, with a potential 3% drag anticipated in fiscal 2026 if unmitigated [19].