Summary of The Cooper Companies FY Conference Call Company Overview - **Company**: The Cooper Companies (NasdaqGS: COO) - **Founded**: 1958 - **S&P 500 Inclusion**: Since 2016 - **Business Units**: - **CooperVision**: Leading contact lens company, number one in wearers and number two in revenue - **CooperSurgical**: Focused on fertility and women's healthcare, leading in non-pharma medical devices [1][2] Key Financial Metrics - **Employees**: Over 15,000 globally - **Product Users**: Over 50 million, with 42 million annual contact lens wearers - **Revenue Composition**: CooperVision accounts for about two-thirds of consolidated revenues - **Historical Revenue Growth**: 10-year growth rate of 8.6% [2][3] Growth Insights - **CooperVision Growth**: Primarily organic growth at 6.3%, with the contact lens market growing mid-single digits annually - **CooperSurgical Growth**: Approximately 16%, driven by acquisitions [3][4] - **Market Trends**: - Contact lens market growth projected at 4%-6% annually - Fertility market growth in mid-single digits, with potential for double-digit growth in the past [4][13] Financial Guidance - **Non-GAAP EPS Guidance**: $1.02-$1.04 for Q1 and $4.45-$4.60 for the full year - **Free Cash Flow Guidance**: $5.75-$6.25 billion, with expectations of $2.2 billion in free cash flow over the next fiscal year [5][6] Strategic Priorities - **Focus on Organic Growth**: Transitioning from heavy investment to driving organic growth and operational efficiency - **Cost Management**: Significant reorganization to reduce costs and improve operational efficiency [7][9] - **AI Integration**: Utilizing AI for inventory optimization and management [10] Market Dynamics - **Contact Lens Market**: - 35% of the global population is myopic, projected to reach 50% by 2050 - Major competitors: J&J (36% market share), CooperVision (27%), Alcon (25%) [13][14] - Shift towards daily lenses driving revenue growth, with daily wearers generating 2.5 times more revenue than monthly wearers [15][16] - **Fertility Market**: - Global market valued at approximately $3 billion, with one in six experiencing infertility - Growth driven by delayed childbirth and increasing insurance support for fertility treatments [26][27] Product Innovations - **New Product Launches**: - MiSight: FDA-approved contact lens for myopia management - MyDay MiSight: Daily silicone hydrogel lens with myopia control technology [21][22][24] - **Expansion Plans**: Launching new products in Europe and Asia, including MyDay Energys and MyDay Multifocal [24][25] Capital Allocation Strategy - **Share Repurchase Program**: Increased from $1 billion to $2 billion, with plans to consistently allocate a portion of free cash flow to buybacks [11][33] - **Investment Focus**: Transitioning from acquisitions to leveraging past investments for growth and shareholder value [11][33] Market Outlook - **2026 Guidance**: Expectation of improved performance in both CooperVision and CooperSurgical, with a focus on regaining traditional growth rates in the fertility market [45][46] - **Regional Performance**: Strong consumer behavior in the Americas, with challenges in Asia-Pac but expected improvements [47][48] Strategic Review - **Ongoing Evaluation**: Conducting a strategic review to assess the potential separation of CooperVision and CooperSurgical, considering synergies and market positioning [36][38][39] Conclusion - **Overall Sentiment**: Positive outlook on growth opportunities in both contact lens and fertility markets, with a strong focus on operational efficiency and shareholder value creation [30][33]

Company Overview - CooperCompanies is a leading global medical device company with FY25 revenue of $41 billion[7] - The company's products are sold in more than 130 countries and it has over 15000 employees in 45+ countries[7] - CooperCompanies operates through two business units: CooperVision (CVI) and CooperSurgical (CSI)[7] Financial Performance and Guidance - CooperCompanies' total revenue has more than doubled in the last decade, with a CAGR of 86% from 2015 to 2025[9] - The company provides FY26 revenue guidance of $4299 - $4338 million, with organic growth of 45% - 55%[10] - CooperVision's FY26 revenue guidance is $2900 - $2925 million, with organic growth of 45% - 55%[10] - CooperSurgical's FY26 revenue guidance is $1399 - $1413 million, with organic growth of 4% - 5%[10] - Non-GAAP EPS guidance for FY26 is $445 - $460[10] - The company targets free cash flow of $575 - $625 million for FY26[10] Market Position and Strategy - CooperVision is the 1 contact lens company in the world in terms of wearers[22] - The global soft contact lens market is an $11 billion market growing at 4-5% annually[16, 18] - CooperSurgical is a leading fertility company in the medical device industry, addressing a ~$3 billion global market with 4-6% annual growth[34]

Core Insights - The Cooper Companies, Inc. (COO) is experiencing growth driven by CooperVision's premium lens migration and MiSight's leadership in myopia management, alongside CooperSurgical's women's health and fertility portfolio [1] - Near-term performance is impacted by channel volatility, private-label transition risks, softness in the Asia-Pacific region, and tariff/foreign exchange pressures, although long-term opportunities remain robust [1] Financial Performance - COO's shares have increased by 15.5% over the past six months, outperforming the industry growth of 12.9% and the S&P 500 Index's increase of 14.5% [2] - The company has a market capitalization of $16.19 billion and is expected to see a 7.8% improvement in its bottom line over the next five years, with earnings beating estimates in three of the last four quarters [4] Growth Drivers - CooperVision's MyDay daily silicone hydrogel franchise is a key growth engine, with strong global rollout and uptake in various lens types, supported by expanding private-label contracts [5] - Capacity constraints in Asia-Pacific have been resolved, allowing for improved execution and higher revenues per patient, despite lower gross margins from daily silicone hydrogel lenses [6] - MiSight, the only FDA-approved contact lens for myopia control, reported 37% growth in Q4 and nearly $104 million in sales for fiscal 2025, with management guiding for 20-25% growth in fiscal 2026 [7] Operational Improvements - A recent reorganization is expected to yield nearly $50 million in annual pretax savings starting in fiscal 2026, enhancing cash flow and operational efficiency [10] - Operating margins expanded to 27% in Q4, with further improvements anticipated, while free cash flow reached $150 million, raising the cumulative target for fiscal 2026-2028 to over $2.2 billion [11] Capital Allocation - The company emphasizes shareholder returns, having repurchased nearly $300 million of stock in fiscal 2025, with plans for similar allocations in fiscal 2026 supported by a $2 billion authorization [12] - Free cash flow is projected to rise to $575-$625 million in fiscal 2026 as capital expenditures normalize, improving net leverage to 1.76x [12] Challenges - Gross margin pressures persist due to the mix shift towards lower-margin daily silicone hydrogel lenses and ongoing tariff impacts, with management guiding for further declines in fiscal 2026 [13][14] - The Asia-Pacific region, particularly China, saw a 28% decline in Q4 due to weaknesses in low-margin e-commerce channels, with management prioritizing profitability over volume [15] - Fertility demand in the CooperSurgical segment remains sensitive to consumer spending, leading to conservative guidance for the next fiscal year despite early signs of improvement [16] Revenue Estimates - The Zacks Consensus Estimate for fiscal 2026 revenues is $4.31 billion, reflecting a 5.3% growth from the previous year, with adjusted EPS expected to improve by 9.5% to $4.51 [17]

Company Overview - The Cooper Companies is a global medical device company with two main segments: CooperVision (CVI) and CooperSurgical (CSI) [11] - CVI focuses on contact lenses, particularly in daily silicone hydrogel lenses, torics, multifocals, and myopia management, with flagship products like MyDay and MiSight [11] - CSI provides products and services in fertility and women's health, including in-vitro fertilization (IVF) solutions and contraceptives [11] Investment Ratings - COO is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of B [12] - The Value Style Score is also B, supported by a forward P/E ratio of 18.54, indicating attractive valuation metrics for value investors [12] - The Zacks Consensus Estimate for fiscal 2026 has increased to $4.39 per share, with one analyst revising their earnings estimate upwards in the last 60 days [12] Performance Metrics - COO has an average earnings surprise of +2.4%, suggesting a positive trend in earnings performance [12] - With a solid Zacks Rank and strong Value and VGM Style Scores, COO is recommended for investors' consideration [13]

Core Insights - The Cooper Companies, Inc. (COO) reported fourth-quarter fiscal 2025 adjusted earnings per share (EPS) of $1.15, an 11% year-over-year increase, surpassing the Zacks Consensus Estimate of $1.11 by 3.6% [1] - Revenues reached $1.065 billion, reflecting a 5% year-over-year increase on a reported basis and a 3% organic growth, also beating the Zacks Consensus Estimate by 0.5% [2] Financial Performance - GAAP EPS for the quarter was 43 cents, down 27% year over year [1] - Adjusted gross profit rose 3.4% to $704.7 million, but adjusted gross margin contracted by almost 70 basis points to 66% due to an unfavorable product mix and tariff headwinds [14] - Selling, general and administrative expenses increased by 7.1% to $419.2 million, while research and development expenses rose by 9.8% to $41.4 million [15] - Adjusted operating profit totaled $288 million, reflecting a 9.4% increase from the previous year, with an adjusted operating margin expanding by 110 basis points to 27% [15] Segment Performance - CooperVision (CVI) segment revenues were $709.6 million, up 5% year over year, driven by MyDay contract wins and strong MiSight sales [4][7] - The CVI segment's Toric and multifocal revenues totaled $344.6 million, up 7% year over year, while Sphere and other revenues reached $365 million, up 3% year over year [8] - The CooperSurgical (CSI) segment's revenues totaled $355.6 million, up 4% year over year, with Office and surgical revenues at $214.6 million, up 6% [11][12] Geographic Performance - Americas' revenues totaled $285.1 million, up 5% year over year, while EMEA revenues amounted to $277.1 million, up 8% year over year [9] - Asia Pacific revenues were $147.4 million, down 1% year over year, primarily due to a 28% decline in China [10] Future Outlook - For fiscal 2026, the company expects revenues in the range of $4,299-$4,338 million, indicating an organic improvement of 3-4% from the prior year [17] - The CVI segment's revenues are projected to be between $2,900-$2,925 million, suggesting an organic improvement of 4.5-5.5% [17] - The CSI segment's revenues are anticipated to be in the range of $1,399-$1,413 million, indicating an organic improvement of 4-5% [18] Growth Catalysts - The company is set to benefit from the global rollout of the MyDay portfolio, expanded private-label wins, and new product launches in 2026 [20] - MiSight is expected to deliver another 20-25% growth, supported by launches in Europe and Japan [20] - The company aims to unlock approximately $50 million in annual savings through AI-driven operational efficiencies [21]

Financial Data and Key Metrics Changes - Consolidated revenues increased by 4.6% year over year, reaching a record of $1.065 billion, with organic growth of 3.4% [9][19] - Non-GAAP earnings per share (EPS) grew by 11% to $1.15, marking the eighth consecutive quarter of beating consensus earnings expectations [7][19] - Free cash flow for Q4 was reported at $150 million, exceeding expectations, with a target of over $2.2 billion in free cash flow from fiscal 2026 to 2028 [7][23] Business Line Data and Key Metrics Changes - CooperVision reported revenue of $710 million, up 4.9% year over year, with organic growth of 3.2% [10][19] - CooperSurgical achieved quarterly revenue of $356 million, up 4% or 3.9% organically, driven by solid execution [14][19] - MyDay lenses showed strong growth, particularly in toric and multifocal categories, while clariti lenses experienced a decline of approximately 2% [10][28] Market Data and Key Metrics Changes - The Americas region grew by 5%, driven by daily silicone hydrogel lenses, while EMEA grew by 3% [11] - Asia-Pacific remained flat, with a significant 28% decline in China attributed to weakness in low-margin e-commerce channels [11][50] - The overall contact lens market is trending towards premium offerings, benefiting the MyDay portfolio [10][11] Company Strategy and Development Direction - The company is focused on consistent market share gains for CooperVision, with an emphasis on the MyDay Premium Daily Silicone Hydrogel Lens portfolio [6][9] - A strategic review has been initiated to explore opportunities for unlocking long-term shareholder value, including potential separation of business units [9][38][79] - The board has authorized an increase in the share repurchase plan to $2 billion, reinforcing the commitment to returning capital to shareholders [8][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal 2026, expecting strong revenue growth driven by MyDay sales and new private label contracts [17][53] - The company anticipates a conservative approach to guidance, particularly in the fertility segment, while remaining optimistic about long-term growth in that market [15][56] - Management highlighted the importance of maintaining fiscal responsibility and not chasing revenues at all costs, particularly in challenging markets like China [50][51] Other Important Information - The company has successfully remediated material weaknesses related to IT controls from fiscal 2024 [24] - Significant cost savings from recent reorganization efforts are expected to enhance profitability and cash flow [20][23] Q&A Session Summary Question: Clariti product line performance - Clariti was down a couple of percent this quarter, approaching $400 million in annualized revenue, with ongoing efforts to reposition the product [27][28] Question: Strategic review timeline and thoughts on separation - A strategic review is underway, with updates expected in the next earnings call, and management's position on potential separation remains unchanged [37][38][41] Question: Market growth assumptions for 2026 - The market is expected to grow at 4%-5%, with pricing power anticipated to remain stable [43][45] Question: Asia-Pacific market dynamics - Asia-Pacific faced challenges due to low-margin e-commerce channels, but management expects less detriment in fiscal 2026 [49][50] Question: Free cash flow outlook - The increase in free cash flow is driven by consistent performance and reduced capital expenditures, with expectations of over $2.2 billion in free cash flow from fiscal 2026 to 2028 [56][59] Question: Product pipeline and innovation - The company is excited about upcoming product launches, including MyDay and MiSight, which are expected to drive growth [90][91]

Financial Data and Key Metrics Changes - Consolidated revenues increased by 4.6% year over year, reaching a record of $1.065 billion, with organic growth of 3.4% [8][18] - Non-GAAP earnings per share (EPS) grew by 11% to $1.15, marking the eighth consecutive quarter of beating consensus earnings expectations [5][18] - Free cash flow for Q4 was strong at $150 million, with a total fiscal year repurchase of nearly $300 million, representing about two-thirds of free cash flow [5][19] Business Line Data and Key Metrics Changes - CooperVision reported revenue of $710 million, up 4.9% year over year, with organic growth of 3.2%, driven by improved availability of MyDay lenses [9][10] - CooperSurgical achieved quarterly revenue of $356 million, up 4% or 3.9% organically, with growth in fertility and surgical segments [14][15] Market Data and Key Metrics Changes - The Americas region grew by 5%, while EMEA grew by 3%, slightly below expectations due to market weakness in some countries [10][14] - Asia-Pacific was flat, primarily due to a 28% decline in China, attributed to weakness in low-margin e-commerce channels [10][12] Company Strategy and Development Direction - The company is focused on delivering consistent market share gains for CooperVision, with an emphasis on the MyDay Premium Daily Silicone Hydrogel Lens portfolio [4][6] - A formal strategic review has been initiated to explore opportunities for unlocking long-term shareholder value, including potential separation of business units [8][31][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal 2026, expecting strong revenue growth driven by MyDay sales and new private label contracts [39][60] - The company anticipates a conservative approach to guidance, particularly in the fertility segment, while remaining optimistic about long-term growth prospects [15][60] Other Important Information - The board authorized an increase in the share repurchase plan to $2 billion, reinforcing the commitment to returning capital to shareholders [6][19] - The company has successfully remediated material weaknesses related to IT controls from fiscal 2024 [24] Q&A Session Summary Question: Clariti product line performance - Clariti was down a couple of percent this quarter, approaching $400 million in annualized revenue, with ongoing efforts to reposition the product line [25][26] Question: Strategic review process - A strategic review is underway, with updates expected in the next earnings call, focusing on driving long-term shareholder value [30][31] Question: Market growth assumptions - The market is expected to grow at 4%-5% in fiscal 2026, with pricing power remaining stable [33][34] Question: Asia-Pacific market dynamics - The company faced challenges in Asia-Pacific, particularly in low-margin e-commerce channels, but expects less detriment in fiscal 2026 [37][38] Question: Free cash flow outlook - The increase in free cash flow is attributed to consistent performance and reduced capital expenditures, with expectations of over $2.2 billion in free cash flow from fiscal 2026 to 2028 [23][42] Question: Paragard product expectations - Guidance for Paragard includes conservatism due to potential competitive launches, with expectations for flat to low single-digit growth [55] Question: Pipeline and product launches - The company is excited about upcoming product launches, including MyDay and MiSight, which are expected to drive growth [58][59]

Core Insights - The Cooper Companies, Inc. (COO) is set to release its fourth-quarter fiscal 2025 results on December 14, with expectations of revenue at $1.06 billion and earnings at $1.11 per share, reflecting a 4.1% revenue increase and a 6.7% earnings improvement year-over-year [1][2]. Group 1: Financial Estimates - The Zacks Consensus Estimate for revenues is $1.06 billion, indicating a 4.1% increase from the previous year [2]. - The consensus estimate for earnings is $1.11 per share, implying a 6.7% improvement from the prior-year period [2]. - Cooper Companies expects total revenues to be in the range of $1.049-$1.069 billion, suggesting 2-4% organic growth during the fourth quarter [2]. Group 2: Segment Performance - Cooper Companies reports revenues under two main segments: CooperVision (CVI) and CooperSurgical (CSI), both of which have shown strength in recent quarters [3]. - CVI is expected to benefit from rising demand for contact lenses, particularly MyDAY lenses, with projected sales between $700-$713 million, reflecting 2-4% organic growth [5][9]. - CSI's revenue growth is anticipated to be limited by weaker fertility and PARAGARD demand, with expected sales in the range of $350-$356 million, indicating 2-4% organic growth [11][13]. Group 3: Market Trends and Drivers - Strong consumption trends and a shift towards silicone hydrogel lenses are likely to have driven CVI sales, alongside continued demand for toric and multifocal products [4]. - The demand for MyDAY lenses has been robust, with the company resolving manufacturing constraints, allowing for full sales capacity [6]. - The Biofinity brand and MiSight lenses are also expected to contribute to strong growth, supported by increased fitting activity [8]. Group 4: Challenges and Weaknesses - Despite the overall positive trends, the demand for MyDAY may negatively impact the adoption of the lower-priced Clariti lens brand [9]. - The fertility business within CSI is showing signs of weakness, with clinics managing cash conservatively and delaying capital purchases, which may further pressure revenue [12].

Core Viewpoint - The Cooper Companies reported a mixed performance in its Q3 fiscal 2025 earnings, with adjusted earnings per share beating estimates but revenues falling short, leading to a lowered sales outlook for the fiscal year [3][4][15]. Financial Performance - Adjusted earnings per share for Q3 fiscal 2025 was $1.10, a 15% increase year over year, surpassing the Zacks Consensus Estimate of $1.07 by 2.8% [3]. - Total revenues reached $1.06 billion, reflecting a 6% year-over-year increase but missing the Zacks Consensus Estimate by 0.5% [4]. - The adjusted gross profit rose 6.8% to $713.4 million, with an adjusted gross margin of 67%, an increase of nearly 100 basis points [12]. Segment Performance - The CooperVision (CVI) segment generated revenues of $718.4 million, up 6% year over year, driven by strong sales in MyDAY and MiSight lenses [5]. - The CooperSurgical (CSI) segment reported revenues of $341.9 million, a 4% increase on a reported basis, with Office and surgical revenues growing 3% to $204.8 million [8][10]. Geographic Performance - Americas revenues totaled $286 million, up 2% year over year, while EMEA revenues increased by 14% to $292.1 million [7]. - Asia Pacific revenues were $140.3 million, up 1% year over year but down 5% organically due to weakness in Clariti sales [8]. Guidance and Outlook - The company revised its fiscal 2025 revenue guidance to a range of $4,076-$4,096 million, indicating an organic improvement of 4-4.5% [15]. - Adjusted earnings per share for the fiscal year is expected to be in the range of $4.08-$4.12, slightly up from previous estimates [16]. Market Reaction - Following the earnings release, there has been a downward trend in estimates for the stock, with a current Zacks Rank of 3 (Hold) indicating an expectation of in-line returns in the coming months [17][20].

Core Insights - The Cooper Companies, Inc. (COO) is experiencing growth driven by CooperVision's premium lens migration and MiSight's leadership in myopia management, alongside CooperSurgical's women's health and fertility portfolio [1][4][5] - Despite long-term growth opportunities, near-term performance is challenged by channel volatility, private-label transition risks, softness in the Asia-Pacific region, and tariff/foreign exchange pressures [1][10][11] Financial Performance - COO's shares have declined by 27.5% year-to-date, contrasting with a 2.8% decline in the industry and a 14.4% increase in the S&P 500 Index [2] - The company has a market capitalization of $13.55 billion, with an estimated bottom line improvement of 9.3% over the next five years [2] - COO's earnings have beaten estimates in three of the last four quarters, with an average surprise of 2.51% [2] Growth Drivers - Premium product migration is a key growth driver, with CooperVision shifting users from lower-margin clariti lenses to premium silicone hydrogel daily lenses, particularly the MyDay family, which is experiencing double-digit growth [4] - MiSight, the only FDA-approved daily lens to slow myopia progression, presents a multibillion-dollar growth opportunity, supported by recurring revenues from annual fits and upcoming launches in various regions [5][6] - CooperSurgical diversifies COO's revenue streams by focusing on fertility and women's health, targeting a growing market due to later maternal age and rising IVF demand [7] Challenges - The transition from clariti to MyDay has led to near-term revenue volatility, with organic growth dropping to nearly 2% despite solid demand [8] - Execution risks include potential rollout delays, slower adoption of fitting sets, and capacity strains, which could lead to backorders and affect revenue consistency [9] - The Asia-Pacific region, particularly China, poses growth challenges due to a significant decline in e-commerce sales and increased local competition [10] Outlook - The Zacks Consensus Estimate for fiscal 2025 revenues is $4.09 billion, indicating a growth of 5.1% from the previous year, with adjusted EPS expected to improve by 10.8% [12] - COO anticipates a $4 million tariff impact on fiscal 2025 COGS and a 3% EPS headwind in fiscal 2026 if tariffs remain unchanged, alongside exposure to global supply chain shifts and foreign exchange fluctuations [11]