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].

Financial Data and Key Metrics Changes - Q3 consolidated revenues increased by 5.7% year over year, reaching $1,060 million, with organic growth of 2% [7][26] - Non-GAAP earnings per share (EPS) grew by 15% to $1.1, with free cash flow reported at $165 million [7][28] - Gross margin improved by 70 basis points to 67.3%, driven by efficiency gains and favorable foreign exchange [26] Business Line Data and Key Metrics Changes - CooperVision reported revenues of $718 million, reflecting a 6.3% increase and 2.4% organic growth, although results were below expectations due to declines in Clarity and e-commerce weakness in Asia Pacific [8][10] - CooperSurgical posted revenues of $342 million, up 4.5% or 2% organically, with fertility revenues growing 6% [20][21] Market Data and Key Metrics Changes - EMEA region grew by 14% or 6% organically, becoming CooperVision's largest revenue region globally [10] - The Americas grew by 2% or 3% organically, while Asia Pacific saw a 1% increase but a 5% organic decline [10] Company Strategy and Development Direction - The company aims to leverage the strong momentum of MyDay and upcoming product launches to outpace the contact lens market and gain market share [24] - Focus on operational excellence and disciplined cost management to support sustainable revenue growth [7][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from Clarity and e-commerce challenges in Asia Pacific but expressed confidence in the long-term outlook for both CooperVision and CooperSurgical [20][24] - The company expects to generate approximately $2 billion in free cash flow over the next three fiscal years, with a focus on debt reduction and share repurchases [30][31] Other Important Information - The company is implementing mitigation strategies for tariffs, expecting a $24 million lower impact than previously anticipated [30] - Significant progress has been made in IT upgrades and organizational efficiency initiatives [30][71] Q&A Session Summary Question: How does the core CVI portfolio compare to the market for fiscal 2026? - Management indicated that the core portfolio is expected to be at least in line with the market, with additional growth from MiSight [37][38] Question: Why is MyDay's success impacting Clarity? - Management noted that in some markets, Clarity and MyDay were viewed similarly, leading to a shift in customer preference towards MyDay [41][42] Question: What is the outlook for the contact lens market? - Management acknowledged a slowdown in market growth but remains optimistic about future performance driven by silicone hydrogel lenses and multifocal products [19][50] Question: What are the expectations for the fertility market? - Management expects a rebound in the fertility market as clinics begin investing again, despite near-term pressures [20][110] Question: What is the situation with PARAGARD? - Management reported declining volumes for PARAGARD but offsetting revenue through pricing strategies [114][116]

Financial Data and Key Metrics Changes - Q3 consolidated revenues increased by 5.7% year over year, reaching $1,060 million, with organic growth of 2% [5][25] - Non-GAAP earnings per share (EPS) grew by 15% year over year to $1.1, with free cash flow reported at $165 million [5][28] - Gross margin improved by 70 basis points to 67.3%, driven by efficiency gains and favorable foreign exchange [25] Business Line Data and Key Metrics Changes - CooperVision reported revenues of $718 million, reflecting a 6.3% increase and 2.4% organic growth, although results were below expectations due to declines in Clarity orders [6][9] - CooperSurgical posted revenues of $342 million, up 4.5% year over year, with fertility revenues growing 6% [20][21] - MyDay lenses showed double-digit growth, with MyDay Multifocal growing 20% [11][13] Market Data and Key Metrics Changes - EMEA region grew 14% or 6% organically, becoming CooperVision's largest revenue region globally [9] - The Americas grew 2% or 3% organically, while Asia Pac grew 1% but declined 5% organically due to Clarity pressure [9][10] - The overall contact lens market is expected to continue mid-single-digit growth, driven by a shift towards silicone hydrogel lenses [19] Company Strategy and Development Direction - The company aims to leverage strong MyDay momentum and upcoming product launches to gain market share [23][30] - Focus on operational excellence and disciplined cost management to support sustainable revenue growth [5][28] - Ongoing restructuring efforts to enhance efficiency and leverage IT upgrades [73][74] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the contact lens market, particularly in Asia Pac, but remains optimistic about long-term growth in fertility and contact lenses [20][50] - Guidance for Q4 indicates expected organic growth of 2% to 4% for both CooperVision and CooperSurgical, factoring in potential headwinds [22][23] - Confidence in achieving $2 billion in free cash flow over the next three fiscal years, supported by improved operating margins [30][102] Other Important Information - The company repurchased $52 million worth of stock during the quarter, with approximately $164 million remaining under the repurchase plan [28] - Tariff impacts are expected to be lower than previously anticipated, with mitigation strategies in place [29][30] Q&A Session Summary Question: How does the core CVI portfolio compare to market growth for fiscal 2026? - Management indicated that the core portfolio has lagged the market but expects to be at least in line with market growth, with additional contributions from MySight [36][40] Question: Why is MyDay's success impacting Clarity? - Management noted that in some markets, Clarity and MyDay were viewed similarly, leading to a shift in orders towards MyDay [41][45] Question: What is the outlook for the contact lens market's growth? - Management acknowledged a slowdown in market growth but remains confident in the long-term fundamentals, including pricing and consumer trends [50][52] Question: What are the drivers for expected Q4 rebound in fertility? - Management highlighted improvements in genomics and consumables, along with anticipated investments from fertility clinics [110][114] Question: What is the situation with PARAGARD and market dynamics? - Management confirmed no new competitive launches but acknowledged declining volumes, offset by pricing strategies [117][119]

Core Viewpoint - The Cooper Companies, Inc. is expected to report strong third-quarter fiscal 2025 results, with anticipated revenue growth of 5.4% year-over-year and earnings per share (EPS) growth of 8.2% [2][10]. Group 1: Financial Performance - The Zacks Consensus Estimate for revenues is $982 million, reflecting a 5.4% increase from the previous year [2]. - The consensus estimate for earnings is 92 cents per share, indicating an 8.2% improvement from the prior-year period [2]. - The company has consistently beaten earnings estimates, with an average surprise of 3.18% over the last four quarters [1]. Group 2: Segment Performance - Cooper Companies operates under two main segments: CooperVision (CVI) and CooperSurgical (CSI), both of which have shown strength recently [3]. - The CVI segment is expected to benefit from rising demand for contact lenses, with projected sales growth of 6-7% in fiscal 2025 [8]. - The CSI segment may face challenges due to weak fertility demand, but growth in minimally invasive surgical devices is expected to partially offset this weakness [11][12]. Group 3: Product Demand and Innovations - The CVI segment has seen solid growth across all geographies, particularly in The Americas, and is expected to continue this trend [5]. - Strong demand for premium brands like MyDay is anticipated to persist, supported by new market availability and expanded product offerings [6]. - The company is also launching new products, such as MyDay Energy in Canada and upgraded Clarity One Day Sphere in Japan, which are expected to contribute to revenue growth [4]. Group 4: Market Trends and Challenges - The overall market for contact lenses is projected to grow by 4-6% in 2025, benefiting Cooper Companies due to its leadership in several categories [5]. - The fertility segment is experiencing a decline, particularly in the Asia-Pacific region, which may impact overall sales [12]. - Despite challenges in the fertility market, the company anticipates continued interest in its PARAGARD product, although sales may decline in the upcoming quarter [13].

Industry Overview - The Zacks Medical - Dental Supplies industry is experiencing weakness due to rising U.S. tariffs on trading partners, particularly China, which are expected to impact sales through 2025 [1] - Demand for elective procedures in the U.S. is declining, affecting sales across various product lines, including CAD/CAM and imaging products [2] - The global dental industry is projected to reach $610.4 billion with a CAGR of 4.5% from 2023 to 2032, indicating long-term growth potential despite current challenges [2] Major Trends - The aging population in the U.S. is a significant driver for the dental equipment market, with 55.8 million people aged 65 and above reported in 2020 [5] - Technological innovations such as CAD/CAM systems and AI diagnostics are enhancing treatment efficacy and expanding product use [6] - There is a growing emphasis on preventive care, leading to increased consumption of preventive dental products [6] - Trends towards minimally invasive and cosmetic dentistry are expanding market segments for specialized dental consumables [7] - Emerging markets, particularly in Asia-Pacific, are experiencing faster growth rates due to rising healthcare expenditure and improved access to care [8] Economic Impact - U.S. tariffs have significantly increased costs on essential imported dental items, with tariffs ranging from 10% to over 50%, leading to higher operational costs for manufacturers and distributors [10] - The industry is gradually shifting supply chains towards domestic production to mitigate tariff exposure, while dental associations are advocating for tariff exemptions [10] Industry Performance - The Zacks Medical Dental Supplies industry has underperformed compared to the broader sector and the S&P 500, with a collective decline of 0.4% over the past year [13] - The industry is currently trading at a forward P/E of 16.05X, lower than the S&P 500's 22.7X and the sector's 18.4X [16] Company Insights - West Pharmaceutical is expected to sustain growth momentum through 2025, with projected revenues between $3.04 billion and $3.06 billion, reflecting an organic growth of 3-3.75% [22] - McKesson is experiencing strong operational momentum, with a projected revenue gain of 13.3% for fiscal 2025 [31] - Cardinal Health anticipates adjusted EPS in the range of $8.05-$8.15 for fiscal 2025, despite facing pricing pressures and inflationary impacts [37] - Cooper Companies expects revenue growth of approximately 5.7% for 2025, supported by strong demand in both CooperVision and CooperSurgical segments [43]

Financial Data and Key Metrics Changes - Consolidated revenues were $1,002 million, up 6% year over year or up 7% organically [7] - Non-GAAP earnings were $0.96, up 14% year over year [24] - Consolidated gross margin was 68%, up from 67.3% [21] - Operating expenses increased 6% but declined as a percentage of revenue to 43.1% [22] Business Line Data and Key Metrics Changes - CooperVision reported revenues of $670 million, up 5% or up 7% organically [7] - CooperSurgical posted revenues of $333 million, up 8% or up 7% organically [14] - Daily silicone hydrogel lenses grew 10%, with Myopia management portfolio growing 19% [8][11] - Fertility revenues were $127 million, up 3% and up 2% organically, but lower than expected due to market softness [15] Market Data and Key Metrics Changes - The Americas grew 8%, EMEA grew 6%, and Asia Pac grew 5% for CooperVision [8] - The contact lens industry grew 4% in calendar Q1, leading to a reduction in growth expectations to 4% to 6% for the year [18][19] - Fertility market growth expectations were reduced to low single digits due to market softness, particularly in Asia Pac [19][41] Company Strategy and Development Direction - The company is focusing on operational improvements and product launches to drive growth [6] - There is a strong emphasis on increasing availability of MyDay and MiSight products in new markets [9][14] - The company is adjusting its revenue guidance to reflect solid Q2 performance and updated market assumptions [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a more complex global operating environment but emphasized strong execution and market share gains [6][20] - There is optimism about long-term growth fundamentals in fertility despite current market softness [16][41] - Management expects organic growth in Q4 to be stronger than Q3, supported by product rollouts and improved fitting activity [25][52] Other Important Information - The company repurchased approximately 537,000 shares for roughly $40.6 million, leaving $215.8 million available under the repurchase plan [24] - Tariffs are expected to have a negative impact of roughly $4 million on the cost of goods this year [26] - Currency fluctuations are anticipated to have a 0.5% headwind to revenues and a 1% headwind to earnings [26] Q&A Session Summary Question: Contact lens end market performance - Management noted that channel inventory pressures are affecting growth rates, but fitting activity remains strong [30][31] Question: Lower market growth assumption for Vision Care - The reduction in guidance is attributed to general market softness rather than specific pricing or volume issues [34][36] Question: Fertility market softness in Asia - Management indicated that the decline in fertility cycles in Asia is partly due to cultural factors and economic pressures [41][42] Question: Changes in consumer behavior regarding contact lens purchases - Management confirmed that consumers are buying shorter supply durations, impacting revenue despite strong fitting activity [46][47] Question: Guidance for Q3 and Q4 - Management expects Q3 results to be below the lower end of guidance, with Q4 anticipated to be at or above the top end [52] Question: Inventory expectations for the rest of the year - Management anticipates continued pressure on inventory levels throughout the year, affecting overall market growth [55][56] Question: Margin expectations moving forward - Management expects continued improvement in margins due to operational efficiencies and prior investment returns [70]