The Cooper Companies, Inc. (Nasdaq: COO) Q3 2025 Earnings Call | 08/28/2025

The Cooper Companies, Inc. reported Q3 2025 results, with consolidated revenues up 5.7% year-over-year (2% organic) to $1.06 billion, below expectations due to challenges in CooperVision's Clarity lens and Asia-Pacific e-commerce. Non-GAAP EPS grew 15% to $1.10, supported by strong margins and $165 million in free cash flow. The company repurchased $52 million in stock.

CooperVision (CVI):

• Revenue: $718 million, up 6.3% reported (2.4% organic), driven by EMEA strength (14% reported, 6% organic), but offset by Clarity softness and Asia-Pacific e-commerce weakness (down 5% organic).
• Key Products:
  • MyDay: Achieved double-digit growth, with strong fitting activity and trial lens rollouts signaling future growth. Manufacturing constraints resolved, enabling global expansion and new private label contracts.
  • Clarity: Declined double digits, particularly in Asia-Pacific and Japan, as customers shifted to MyDay, though new launches like the 3-add multifocal in the U.S. showed promise.
  • MySight: Grew 23%, with record EMEA performance and upcoming launches in Japan and MyDay MySight in 2026. On track for $100 million in sales in 2025.
• Market Outlook: Contact lens market grew 4% in Q1/Q2 2025, expected to remain mid-single-digit. CVI anticipates at least market-level growth in 2026, driven by MyDay and MySight.

CooperSurgical (CSI):

• Revenue: $342 million, up 4.5% reported (2% organic). Fertility grew 6% (3% organic), led by EMEA genomics and consumables, despite Asia-Pacific cycle softness. Office and surgical grew 3% (1% organic), with strong labor/delivery and surgical device performance, offset by a 10% Paragard decline.
• Outlook: Expects 2-4% organic growth in Q4, with fertility rebound anticipated in 2026 as Asia-Pacific cycles recover and clinics resume investments.

Financial Highlights:

• Margins: Gross margin improved to 67.3% (+70 bps), driven by efficiency and mix. Operating margin rose to 26.1%.
• Guidance: Q4 revenue expected at $1.049-$1.069 billion (2-4% organic), with non-GAAP EPS of $1.10-$1.14. Full-year free cash flow projected at $385 million, with $2 billion expected over the next three years due to lower CapEx and efficiency initiatives.
• Tariffs: Expected $24 million impact in 2026, offset by cost management and productivity initiatives.
• Capital Deployment: Focus on debt reduction, share repurchases ($164 million remaining), and growth investments.

Challenges:

• Clarity orders impacted by MyDay fitting activity, particularly in Asia-Pacific.
• Asia-Pacific e-commerce weakness due to aggressive competitor pricing.
• Fertility market softness from delayed clinic investments.

2026 Outlook:

• CVI expects to outpace market growth, driven by MyDay momentum, new launches, and contract wins.
• CSI anticipates recovery in fertility, supported by improving market conditions.
• Strong free cash flow and operating margin expansion expected from efficiency initiatives and completed CapEx cycles.

Q&A Highlights:

• Clarity vs. MyDay: Shift to MyDay in Asia-Pacific was unexpected, with Clarity repositioning underway to target value-driven channels.
• Market Growth: Contact lens market expected to grow 4-6% in 2026, supported by myopia trends and demand for daily silicone hydrogel lenses.
• Restructuring: Ongoing efficiency review across CVI and CSI to leverage IT upgrades and integration, with details forthcoming.
• MySight: Strong in EMEA, slower in the Americas due to promotional transitions, with Japan launch in 2026 expected to boost growth.