Cooper Companies (COO) Q1 FY26 earnings call: guidance and Q&A

How to reconcile the reported 10% calendar Q4 growth for CVI with the 3.3% organic growth in fiscal Q1, and how is the plan to return to above-market growth progressing?

The 10% calendar Q4 growth was due to shipment timing, specifically a weak November/December 2024 followed by a strong January 2025. For CVI's market share plan, Americas and EMEA are performing well with strong momentum. Asia Pac, particularly Japan's older hydrogel products, is a challenge, but new leadership, increased marketing, and product launches are expected to return the region to growth by Q3 FY26.

“It's literally just a matter of months and shipment of product. So we had, had a weak November and December of 2024, and we had a really strong January of 2025. So just when you comped against that, the way that the shipments worked, it resulted in a really strong calendar Q4 for us.”

asked by Jeffrey Johnson · answered by Albert White

What is the company's exposure to the Middle East for IVF, and how might the conflict impact the business? Also, what drove the strong Q1 margins and is there potential upside from tariff changes?

The Middle East represents about 2% of consolidated sales, with a significant portion in fertility where CooperSurgical is #1. Product access could be challenging if the situation extends. Q1 margins were strong due to durable savings from the reorganization, leveraging prior investments, and disciplined expense scrutiny. The $24 million tariff estimate for FY26 remains unchanged, as a 10% tariff is already factored in, and any changes would have a delayed impact.

“For our first fiscal quarter, consolidated revenue was $1.024 billion, up 6.2% year-over-year and up 2.9% organically. Gross margin was 68.1%, exceeding expectations driven primarily by a lighter mix of low-margin Asia Pac revenue at CooperVision.”

asked by Larry Biegelsen · answered by Albert White

How are current industry pricing dynamics, and can the market absorb more than one price increase per year without negatively affecting demand?

Industry pricing dynamics have calmed and are generally positive, with about 1% of market growth expected from price. This is supported by the launch of innovative, high-quality products (e.g., MyDay MiSight, multifocals, Energys) for which consumers are willing to pay. The only caveat is competitive pricing in some Asia Pac markets. The market can absorb more price increases due to technological advancements.

“I do because of the technology that's coming out. I mean we are launching -- as an industry, we're launching new products, really innovative products. We have some great ones ourselves. I mean there's nothing more innovative in the contact lens industry today, the MyDay MiSight that's launching out there.”

asked by Jason Bednar · answered by Albert White

CVI's 3.3% organic growth was below expectations. What deviated from the guidance given in December, and how did trends progress into February?

The miss was specifically due to unexpected weakness in Japan's legacy hydrogel products in December and January, which was a 'decent hit.' Asia Pac was expected to be flat but declined. While Americas and EMEA performed better than expected, the Japan softness offset these gains. Asia Pac is anticipated to be down for one more quarter (Q2 FY26) before returning to growth in Q3 FY26 due to launch activities.

“Yes. No, you're right, Jon, because we were looking at Asia Pac being essentially flat for the quarter kind of similar to what we did in Q4, and that would have meant CooperVision consolidated growth would have been like 4.3%, something like that. And you're right. It was 3.3%. So that delta was very specific and very targeted, if you will, to what happened in Japan on those legacy products.”

asked by Jonathan Block · answered by Albert White

Can you size the target market for MiSight in Japan, including target practices and market size in dollars?

The product launched in Japan was the traditional MiSight (not MyDay MiSight) due to regulatory approval timelines. Japan has a significant opportunity with an estimated 77% of elementary school children being myopic. It's an ophthalmology-driven market where professionals understand clinical data, leading to strong reception. While difficult to size in dollars, the company is aggressive and expects MiSight to continue growing 20-25% or higher, supported by early positive responses.

“Yes. So just to be clear on that one, like the product that got launched in Japan was just MiSight, the regular MiSight because it took us like 3 years to get regulatory approval on that. So MyDay MiSight is in multiple European countries right now. We just launched it in like Australia, New Zealand, South Africa I think, but Japan is the kind of the traditional, if you will, MiSight.”

asked by Anthony Petrone · answered by Albert White

What R&D opportunities exist to build on the MiSight platform, and what is driving the upside in free cash flow guidance?

Exciting R&D opportunities for MiSight include developing a MyDay MiSight toric lens, a 'MiSight 2' for improved efficacy, and combinations with atropine for non-reacting children. The company is investing significantly in myopia control R&D, expecting 20%+ growth for years. Free cash flow upside is driven by stronger operating performance, better working capital management (improved collections, more efficient inventory building), and lower CapEx, with a slight tailwind from FX.

“There's some really exciting stuff there. I mean, one is that we need to get a MyDay MiSight toric out into the marketplace. That is one of the products that the optical community really wants. So we're doing a lot of work on that right now. That's a positive.”

asked by Steven Lichtman · answered by Albert White

How are G&A savings from the restructuring being realized and reinvested, and where would additional resources be deployed?

The company is actively leveraging G&A savings from the restructuring and IT advancements, including AI adoption, to reinvest in sales and marketing initiatives. This strategy allows for aggressive investment, particularly in areas like MiSight, while still achieving stronger-than-expected earnings. The combination of G&A leverage and targeted sales/marketing spend is working very well.

“I mean we are doing that. We're doing that already. I was talking about how aggressively we're doing that certainly on the MiSight side of things, and we certainly saw that in Q1. That's just putting dollars back into sales and marketing. That's where it's going, so leverage G&A, put dollars into sales and marketing, and we're getting enough savings through all of our work that we're able to do those reinvestments and still put up stronger than -- earnings than people were expecting.”

asked by David Roman · answered by Albert White