The Cooper Companies, Inc. is a global medical device company operating through two main business segments: CooperVision and CooperSurgical. CooperVision focuses on the vision correction market, developing, manufacturing, and marketing a wide range of soft contact lenses, including products like the MiSight 1 day lens, which is FDA-approved for slowing myopia progression in children . CooperSurgical specializes in fertility and women's health, offering products and services such as medical devices, fertility products, cryostorage services, and contraception solutions like the PARAGARD IUD . The company continues to expand its market presence through strategic acquisitions and product innovations in both segments .
- CooperVision - Develops, manufactures, and markets a wide range of soft contact lenses, including spherical, toric, multifocal, and myopia management lenses.
- MiSight 1 day lens - FDA-approved lens designed to slow myopia progression in children.
- MyDay - A product line contributing significantly to the company's revenue.
- Biofinity - Another key product line in the vision correction market.
- CooperSurgical - Focuses on fertility and women's health, offering a diverse portfolio of products and services.
- Fertility Products - Includes medical devices and cryostorage services.
- Contraception Solutions - Features products like the PARAGARD IUD.
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What went well
- MiSight shows strong underlying demand with strong back-to-school fits, indicating robust growth potential despite temporary inventory adjustments by distributors.
- The company is confident in delivering strong results in fiscal '25 and has a history of outperforming guidance, signaling strong management and growth prospects.
- Management demonstrates transparency and proactive management in addressing inventory fluctuations, suggesting they are well-prepared to handle short-term challenges and maintain growth momentum.
What went wrong
- The company experienced unexpected softness in the U.S. and China markets during the fourth fiscal quarter, which persisted into November, potentially indicating slowing demand.
- Paragard sales declined 10% in Q4 due to competitive pressures, and the company expects continued challenges with potential flat or slightly negative growth in fiscal 2025.
- Inventory contraction in MiSight, the company's myopia management product, due to distributors tightening inventory, may lead to fluctuations and volatility in sales.
Q&A Summary
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Margins and Profitability Outlook
Q: How will margins and profitability look in FY 2025?
A: Management expects gross margin expansion driven by price increases, better freight costs, and improved manufacturing productivity. They are committed to operating margin expansion with 10%-12% constant currency operating income growth. -
FY 2025 Guidance
Q: What is the growth outlook and guidance for FY 2025?
A: The company guides for 6.5%-8.5% growth in CooperVision, continuing to grow faster than the market. They expect to outperform their guidance, as usual. -
Supply Constraints and Capacity Expansion
Q: When will MyDay supply constraints improve?
A: Supply remains tight due to strong demand exceeding capacity. They are adding manufacturing lines but it takes time; they expect improvements through the year and into fiscal 2026 and 2027. -
Market Softness in October
Q: What caused the unexpected softness at quarter-end?
A: There was unexpected softness in the U.S. and China from mid-October into early November, possibly due to hurricanes, but things have now returned to normal. -
Competition and Market Share
Q: How confident are you in outperforming the market in 2025?
A: Management remains confident in growing faster than the market, expecting to continue taking share despite increased competition. -
Pricing Environment and Inflation
Q: Will the favorable pricing environment continue?
A: The contact lens industry will offset inflation impacts with price increases, expecting pricing to offset inflation around 2.5%-3%, and this trend is expected to continue. -
MiSight Growth and Inventory Adjustments
Q: What's the outlook for MiSight growth and recent inventory changes?
A: MiSight is expected to grow around 40% in FY 2025, driven by markets worldwide. Recent inventory tightening by distributors caused some fluctuations, but overall growth remains strong. -
Paragard Performance and Competition
Q: What's impacting Paragard's recent performance and outlook?
A: Paragard revenue was down 10% in Q4, with expectations of flat to slightly down performance in FY 2025 due to competitive pressures. A new competitive product has not been approved yet. -
Fertility Business Growth
Q: How is the fertility business performing and expected to grow?
A: The fertility business showed strong growth across consumables, genomics, donor activity, and capital equipment. The market is expected to grow mid-single digits, with the company aiming for high single-digit growth, supported by favorable trends and potential positive impact from the incoming administration. -
Tariff Exposure and Manufacturing Locations
Q: What's the exposure to potential tariffs and manufacturing locations?
A: They have no manufacturing in China, Mexico, or Canada, so potential tariffs from the new administration are expected to have minimal impact. -
FX Headwinds
Q: How will FX headwinds impact financials in FY 2025?
A: FX creates a 1.5% headwind to revenues and 4% headwind to EPS, impacting revenues evenly throughout the year. -
M&A Environment
Q: Do you expect to continue being active in M&A?
A: The M&A environment is currently very quiet, and while previous acquisitions are performing well, they do not anticipate significant M&A activity in the near term.
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Given the unexpected revenue softness at the end of Q4 and the potential impact of recent price increases, can you provide more detail on how your pricing strategy is affecting consumer buying behavior and what measures you're taking to mitigate any potential negative effects on revenues?
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With competitors accelerating their product launches and expanding their portfolios, how confident are you in your current pipeline and global launch strategy to maintain and grow your market share, and can you elaborate on specific new products or innovations that will differentiate you in fiscal 2025?
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You mentioned that CooperSurgical faced challenges with the Q2 IT system upgrade that impacted operations; can you discuss how these issues affected your financial performance and operational efficiency, and what steps have been implemented to prevent similar disruptions in the future?
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Considering that the recent acquisitions contributing approximately $25 million in annualized revenue are now part of the organic base and the M&A environment is currently quiet, how do you plan to drive growth organically in fiscal 2025, and what strategies are in place to compensate for the reduced contribution from acquisitions?
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While you've indicated minimal exposure to tariffs from manufacturing in China, Mexico, or Canada, how are you assessing and mitigating potential supply chain and geopolitical risks in other regions where you have manufacturing facilities to ensure uninterrupted operations and protect your margins?
Q4 2024 Earnings Call
- Issued Period: Q4 2024
- Guided Period: FY 2025
- Guidance:
- Revenue Guidance:
- CooperVision: $2.733 billion to $2.786 billion, up 6.5% to 8.5% organically .
- CooperSurgical: $1.347 billion to $1.372 billion, up 4% to 6% organically .
- Consolidated Revenues: $4.08 billion to $4.158 billion, up roughly 6% to 8% organically .
- Operating Income Growth: Expected to be roughly 10% to 12% in constant currency .
- Interest Expense: Expected to be roughly $90 million, assuming no interest rate changes by the Fed .
- Effective Tax Rate: Expected to be slightly over 15% .
- Non-GAAP EPS: Expected to be in the range of $3.92 to $4.02 .
- Currency Impact: Expecting a headwind of roughly 1.5% to revenues and roughly 4% to earnings .
- Free Cash Flow: Expected to be in the range of $350 million to $400 million .
- CapEx: Expected to be around 11% of revenue, approximately $450 million .
- Revenue Guidance:
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: FY 2024
- Guidance:
- Consolidated Revenue: $3.89 billion to $3.91 billion, representing an increase of 8% to 8.5% organically .
- CooperVision Revenue: $2.61 billion to $2.62 billion, representing an increase of 9% to 9.5% organically .
- CooperSurgical Revenue: $1.286 billion to $1.294 billion, representing an increase of 5.5% to 6.5% organically .
- Interest Expense: Expected to be roughly $109 million, assuming no interest rate changes by the Federal Reserve for the remainder of the fiscal year .
- Effective Tax Rate: Expected to be slightly over 14% .
- Non-GAAP EPS: Expected to be in the range of $3.64 to $3.67, representing an increase of 14% to 15% .
- Fiscal Q4 Expectations:
- CooperVision Growth: Expected to grow 8% to 10% organically .
- CooperSurgical Growth: Expected to grow 6% to 8% organically .
- Non-GAAP EPS: Expected to be in the range of $0.98 to $1.01 .
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: FY 2024
- Guidance:
- Full Year Revenue Guidance:
- Consolidated revenues: $3.86 billion to $3.9 billion, up 7.5% to 8.5% organically .
- CooperVision revenues: $2.59 billion to $2.61 billion, up 8.5% to 9.5% organically .
- CooperSurgical revenues: $1.27 billion to $1.29 billion, with organic revenue growth unchanged at 5% to 7% .
- Interest Expense: Expected to be roughly $108 million, assuming no interest rate changes for the remainder of the fiscal year .
- Effective Tax Rate: Forecasted full-year effective tax rate of 14% .
- Non-GAAP EPS Guidance: Expected to be in the range of $3.54 to $3.60, up 11% to 13% .
- Currency Impact: The impact from foreign exchange (FX) is expected to be roughly $0.02 worse in the back half of the year compared to the previous quarter's guidance .
- Quarterly EPS Expectation: Non-GAAP EPS is anticipated to be higher in Q4 than in Q3 .
- Full Year Revenue Guidance:
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: FY 2024
- Guidance:
- Full Year Consolidated Revenues: $3.85 billion to $3.9 billion, representing an organic growth of 7% to 8% .
- CooperVision Revenue Guidance: Organic revenue growth is expected to be 8% to 9%, equating to $2.57 billion to $2.6 billion .
- CooperSurgical Revenue Guidance: Organic revenue growth is expected to be 5% to 7%, equating to $1.27 billion to $1.29 billion .
- Non-GAAP EPS Guidance: Expected to be in the range of $3.50 to $3.58, representing a year-over-year increase of 9% to 12%, or 15% to 17% in constant currency .
- Interest Expense: Assumed to be roughly $108 million .
- Effective Tax Rate: Expected to be roughly 14.5% .
- Currency Impact: The full-year impact is expected to be roughly a negative 1% to revenues and a negative 5% to earnings .
Competitors mentioned in the company's latest 10K filing.
- Johnson & Johnson Vision Care, Inc. - Competitor in the worldwide contact lens market, particularly in the spherical, toric, and multifocal lens categories .
- Alcon Inc. - Competitor in the worldwide contact lens market, particularly in the spherical, toric, and multifocal lens categories .
- Bausch + Lomb - Competitor in the worldwide contact lens market, particularly in the spherical, toric, and multifocal lens categories .
- Vitrolife Group - Competitor in the fertility market .
- FujiFilm-Irvine Scientific - Competitor in the fertility market .
- Hamilton Thorne - Competitor in the fertility market .
- Fairfax Cryobank and Fairfax EggBank - Competitors in the fertility market .
- ViaCord, a division of Revvity - Competitor in the stem cell storage field in the United States .
- Bayer - Competitor with hormonal IUDs .
- AbbVie - Competitor with hormonal IUDs .
- Organon - Competitor with Long Acting Reversible Contraceptives .
- Medtronic - Competitor with medical device products .
- Hologic - Competitor with medical device products .
Recent developments and announcements about COO.
Financial Reporting
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Fourth Quarter 2024 Revenue: The company reported revenue of $1,018.4 million, marking a 10% increase from the previous year, or 7% organically. The fiscal year 2024 revenue was $3.9 billion, up 8% both reported and organically .
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Earnings Per Share (EPS): The GAAP diluted EPS for the fourth quarter was $0.58, a 38% increase from the previous year. For the full fiscal year, the GAAP diluted EPS was $1.96, up 33%. The non-GAAP diluted EPS for the fourth quarter was $1.04, up 19%, and for the fiscal year, it was $3.69, up 15% .
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Operating Margins: The operating margin for the fourth quarter was 19%, up from 15% in the previous year, driven by SG&A expense leverage and stronger gross margins. On a non-GAAP basis, the operating margin was 26%, up from 24% last year .
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CooperVision Revenue: The revenue for CooperVision was $676.4 million, up 9% from the previous year, with a constant currency growth of 8%. The revenue growth was consistent across different product categories and geographies .
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CooperSurgical Revenue: The revenue for CooperSurgical was $342.0 million, up 12% from the previous year, with a constant currency growth of 12% and organic growth of 5% .
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Free Cash Flow: The company generated a free cash flow of $128.2 million for the fourth quarter, after accounting for capital expenditures of $139.9 million .
Earnings Call
Cooper Companies recently held their Fourth Quarter and Full Year 2024 Earnings Conference Call, where they reported record revenues of $3.9 billion for fiscal 2024, with both CooperVision and CooperSurgical achieving record revenues . For the fourth quarter, consolidated revenues were $1.018 billion, marking a 10% increase year-over-year . CooperVision's quarterly revenues were $676 million, up 9%, driven by strong performance in silicone hydrogel dailies and multifocals . CooperSurgical reported revenues of $342 million, up 12%, with significant growth in fertility services .
Looking forward to fiscal 2025, Cooper Companies expects the contact lens market to grow by 5% to 7% in constant currency, with CooperVision aiming to grow by 6.5% to 8.5% . They anticipate price increases to offset inflation, contributing to about one-third of this growth . CooperSurgical is expected to see mid-single-digit organic growth, with fertility services projected to grow in the high single digits .
Management highlighted strategic initiatives such as expanding manufacturing capacity, optimizing technology investments, and launching new products . They also discussed the sustainability of the pricing environment in the contact lens market, expecting it to offset inflationary pressures .
During the Q&A session, analysts inquired about consumer price sensitivity and the adoption of daily silicone hydrogel lenses, with management noting consistent growth across their product portfolio . They also addressed questions about the competitive landscape and the impact of new product launches on market share .
Overall, Cooper Companies is focused on leveraging their market-leading products and improving operational efficiencies to drive growth in fiscal 2025 .
Earnings Report
CooperCompanies (Nasdaq: COO) has released its financial results for the fiscal fourth quarter and full year ended October 31, 2024. Here are the key highlights from the earnings release:
Al White, Cooper's President and CEO, expressed optimism about the company's performance, highlighting record revenues and non-GAAP EPS, and expressed confidence in continued success in fiscal 2025 .
These results indicate strong financial performance and growth across CooperCompanies' business units, driven by strategic initiatives and market conditions.