COO Q3 2025: MyDay Capacity Unlocked; Trial Sets Up 300%
- Accelerated MyDay uptake: Management highlighted that previous manufacturing constraints on MyDay have been largely resolved, resulting in over 30 new MyDay private label contracts, nearly 50% more fitting sets, and a 300% increase in trial sets. This improved capacity positions the company to capture significant incremental revenue as demand converts into sales.
- Improved operational efficiency and margins: The company delivered strong free cash flow of $165 million in Q3 2025 and is executing on cost management initiatives with expanding operating margins and lower relative CapEx. These factors support a healthier balance sheet and potential for sustainable earnings growth.
- Resilient market fundamentals with a favorable product transition: Despite short‐term headwinds from declining Clarity orders, management is repositioning Clarity and capitalizing on premium MyDay’s momentum to eventually align or exceed the mid-single digit growth in the overall contact lens market. This transition supports the bull case for market share gains and improved underlying performance.
- Delayed Clarity Conversion: The company experienced weaker-than-expected Clarity orders as customers shifted toward MyDay—with significant fitting sets and trial lenses activity not yet fully converting into revenue. This delay in the transition creates uncertainty around near-term revenue continuity and margin pressure.
- Weak Asia Pac E-commerce and Pricing Pressures: There are ongoing challenges in the Asia Pac pure play e-commerce channel, where aggressive competitor pricing and volume declines—especially in China and parts of Asia—could continue to stress margins and overall revenue.
- Uncertain Revenue Guidance and Market Softness: Guidance for the contact lens business has been adjusted to account for potential timing delays in revenue from MyDay activities and persistent distributor inventory issues. Such conservative estimates, combined with potential consumer softness and pricing moderation globally, add to the bear-case narrative.
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Accelerated MyDay Uptake | Consistently highlighted in Q2, Q1 and Q4 2024 with double‐digit growth, increased fitting sets/trials, new product launches | Q3 2025 emphasized strong uptake with MyDay Multifocal up 20%, significant private label contracts, and deepened fitting activity | Steady positive momentum with a faster shift from legacy products; growth remains robust as capacity constraints are resolved |
Manufacturing Capacity Expansion | Previously discussed in Q2, Q1 and Q4 2024 as a key initiative with ongoing capacity investments and early schedule completions | Q3 2025 notes that past capacity constraints have been resolved with completed large CapEx investments supporting future free‐cash flow | Transition from constraint to enabled growth; capacity issues are now largely mitigated, supporting market expansion |
Operational Efficiency and Margin Improvement Initiatives | Q2, Q1 and Q4 2024 calls emphasized efficiency gains from IT and integration activities, disciplined cost management, and improved margins | Q3 2025 reiterated focus on SG&A leverage, productivity initiatives, tariff mitigation, and free cash flow conversion while restructuring | Ongoing improvement with enhanced productivity and strategic cost management; steady evolution towards higher margins and cash flow |
Myopia Management Growth (MiSight and SightGlass Vision) | Q1, Q2 and Q4 2024 consistently reported robust MiSight growth (forecast around 40% growth and strong performance in key markets) with mixed updates on SightGlass Vision | Q3 2025 reported record-setting MiSight performance in EMEA and continued strong momentum, while SightGlass Vision remains pending updates | Continued strong performance in MiSight with a clear strategic focus, although updates on SightGlass Vision remain limited |
Channel Inventory Management and Supply Chain Pressures | Q1, Q2 and Q4 2024 documented ongoing challenges with distributor inventory tightening, seasonal fluctuations, and supply chain constraints impacting growth | Q3 2025 highlighted distributor inventory adjustments (including impacts from Clarity to MyDay transition) and continued supply chain management efforts | Persistent headwinds remain with inventory tightening and supply chain pressures, although resolved manufacturing boosts supply reliability |
Pricing Dynamics (Strong Pricing Power vs. Competitive Pricing Pressures) | Q1, Q2 and Q4 2024 described steady pricing power with modest increases (2%-3%) and limited discounting, balancing legacy product declines with premium pricing | Q3 2025 noted aggressive competitor pricing in certain regions (especially in Asia Pac) but maintained strong pricing where possible (e.g. PARAGARD) | Consistent strong pricing power overall but with emerging competitive pressures in select regions prompting careful pricing strategies |
Regional Market Challenges (Asia Pac, China, and Fertility Markets) | Q1, Q2 and Q4 2024 reported softer growth in Asia Pac (due to capacity constraints and market-specific issues), challenges in China, and cyclic softness in fertility markets influenced by cultural and economic factors | Q3 2025 continues to reveal challenges in Asia Pac and China (e.g. e-commerce weakness, distributor dynamics) and ongoing softness in fertility markets despite long-term fundamentals | Challenges persist regionally with Asia Pac and fertility markets remaining soft, though some normalization is expected in the longer term |
Delayed Clarity Conversion and Product Portfolio Transition | Mentioned indirectly in Q2 (with redesigned Clarity multifocal and legacy product declines) and not explicitly in Q1/Q4 2024 | Q3 2025 explicitly detailed a faster-than-expected switch from Clarity to premium MyDay, impacting Clarity orders globally | A newer focus with more pronounced discussion in Q3 2025; the accelerated transition is both a challenge short term and an opportunity for higher-value sales long term |
Tariff-Related Cost Pressures | Q1 2025 downplayed the impact; Q2 2025 outlined a modest negative impact and mitigation plans; Q4 2024 noted limited exposure due to diversified manufacturing | Q3 2025 discussed tariff pressures with a revised impact (approximately $24 million lower than expected) and active mitigation through cost efficiencies | An increased focus on managing tariff costs, with proactive mitigation strategies reducing the anticipated negative impact |
Competitive Pressures and Market Share Challenges (e.g., PARAGARD and CooperVision) | Q1, Q2 and Q4 2024 presented challenges such as new competitor approvals for PARAGARD and intensified competition in the contact lens market; strategies focused on pricing and private label stability | Q3 2025 highlighted competitive pressures with volume declines in PARAGARD offset by price increases and a significant shift from Clarity to MyDay affecting CooperVision market share | Competitive pressures persist with nuanced challenges—PARAGARD faces volume headwinds but benefits from pricing, while CooperVision navigates product transitions amid shifting market share |
Uncertain Revenue Guidance and Overall Market Softness | Q1, Q2 and Q4 2024 cited softer starts, variable performance in China, channel inventory tightening, and cautious outlooks with adjusted revenue guidance | Q3 2025 described the impact of lower Clarity orders, regional softness (especially in Asia Pac), and conservative Q4 guidance (2%-4% organic growth) | Uncertainty remains as market softness and inventory adjustments temper near-term revenue expectations—even as underlying demand remains sound |
-
CVI Growth
Q: Future CVI growth drivers?
A: Management explained that the core CVI portfolio is expected to grow at market pace while MiSight contributes an extra 100 basis points to overall growth, positioning the business to eventually outperform the market. -
Margin Outlook
Q: How are margins expected to evolve?
A: They expect operating margins to improve modestly despite tariff headwinds and mix shifts, with a focus on efficient expense management and disciplined cost control to support low double-digit operating income growth. -
Free Cash Flow
Q: What underpins the $2B free cash flow target?
A: Management detailed that lower CapEx levels combined with a stair‐step improvement in operating margins will drive free cash flow to reach $2,000,000,000 over the next three years. -
Performance Gap
Q: What explains the performance gap since the last call?
A: The gap was attributed to unanticipated challenges in the pure play e‑commerce channel in Asia Pac and softer-than-expected Clarity orders, which were factored into updated guidance. -
Pricing Strategy
Q: What is the global pricing outlook?
A: Globally, modest pricing increases (around 1%) are expected, with stronger pricing maintained in The Americas while competitive pressures in Asia Pac limit gains, reflecting a cautious yet balanced strategy. -
MiSight/CapEx
Q: How will MiSight and CapEx evolve next year?
A: Management is confident that while MiSight growth remains solid, CapEx spending will normalize as a percentage of revenue, allowing more cash to be funneled into free cash flow improvements. -
Product Dynamics
Q: Why is MyDay affecting Clarity?
A: They noted that in certain markets, particularly where the products overlap, optometrists are holding back Clarity orders in favor of fitting with MyDay, impacting near-term Clarity revenue but in a way that supports long‑term product repositioning. -
Fertility Outlook
Q: What is driving a rebound in fertility?
A: Despite near-term softness, improvements in genomics and consumables along with easing cycle delays in Asia Pac signal a gradual recovery in fertility, setting a positive tone for future growth. -
PARAGARD Impact
Q: How is the PARAGARD business performing?
A: Volumes for PARAGARD remain under pressure due to overall market softness in non‑hormonal IUDs, though pricing actions have helped mitigate revenue declines, with modest growth anticipated in Q4. -
Restructuring & MiSight
Q: What’s behind the restructuring review?
A: They are reexamining the organizational structure – particularly in IT and G&A – after years of acquisitions, aiming to drive long‑term efficiency and bolster the rollout of MyDay, with no immediate charges expected. -
Private Label & TBI
Q: What is the potential from private label wins and TBI promotions?
A: New private label agreements, primarily for MyDay, have been inked, and early results from trial lens promotions in select markets are promising, though timing remains a key factor. -
CVI Reacceleration
Q: How will CVI reaccelerate down the line?
A: With improved MyDay capacity and increased fitting and trial set activity, the outlook is that the overall CVI segment will start to reaccelerate as capacity issues resolve and orders convert into revenue. -
Sales Feedback
Q: How was the Clarity vs. MyDay dynamic identified?
A: Direct feedback from large accounts revealed that when order patterns for Clarity were lower than expected, customers intentionally shifted to MyDay fittings, confirming the market’s evolving preference.
Research analysts covering COOPER COMPANIES.