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COOPER COMPANIES, INC. (COO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered mixed results: revenue rose 6% y/y to $1.060B but came in below expectations; non-GAAP EPS grew 15% y/y to $1.10 on margin expansion, while GAAP EPS dipped to $0.49 .
  • Management raised full‑year non‑GAAP EPS guidance to $4.08–$4.12 (from $4.05–$4.11 in Q2) despite lowering revenue guidance, citing strong operational execution and free cash flow .
  • Key swing factors: softer Clarity orders and weakness in APAC pure-play e‑commerce offsetting strong MyDay momentum and EMEA performance; Q4 guide embeds caution on the pace of conversion from fitting to revenue .
  • Street context: COO beat consensus EPS and slightly missed revenue in Q3; EBITDA tracked below consensus. The company highlighted tariff mitigation and a three‑year ~$2B free cash flow target as medium‑term catalysts .
  • Near‑term stock reaction catalysts: raised EPS guidance and robust FCF in Q3 ($165M), plus MyDay fitting momentum and >30 new private-label MyDay wins set up FY26 trajectory .

What Went Well and What Went Wrong

What Went Well

  • MyDay regained momentum; multifocal grew ~20% and premium MyDay variants (toric, multifocal, Energys) posted double‑digit growth as fitting sets and trial lens activity accelerated globally .
  • EMEA became CVI’s largest region, growing 14% reported (6% organic) with strong MyDay fitting activity and share gains; CSI gained share in EMEA fertility consumables/genomics .
  • Operational execution drove margin expansion and EPS outperformance; non‑GAAP gross margin rose 70 bps to 67% and operating margin reached 26%, enabling a full‑year EPS guidance raise .
  • “We delivered strong margins, double-digit earnings growth, and robust free cash flow… revenues were below expectations but we're raising earnings guidance… expect improving revenue in Q4 and fiscal 2026 driven by MyDay®” — Al White, CEO .

What Went Wrong

  • Clarity softness: customers paused Clarity orders to prioritize MyDay fittings, notably in Japan/Asia-Pac; this unexpectedly pressured near-term revenue .
  • APAC pure‑play e‑commerce weakness (especially China) persisted with pricing aggression from competitors; impact to profitability minimal due to low margins in that channel .
  • CSI fertility cycles in Asia‑Pac remained soft; clinics delayed capital purchases, pressuring CSI growth; PARAGARD volumes declined y/y (offset by pricing) with Q3 a softer quarter .
  • GAAP gross margin and operating margin declined y/y (65% vs 66%, and 17% vs 19%) due to a product line exit at CSI .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$964.7 $1,002.3 $1,060.3
GAAP Diluted EPS ($)$0.52 $0.44 $0.49
Non‑GAAP Diluted EPS ($)$0.92 $0.96 $1.10
GAAP Gross Margin (%)68% 68% 65%
Non‑GAAP Gross Margin (%)69% 68% 67%
GAAP Operating Margin (%)19% 18% 17%
Non‑GAAP Operating Margin (%)25% 25% 26%
Segment Revenue ($USD Millions)Q1 2025Q2 2025Q3 2025
CooperVision (CVI)$646.1 $669.6 $718.4
CooperSurgical (CSI)$318.6 $332.7 $341.9
CVI Category Breakdown (Q3 2025) ($USD Millions)Reported y/yConstant Currency y/yOrganic y/y
Toric & Multifocal $358.8 10% 6% 6%
Sphere, Other $359.6 3% (1)% (1)%
Total $718.4 6% 2% 2%
CVI Geography (Q3 2025) ($USD Millions)Reported y/yConstant Currency y/yOrganic y/y
Americas $286.0 2% 3% 3%
EMEA $292.1 14% 6% 6%
Asia Pacific $140.3 1% (5)% (5)%
CSI Category Breakdown (Q3 2025) ($USD Millions)Reported y/yConstant Currency y/yOrganic y/y
Office & Surgical $204.8 3% 3% 1%
Fertility $137.1 6% 4% 3%
Total $341.9 4% 4% 2%
KPIsQ1 2025Q2 2025Q3 2025
Cash from Operations ($USD Millions)$190.6 $96.2 $261.5
Capital Expenditures ($USD Millions)$89.4 $78.1 $96.9
Free Cash Flow ($USD Millions)$101.2 $18.1 $164.6
Interest Expense ($USD Millions)$26.0 (GAAP) $24.2 (GAAP) $25.4 (GAAP); $24.7 (non‑GAAP)
Share Repurchasesn/a disclosed Q1$40.6M; 537.2k shrs; $75.60 avg $52.1M; 724.3k shrs; $71.97 avg; $163.6M remaining

Guidance Changes

MetricPeriodPrevious Guidance (as of Q2)Current Guidance (Q3)Change
Total Revenue ($USD Millions)FY 2025$4,107–$4,146 $4,076–$4,096 Lowered
CVI Revenue ($USD Millions)FY 2025$2,759–$2,786 $2,734–$2,747 Lowered
CSI Revenue ($USD Millions)FY 2025$1,347–$1,359 $1,343–$1,349 Lowered
Non‑GAAP Diluted EPS ($)FY 2025$4.05–$4.11 $4.08–$4.12 Raised
Total Revenue ($USD Millions)Q4 2025n/a$1,049–$1,069 Newly provided
CVI Revenue ($USD Millions)Q4 2025n/a$700–$713 Newly provided
CSI Revenue ($USD Millions)Q4 2025n/a$350–$356 Newly provided
Non‑GAAP Diluted EPS ($)Q4 2025n/a$1.10–$1.14 Newly provided
Interest Expense ($USD Millions)Q4 2025n/a~$21 Newly provided
Effective Tax Rate (%)Q4 2025n/a14%–15% Newly provided
Free Cash Flow ($USD Millions)Q4 / FY 2025n/aQ4 ≈$100; FY ≈$385 Newly provided

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
MyDay capacity & rolloutCapacity ahead of schedule; expanded toric/multifocal ranges; aggressive launch activity Strong fitting activity; private label discussions; Q4 expected stronger; market growth lowered to 4–6% Constraints resolved; double‑digit growth; >30 new MyDay private‑label wins; heavy fitting/trial lens activity Improving
Clarity dynamicsRedesigned Clarity multifocal; strong feedback; growth Solid; Clarity multifocal double‑digit growth Near‑term softness as accounts prioritize MyDay fittings; margin slightly better than MyDay Near‑term headwind
EMEA6% growth; strong execution Healthy; CVI EMEA +6% organic EMEA reported +14%; now largest CVI region; strong MyDay fitting Strengthening
APAC / ChinaCVI decline in China; ~<5% of consolidated rev.; plans to fix Pure‑play e‑commerce weakness; pricing pressure; low margin impact Continued weakness, esp. e‑commerce; Clarity down; cautious Q4 guide Mixed/weak
Tariffs/pricingMinimal impact then; market pricing 2–3% globally FY25 ~$4M COGS; FY26 ~3% EPS headwind pre‑mitigation; evaluating price actions FY26 tariff impact ~ $24M lower than prior assumptions; plan to offset via OpEx efficiency Manageable with mitigation
Free Cash FlowFCF $101M; FY25 guide $350–$400M Seasonal low Q2 ($18M); H2 to improve Q3 FCF $165M; ~ $2B FCF over next three fiscal years Strengthening
FertilityExpect rebound to high single/double digit after Q1 blip Lower growth assumptions; Asia‑Pac cycles soft; clinics delaying capex Softness persists; CSI guides 2–4% organic in Q4; long‑term bullish Softer near term
PARAGARDGrowth driven by price; competitive dynamics monitored Strong early year on buy‑in; mid‑teens decline expected in Q3; flattish Q4 10% decline in Q3; expect modest Q4 growth; volumes down offset by pricing Volumes declining; pricing offsets
IT/efficiency/AI mentionIT upgrades; back‑office harmonization; margin leverage Efficiency gains driving margins; considering tariff mitigation Organization-wide efficiency review; restructuring actions expected; leverage OpEx to offset GM headwinds Cost discipline increasing

Management Commentary

  • Strategic focus: “We expect operating margin expansion as we lever prior investment activity” — CEO .
  • Product positioning: “MyDay Multifocal grew 20%… full family has considerable upside as we expand availability and deepen penetration” — CEO .
  • Near‑term caution: “We’re guiding to 2%–4% organic growth [CVI] to avoid being overly optimistic about the ramp of MyDay” — CEO .
  • Capital allocation: “We expect to generate approximately $2,000,000,000 in free cash flow over the next three fiscal years” — CFO .
  • Tariffs: “We’ve begun implementing mitigation strategies… impact approximately $24,000,000 lower than previously anticipated… more than offset through disciplined operating expense management” — CFO .

Q&A Highlights

  • Clarity vs. MyDay cannibalization: In several APAC markets (e.g., Japan) accounts paused Clarity to prioritize MyDay fittings; Clarity margins are slightly better than MyDay .
  • APAC e‑commerce: Ongoing competitive pricing pressure, especially China; low margin impact but revenue headwind .
  • Guidance conservatism: Q4 modeled similar to Q3 to avoid over‑optimism about fitting conversion; interest expense ~$21M; tax rate 14–15% .
  • Free cash flow trajectory: Stair‑step improvements with CapEx normalization post MyDay capacity build; ~$2B over three years .
  • CSI dynamics: Fertility soft in APAC; clinics delaying equipment; PARAGARD volume declines offset by pricing; competitive product still not launched .

Estimates Context

Consensus vs ActualQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD)980.9M*995.2M*1,063.4M*
Revenue Actual ($USD)964.7M 1,002.3M 1,060.3M
Primary EPS Consensus Mean ($)0.9115*0.9292*1.0676*
Non‑GAAP EPS Actual ($)0.92 0.96 1.10
EBITDA Consensus Mean ($USD)290.5M*293.1M*324.2M*
EBITDA Actual ($USD)273.0M*277.4M*271.1M*

Values retrieved from S&P Global.
Interpretation: Q3 EPS beat; revenue slight miss; EBITDA below consensus. Management cited margin execution and cost discipline for EPS strength amid near‑term revenue headwinds .

Key Takeaways for Investors

  • Non‑GAAP EPS beat and FY EPS guidance raised despite revenue headwinds — margin discipline and lower interest/tax support earnings resilience .
  • MyDay capacity constraints are resolved; fitting/trial activity and >30 private‑label wins should convert into revenue over coming quarters; Q4 guide prudently cautious on timing .
  • Clarity softness and APAC e‑commerce pricing remain near‑term drags; impact to profitability limited; watch Japan/China normalization .
  • EMEA momentum is notable with CVI leadership and robust MyDay adoption; supports share gains into FY26 .
  • CSI fertility cycles soft; clinics delaying capex; long‑term secular drivers intact; near‑term growth modest (Q4 CSI guide 2–4% organic) .
  • Free cash flow inflecting: Q3 $165M; three‑year ~$2B target implies deleveraging and buyback capacity, supporting equity value .
  • Tariff headwind managed via mitigation and OpEx efficiency; potential incremental industry pricing actions could provide offset .