CooperVision's Q4 2025: Contradictions Emerge on Growth Expectations, Contact Lens Market Projections, MyDay Margins, Fertility Sales, and Inventory Dynamics

Date of Call: December 4, 2025

Financials Results

• Revenue: $1.065 billion, up 4.6% YOY (3.4% organic)
• EPS: Non-GAAP $1.15, up 11% YOY
• Gross Margin: 66.2%, declined marginally year-over-year due to tariffs and product mix
• Operating Margin: 27% operating margin; operating income up 9% year-over-year

Guidance:

• Q1 consolidated revenue $1.019B–$1.03B (~3%–4% organic); CooperVision Q1 $693M–$700M (3.5%–4.5% organic); CooperSurgical Q1 $327M–$330M (2%–3% organic).
• FY2026 consolidated revenue $4.3B–$4.34B (4.5%–5.5% organic); CooperVision FY $2.9B–$2.925B (4.5%–5.5%); CooperSurgical FY $1.4B–$1.413B (4%–5%).
• FY2026 non‑GAAP EPS $4.45–$4.60; Q1 EPS $1.02–$1.04.
• FY2026 free cash flow $575M–$625M; FY2026–2028 free cash flow > $2.2B.
• Interest expense ~ $85M FY26 (Q1 ~$24M); effective tax rate 15%–16%.

Business Commentary:

• Revenue Growth and Strategic Priorities:
• Cooper Companies reported consolidated revenue of $1.065 billion for Q4, up 4.6% year-over-year or 3.4% organically.

• The growth was driven by the execution of CooperVision's global rollout of MyDay premium daily silicone hydrogel lenses and private label contract wins, despite market softness in certain regions.

• Operating Margin Improvement:

• CooperVision's revenue was $710 million, up 4.9% or 3.2% organically, with a focus on daily silicone hydrogel lenses and private label deals.

• The company's operating margins improved, and non-GAAP earnings grew by 11%, attributed to significant cost savings from a recent reorganization and increased efficiency.

• Free Cash Flow and Shareholder Returns:

• Cooper Companies achieved free cash flow of $150 million in Q4, beating expectations, and repurchased $197.3 million of stock.
• The company maintains a strategic focus on returning capital to shareholders, with nearly $300 million of stock repurchases in the fiscal year, and aims to allocate a similar percentage to stock buybacks for fiscal 2026.

• Strategic Review and Governance Changes:
• Cooper Companies initiated a formal strategic review to explore opportunities for unlocking long-term shareholder value, which includes evaluating strategic alternatives for its business units.
• A board leadership transition was announced, with Colleen Jay replacing Bob Weiss as the independent Chair, aiming to ensure alignment of leadership incentives with shareholder returns.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted the eighth consecutive quarter beating consensus, non‑GAAP earnings up 11% to $1.15, Q4 free cash flow $150M and a raised FY26–28 FCF target to >$2.2B, and nearly $200M of share repurchases in Q4.

Q&A:

• Question from Jeffrey Johnson (Robert W. Baird & Co. Incorporated): How much was clariti down, what's the floor for that ~$400M line, and can MyDay margins reach clariti levels within 1–2 years?
  Response: Clariti was down a couple percent and remains ~ $400M; MyDay/daily SiHy has lower gross margins than legacy lines but drives more revenue per patient and operating margin expansion via cost savings.

• Question from Jeffrey Johnson (Robert W. Baird & Co. Incorporated): Reconciling calendar Q3 5% growth vs fiscal Q4 3.2% — does that imply a weak October?
  Response: Difference driven by timing overlap at the beginning of the quarter; October was a good month, not a weak period.

• Question from Larry Biegelsen (Wells Fargo Securities): Details on the strategic review timeline and response to calls to split CVI and CSI and add board members?
  Response: Strategic review is underway, public notice issued, and management will provide an update at the Q1 (March) earnings call unless a material event occurs sooner.

• Question from Larry Biegelsen (Wells Fargo Securities): Has your position changed on splitting CVI and CSI?
  Response: Position unchanged—management will evaluate any action that maximizes long‑term shareholder value and has been proactively reviewing alternatives with the Board.

• Question from Jonathan Block (Stifel): What underpins your 4%–5% market growth assumption given apparent decelerating pricing power?
  Response: Company expects 4%–5% market growth (likely closer to 5%) with global pricing near ~1%, supporting the 4%–5% market assumption.

• Question from Jonathan Block (Stifel): Geographic dynamics — APAC flat in FY25 after prior strong growth; outlook for APAC in FY26?
  Response: APAC weakness was concentrated in low‑margin pure‑play e‑commerce in China (China down 28% in Q4); those channels are now a smaller share, so APAC should be less of a drag in FY26.

• Question from Lilia-Celine Lozada (JPMorgan Chase): Guide looks back‑end loaded — what drives confidence in growth stepping up through the year and variables across Vision and Surgical?
  Response: Confidence driven by MyDay momentum and additional private‑label wins ramping through the year; CooperSurgical guidance is conservative on fertility but benefits from easier comps and product momentum.

• Question from Lilia-Celine Lozada (JPMorgan Chase): What’s driving the improved free cash flow outlook and is it from SG&A or R&D cuts?
  Response: FCF improvement driven by earnings growth, working‑capital improvements and lower CooperVision CapEx as investment cycle winds down; not from incremental SG&A/R&D cuts but from prior reorg savings and lower CapEx.

• Question from Jason Bednar (Piper Sandler): Guidance excludes repurchases — you said allocating ~2/3 of FCF to buybacks; reconcile?
  Response: Plan to allocate roughly two‑thirds of FY26 free cash flow to repurchases, but repurchases were conservatively excluded from the published guidance range.

• Question from Jason Bednar (Piper Sandler): Why was Colleen Jay chosen as next Chair?
  Response: Board chose Colleen Jay for her P&G senior‑executive global and branding experience and her leadership on aligning TSR with executive compensation for a smooth transition.

• Question from Travis Steed (BofA Securities): On the strategic review, willingness to take short‑term dilution to create longer‑term value and views on consolidation/antitrust?
  Response: Company is conducting a comprehensive review with advisers considering all alternatives to drive long‑term shareholder value; no specific actions or commentary on dilution/antitrust provided yet.

• Question from Travis Steed (BofA Securities): With gross margins down in '26, how will you drive operating margin leverage—will SG&A be cut?
  Response: Operating leverage will come from prior reorg savings and disciplined OpEx; SG&A is not expected to grow materially rather than require additional cuts.

• Question from Matthew Miksic (Barclays): Which catalysts lifted performance into the last month/quarter that should drive share gains?
  Response: A weak prior‑year Q4 comp plus stronger MyDay execution and product momentum positioned the company to close the calendar year stronger and sustain share gains.

• Question from Matthew Miksic (Barclays): If CVI and CSI have been running independently, what's changed that makes separation more viable now?
  Response: Separation can unlock value but entails tax/dissynergies; management believes it's prudent to evaluate options now given recent operational improvements—no decision yet.

• Question from David Saxon (Needham): PARAGARD outlook given a competitor launch and margin profile changes?
  Response: Guidance factors in conservatism for a potential competitor launch; PARAGARD grew (~7%) this year and margins are slightly lower due to the single‑hand inserter rollout but remain healthy.

• Question from David Saxon (Needham): Residual impact from distributor inventory or private‑label conversion as we move into FY26?
  Response: Some Asia‑Pac noise may persist into Q1 and that is already factored into guidance; distributor inventory dynamics were not a material Q4 factor.

• Question from Young Li (Jefferies): Where is the pipeline on next‑generation lenses and materials?
  Response: Company has active R&D, is launching MiSight on a silicone‑hydrogel platform and other material work; MiSight remains a differentiated, FDA‑approved myopia control product.

• Question from Young Li (Jefferies): Fertility assumptions for FY26 and geographic differences (U.S. vs. other regions)?
  Response: Management expects fertility to grow mid‑single digits longer term; FY26 guidance is conservative—market modeled low single digits while CooperSurgical expects mid‑single‑digit growth.

• Question from Navann Ty Dietschi (BNP Paribas): MyDay private‑label contribution in APAC 2026–27 and details on improving fertility cycles/competitive landscape?
  Response: No specific revenue disclosures; private‑label contracts are being executed with ramp across quarters (APAC, then U.S./EMEA); fertility momentum aided by new genomics tests and capital tech—details withheld.

• Question from Unknown Analyst (Citi): Expectations for MiSight and myopia management in FY26?
  Response: MiSight expected to grow ~20%–25% in FY26; company is conservative for potential short‑term competitive impacts (e.g., Stellest), with Japan and additional launches supporting growth.

• Question from Brett Fishbin (KeyBanc): MiSight Japan launch — long‑term opportunity and FY26 contribution?
  Response: Japan launch (MiSight) should perform well in an ophthalmologist market; traction expected later in FY26 and into FY27 as execution and capacity continue.

• Question from Brett Fishbin (KeyBanc): Distributor channel inventory dynamics in Americas — impact on Q4 and FY26 assumption?
  Response: No meaningful distributor inventory impact in Q4; nothing material to report and assumptions are neutral for FY26.

• Question from David Roman (Goldman Sachs): Nature of reorganization and retention actions to avoid losing key people?
  Response: Reorg focused on back‑office consolidation leveraging IT/AI to unlock productivity; retention addressed via promoting from within, training and career advancement to keep talent.

• Question from Anthony Petrone (Mizuho): Private‑label trend and historical synergies/dissynergies of combined CVI/CSI ownership?
  Response: Private‑label momentum accelerating with new U.S./Europe contracts rolling out; synergies are mainly back‑office and capital allocation has favored CooperVision historically without creating material capital allocation conflicts.

Contradiction Point 1

CooperVision's Growth Expectations

It involves changes in financial forecasts, specifically regarding CooperVision's growth expectations, which are critical for investors in understanding the company's performance and strategies.

What factors are driving confidence in growth over the year? - Lilia-Celine Lozada(JPMorgan Chase & Co)

2025Q4: Our confidence is driven by MyDay's momentum, new private label contracts, and CooperVision's strong execution. We see solid opportunities ahead, particularly in Q3 and Q4. - Albert White(CEO)

Should we exclude MiSight's 100-basis-point growth contribution this year? Given that 2025 CVI growth is 3.5% at the midpoint, lagging the mid-single-digit market growth, how should we model CVI for fiscal 2026? - Jonathan David Block(Stifel)

2025Q3: If we look at the market in calendar Q1 and calendar Q2 of this year, the market grew 4% each quarter. In the first quarter, the market grew 4%, we grew 5% and in calendar Q2 here, the market grew 4% and we grew 2%. - Albert White(CEO)

Contradiction Point 2

Contact Lens Market Growth

It involves the company's assessment of the contact lens market growth, which impacts revenue projections and strategic planning.

What is the growth assumption for the contact lens market in 2026? - Jonathan Block(Stifel, Nicolaus & Company, Incorporated)

2025Q4: The market grew 4% in the first half of 2025 and 5% in Q3. We expect a 4% to 5% growth for the year, driven by pricing similar to 2025, which was about 1%. - Albert White(CEO)

What factors are driving the significant slowdown in the contact lens market, and are there other factors at play beyond the 4% growth in H1 2025, such as consumer softness? - Lawrence H. Biegelsen(Wells Fargo Securities)

2025Q3: The market grew 7% last year. It's grown 4% so far this year. I think there's a little bit of lightness in some areas where we had strength. - Albert White(CEO)

Contradiction Point 3

MyDay Gross Margins and Price Discipline

It involves discrepancies in the company's communication regarding the gross margins of MyDay and its price strategy, which are critical for financial forecasting and market positioning.

What was Clariti's decline and will MyDay's gross margins eventually reach Clariti's levels? - Jeffrey Johnson (Baird & Co. Incorporated)

2025Q4: The gross margins for the family of daily silicone hydrogel lenses are below CooperVision's gross margins. - Albert White(CEO)

What are the price expectations for the contact lens business this year? - Steve Lichtman (Oppenheimer)

2025Q1: Our global pricing strategy will be the same as it has been since the beginning of 2025, which is a price increase of 4% to 5% on average to our customers. - Al White(CEO)

Contradiction Point 4

Fertility Sales and Market Dynamics

It involves differing perspectives on the impact of competitive launches and market dynamics in the fertility segment, which are crucial for understanding future growth prospects.

What impact does the competitive IUD launch have on fertility sales? - David Saxon (Needham & Company, LLC)

2025Q4: We factored in conservatism for competitive launches, assuming a modest impact on sales. - Albert White(CEO)

With the Q1 fertility capital pull-forward, how confident are you about returning to double-digit growth? - Robbie Marcus (JPMorgan)

2025Q1: Capital was pulled into Q4 and resulted in a weaker Q1, but strong demand is expected to return fertility to high single-digit to low double-digit growth for the rest of the year. - Al White(CEO)

Contradiction Point 5

Inventory Levels and Market Performance

It involves differing perspectives on the impact of inventory levels on market performance, which affects revenue expectations.

Can you discuss factors impacting Q4 growth and future growth catalysts? - Matthew Miksic(Barclays Bank PLC)

2025Q4: We're seeing better market share gains in calendar Q4 compared to last year. - Albert White(CEO)

How does channel inventory impact contact lens market performance? - Jason Badner(Piper Sandler & Co.)

2025Q2: Channel inventory pressure is a challenge, but we're seeing improvement in fitting activity. We expect continued pressure year-over-year, but expect growth in Q4. - Al White(CEO)