Press release·03/07/2025 22:23:34

Financial Performance Overview

The Cooper Companies, Inc. is a global medical device company that operates in two main business segments: CooperVision and CooperSurgical. In this report, the company discusses its financial results for the first quarter of fiscal year 2025, which ended on January 31, 2025.

Overall, the company saw solid growth in both its CooperVision and CooperSurgical segments during the quarter. Consolidated net sales increased by 4% compared to the same period in the prior year, reaching $964.7 million. Gross margin also improved, rising to 68% from 67% in the prior year period.

However, the company faces some significant risks and uncertainties in its global operating environment, including uncertain economic conditions, supply chain disruptions, regulatory changes, and foreign exchange rate fluctuations. These factors have adversely affected the company’s sales, cash flow, and performance in the past and could continue to do so in the future.

CooperVision Segment Performance

CooperVision, the company’s contact lens business, saw net sales increase by 4% to $646.1 million. This growth was driven by strong performance across both the toric and multifocal lens categories, as well as the sphere and other category, which includes myopia management products.

Toric and multifocal lenses, which address more complex vision issues like astigmatism and presbyopia, grew 7% year-over-year. Sphere and other lenses, including myopia management products, grew 1%. The company believes there will be lower contact lens dropout rates as technology improves the wearing experience through better designs, materials, and the growth of preferred modalities like single-use and monthly lenses.

CooperVision competes globally, with sales spread across three main regions: the Americas, EMEA (Europe, Middle East, and Africa), and Asia Pacific. All regions saw sales growth, led by a 7% increase in the Americas. EMEA grew 3%, while Asia Pacific declined 2%, partially due to unfavorable foreign exchange rate fluctuations.

The company’s ability to compete successfully with a full range of silicone hydrogel contact lenses is seen as a key factor in achieving its desired future sales growth and profitability. CooperVision’s single-use silicone hydrogel product lines, such as clariti, MyDay, and MyDay Energys, remain a focus as the company expects increasing demand for these types of lenses.

CooperSurgical Segment Performance

CooperSurgical, the company’s women’s healthcare and fertility business, saw net sales increase by 3% to $318.6 million. This growth was driven by a 4% increase in office and surgical product sales, which include medical devices, cryostorage, and contraception. Fertility product sales grew 1%.

The office and surgical sales increase was primarily due to higher sales of Paragard contraceptive intrauterine devices and the acquisition of obp Surgical on August 1, 2024. Fertility sales grew due to an increase in revenue from gamete services and genetic testing, partially offset by a decrease in revenue from consumable products.

Competitive factors in the CooperSurgical segments include technological and scientific advances, product quality and availability, price, and customer service. The company protects its products through patents, trademarks, and trade secrets, and it monitors and enforces its intellectual property rights.

Profitability and Expenses

Consolidated gross margin increased to 68% in the first quarter of fiscal 2025, up from 67% in the prior year period. This improvement was driven by efficiency gains and a more favorable product mix.

Selling, general, and administrative (SG&A) expenses increased by 2% to $387.9 million, representing 40% of net sales. The increase was primarily due to higher selling activities in the CooperVision segment, partially offset by lower share-based compensation expenses in the Corporate segment.

Research and development (R&D) expenses increased by 3% to $40.7 million, or 4% of net sales. CooperVision’s R&D focus is on contact lens development, manufacturing technology, and process enhancements, while CooperSurgical’s R&D is centered on surgical devices, fertility solutions, and manufacturing improvements.

Amortization expense decreased slightly to $49.6 million, or 5% of net sales. CooperVision’s amortization expense declined due to certain intangible assets being fully amortized, while CooperSurgical’s increased due to the amortization of assets acquired through recent acquisitions.

Overall, operating income increased by 19% to $182.0 million, or 19% of net sales. CooperVision’s operating income grew 19%, while CooperSurgical’s declined 16%, primarily due to the increase in amortization expense.

Financial Condition and Liquidity

As of January 31, 2025, the company had working capital of $987.4 million, up from $928.7 million at the end of fiscal 2024. This increase was mainly due to a decrease in accounts payable and an increase in inventories, partially offset by higher employee compensation benefits and short-term debt.

Cash provided by operating activities in the first three months of fiscal 2025 increased to $190.6 million, compared to $122.7 million in the prior year period. This was primarily due to increases in net income and changes in other non-cash items and operating capital, including higher cash collections and accrued liabilities, offset by an increase in inventories.

Cash used in investing activities decreased to $96.8 million, down from $324.1 million in the first three months of fiscal 2024. This was mainly attributable to the $200 million paid for the Cook Medical acquisition in the prior year period, as well as lower purchases of property, plant, and equipment.

Cash used in financing activities was $96.6 million, compared to cash provided of $212.3 million in the prior year period. The current period included repayments on the revolving credit facility and the first installment payment related to the Cook Medical acquisition, while the prior year period included $200 million drawn on the revolving credit to fund the Cook Medical acquisition.

As of January 31, 2025, the company had total debt of $2.5 billion, with $1.3 billion available under its revolving credit facility. The company was in compliance with all debt covenants as of the end of the quarter.

Outlook and Risks

The company remains optimistic about the long-term prospects for the worldwide contact lens and general healthcare markets, as well as the growth potential of its businesses and products. However, it faces significant risks and uncertainties in its global operating environment, including uncertain economic and political conditions, supply chain disruptions, regulatory changes, and foreign exchange rate fluctuations.

These risks have adversely affected the company’s sales, cash flow, and performance in the past and could continue to do so in the future. The company is focused on addressing these challenges and maintaining its competitive position through product innovation, market expansion, and operational efficiency.

Key areas of focus for the company include greater worldwide market penetration for CooperVision’s recently introduced products, continued growth in the single-use silicone hydrogel contact lens market, and expansion of CooperSurgical’s portfolio of fertility and women’s healthcare products and services.

Overall, the Cooper Companies’ first quarter of fiscal 2025 results demonstrate the company’s ability to navigate a challenging global environment and deliver solid financial performance. However, the company remains vigilant in addressing the risks and uncertainties it faces to ensure long-term success and value creation for its shareholders.