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DATE

Thursday, March 5, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Al White
  • Chief Financial Officer and Treasurer — Brian Andrews
  • Vice President, Investor Relations — Kim Duncan

TAKEAWAYS

  • Consolidated Revenue -- $1.024 billion, up 6.2% with organic growth of 2.9%.
  • CooperVision Revenue -- $695 million, representing 7.6% growth; organic growth reached 3.3%.
  • CooperSurgical Revenue -- $329 million, a 3.3% increase; organic growth was 2.2%.
  • Operating Margin -- Improved, with a 26.9% margin and operating income up 13.9% year over year.
  • Gross Margin -- 68.1%, attributed to a lighter mix of low-margin Asia Pac revenue at CooperVision; excluding tariffs, gross margin would have been flat compared to last year.
  • Non-GAAP Earnings Per Share -- $1.10, up 20%, with approximately 197 million shares outstanding.
  • Free Cash Flow -- $159 million, supporting capital allocation initiatives.
  • Capital Deployment -- $92 million used to repurchase 1.1 million shares; $50 million final payment for 2023 Cook acquisition; remaining cash used to reduce net debt to $2.4 billion.
  • Term Loan Extension -- Amended $950 million of $1.5 billion due December 2026, extending maturity to February 2031; $550 million balance will be repaid at maturity with free cash flow and revolver capacity.
  • CooperVision Product Growth -- Torics and multifocals up 6% organically, spheres up 1%, daily silicone hydrogel lenses up 7% led by double-digit MyDay growth, clariti slightly up, Biofinity and Avaira combined up 3%, MiSight up 23% to $28 million.
  • Regional Trends (CooperVision) -- The Americas grew 6%, EMEA up 4% maintaining market leadership, Asia Pac declined 4% primarily due to softness in Japan legacy hydrogels.
  • CooperSurgical Fertility Revenue -- $127 million, up 3% organically, driven by genomics and consumables; partially offset by Middle East softness and lower equipment installations.
  • CooperSurgical Office & Surgical -- Sales of $202 million, up 2% organically; medical devices up 6%; PARAGARD declined 7% due to prior-year comp related to single-hand inserter launch.
  • Operating Expenses -- Declined as a percentage of sales to 41.2% from 43.6%, reflecting benefits from reorganization and efficiency gains.
  • Interest Expense & Tax Rate -- Interest expense $22.4 million; effective tax rate 15.1%.
  • Guidance: Fiscal 2026 Revenue (period ending Oct. 31, 2026) -- Consolidated revenue expected at $4.3–$4.35 billion, organic growth 4.5%–5.5%.
  • Guidance: CooperVision & CooperSurgical -- CooperVision targeted at $2.9–$2.93 billion (4.5%–5.5% organic), CooperSurgical at $1.4–$1.41 billion (4%–5% organic).
  • Raised Guidance: Non-GAAP EPS & Free Cash Flow -- Non-GAAP EPS raised to $4.58–$4.66; free cash flow guidance increased to $600–$625 million for fiscal 2026 and $2.2+ billion through fiscal 2028.
  • Tariffs -- Annual tariff estimate unchanged at $24 million; impact recognized with a four-month lag.
  • Key Product Launches -- MyDay launches in various Asia Pac markets; planned clariti toric and multifocal launch in Japan later this year for market upgrade path.
  • Synergies and Technology Adoption -- Management highlighted ongoing benefit from AI and technology investments leading to process automation and cost reduction.
  • Strategic Review -- Review process is active, with board and adviser engagement; management will update when outcomes become definitive.
  • Middle East Exposure -- Middle East comprises about 2% of consolidated sales, mostly through distributors and with significant fertility business share.
  • Win Rate on New Contracts -- Management confirmed wins on additional MyDay contracts across all regions, supported by improved supply dynamics.

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RISKS

  • Asia Pac region declined 4%, with management stating: "I think Asia Pac will probably be down one more quarter before all the positive energy that we have kind of overwhelms that," indicating expected continued weakness due to legacy hydrogels in Japan.
  • The Middle East's ongoing conflict introduces uncertainty to the fertility business; management noted, "If that situation extends for a period of time, it will be more challenging for us."
  • PARAGARD sales dropped 7% in the quarter, and future performance remains dependent on competitive landscape developments.
  • Guidance incorporates negative impact from a potential competitive launch in PARAGARD, though timing and magnitude are uncertain.

SUMMARY

Management delivered improved margins, robust cash flow, and increased non-GAAP EPS, attributed to realized synergies from prior reorganization and effective technology deployment. The strategic review remains underway with no incremental detail provided, but leadership continues to emphasize organic growth, capital discipline, and technology-led operational enhancements. Across segments, strong results in The Americas and EMEA contrasted with Japan-driven performance headwinds for CooperVision, while CooperSurgical’s fertility business showed early signs of a market upturn despite ongoing risk exposure in the Middle East.

  • Substantial investments in sales, marketing, and R&D supported new launches in daily silicone hydrogel and myopia control, especially MyDay and MiSight platforms.
  • Management confirmed, Yes. We are executing on those private-label contracts and a number of branded contracts that we won, and you will see those as we progress through the year. indicating stronger contributions expected from new partnerships in the second half.
  • Outlook for CooperSurgical calls for improving momentum in fertility and medical devices as 2026 progresses, with the strongest growth anticipated for Q3 and Q4.
  • Despite Asia Pac segment challenges, operating leverage and disciplined cost control were evident, as the company reported a second consecutive quarter of flat operating expenses year over year.

INDUSTRY GLOSSARY

  • MyDay: CooperVision’s flagship daily silicone hydrogel contact lens portfolio, emphasizing comfort and technological innovation.
  • MiSight: FDA-approved daily disposable contact lens specifically indicated for myopia control in children.
  • PARAGARD: Copper-based intrauterine device (IUD) for long-term contraception, part of CooperSurgical’s portfolio.
  • FRP: Refers to frequent replacement contact lenses, typically monthly or bi-weekly modalities.
  • KOL: Key Opinion Leader; influential experts used in medical device product launch engagement and education.

Full Conference Call Transcript

Al White, President and Chief Executive Officer, and Brian Andrews, Chief Financial Officer and Treasurer. Before we begin, I would like to remind you that this conference call will contain forward-looking statements, including statements relating to revenues, EPS, cash flows, interest, FX and tax rates, tariffs and other financial guidance and expectations, strategic and operational initiatives, market conditions and trends, and product launches and demand. Forward-looking statements depend on assumptions, data, or methods that may be incorrect or imprecise and are subject to risks and uncertainties.

Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption “Forward-Looking Statements” in today's earnings release and are described in our SEC filings, including The Cooper Companies, Inc. Form 10-Ks and Form 10-Q filings, all of which are available on our website at coopercos.com. Also, a reminder, the non-GAAP financial information we will provide on this call is provided as a supplement to our GAAP information.

We encourage you to consider our results under GAAP as well as non-GAAP and refer to the reconciliations provided in our earnings release, which is available on the Investor Relations section of our website under Quarterly Materials. Should you have any additional questions following the call, please email [email protected]. I will now turn the call over to Al for his opening remarks.

Al White: Thank you, Kim, and welcome, everyone. We are pleased to report a strong start to the fiscal year highlighted by product launches, outstanding profitability, and robust cash flow. These results reflect our disciplined execution combined with the significant synergies we are realizing from last year's reorganization. For today's call, I will begin with an update on the three key strategic priorities we outlined in December and then move to Q1 results and guidance.

First, we remain focused on delivering consistent market share gains for CooperVision. In calendar 2025, we gained share for an eighteenth consecutive year, and we entered 2026 with the intention of doing so once again. In our first fiscal quarter, we made meaningful progress with the global rollout of our premium MyDay daily silicone hydrogel portfolio, growing branded sales, and executing on private-label contracts. Regionally, The Americas and EMEA strengthened and have excellent commercial momentum. Japan weighed on our Asia Pac results, but we are executing on product launches and investing to restore growth in the region. We are also incredibly excited about the early adoption of our MyDayMySite launches in EMEA and MiSight in Japan.

At CooperSurgical, we are encouraged by improving trends in our fertility business and look forward to positive momentum continuing.

Second, our commitment to delivering strong earnings and free cash flow through operational excellence was clearly evident this quarter. The organizational changes and IT implementations we completed last year are generating meaningful synergies, providing us with the opportunity to invest in sales and marketing initiatives while still delivering outstanding financial performance. Q1 earnings exceeded the top end of our guidance range, and those earnings translated into a healthy $159,000,000 in free cash flow. Given our strong start to the year, we are raising guidance for both earnings and free cash flow.

Third, we continue to maintain a disciplined approach to capital allocation. We have entered a multi-year period of consistent earnings and free cash flow growth, and we are deploying capital to high-return opportunities. This starts with prioritizing internal investments that drive revenue growth, which we did this past quarter by increasing sales and marketing spend at CooperVision and CooperSurgical in support of product launches and key strategic initiatives across both businesses. We also repurchased $92,000,000 in stock during the quarter, reinforcing our commitment to consistent share repurchases as a core part of our long-term strategy to drive shareholder value. And the remainder of our cash was used to reduce debt.

Before reviewing the quarterly details, I want to address the strategic review we announced in December. We understand there is strong investor interest in this process. While we are not in a position to provide an update today given where we are in the process, the review is progressing as planned with active engagement from our board and advisers. We will communicate outcomes if we have something definitive to share or when the process is complete. In the meantime, our board and management remain highly focused on maximizing long-term shareholder value.

This includes driving organic growth by winning new contracts, strengthening customer relationships, delivering strong earnings and cash flow by leveraging our infrastructure, and deploying a consistent capital allocation strategy that includes share buybacks and debt paydown.

With that, let us move to the Q1 results. Consolidated revenues were $1,024,000,000, up 6.2%, or up 2.9% organically. CooperVision reported revenue of $695,000,000, up 7.6%, or up 3.3% organically. And CooperSurgical delivered revenue of $329,000,000, up 3.3%, or up 2.2% organically. Operating margins improved meaningfully, and non-GAAP earnings grew 20% to $1.10.

For CooperVision, on an organic basis, torics and multifocals grew 6%, and spheres grew 1%. Daily silicone hydrogel lenses grew 7%, led by double-digit growth in MyDay, while clariti was up slightly. Biofinity and Avaira grew a combined 3%, and MiSight continued its strong growth, up 23%. Regionally, The Americas grew 6%, led by strength in daily silicone hydrogel lenses, and EMEA grew 4%, strengthening our number one market position in that region. Asia Pac declined 4%, as execution on new product launches was more than offset by softness in Japan, primarily tied to lower-margin older hydrogel products.

To accelerate APAC performance, we have upgraded several leadership roles, increased marketing investments, and are ramping up our new regional distribution center, which is already enhancing service with faster fulfillment. We have also recently launched MyDay toric in Taiwan, MiSight in Japan, MyDay MiSight in Australia and New Zealand, and we are increasing regional availability of MyDay multifocal and MyDay toric expanded range. We also have private-label launches underway in multiple markets, and in Japan, we will be launching the full clariti family later this year with the addition of both the toric and multifocal, providing a competitively priced full-family silicone hydrogel upgrade path for the large base of hydrogel wearers in that market.

While we expect Asia Pac to remain down in Q2 due to declining legacy hydrogel sales, we are confident the region will return to growth in fiscal Q3 given all of our launch activity.

Turning to products, our daily silicone hydrogel portfolio continues to perform well with MyDay leading the way through expanding customer partnerships, broader availability, and ongoing launches. Our premium-priced offerings delivered their strongest performance, led by MyDay multifocal, Energys, and torics, all growing over 15%. Particular strength was seen with MyDay multifocal as the rollout continues to gain momentum. Our premium MyDay Energys also posted strong growth driven by its innovative digital boost technology designed to provide maximum comfort in today's heavy digital world. This product will be launched shortly in Europe, and we look forward to the boost it will provide in that region.

MyDay toric, which offers the broadest SKU range in the category and is powered by the same leading toric design in our Biofinity toric, continued delivering exceptional growth. We also closed additional MyDay key customer contracts and private-label partnerships this past quarter across all three regions.

For the clariti product family, it grew modestly, led by the ongoing launch of our new multifocal in The Americas. This multifocal has the same next-generation optical design as MyDay, meaning an easy-fit lens with consistent performance across different lighting conditions, distances, and patient profiles, so we expect strong performance as we launch across EMEA and APAC later this year.

Turning to myopia control, MiSight grew 23% to $28,000,000. Momentum is building with our latest innovation, MyDay MiSight, launched in EMEA in January to an extremely positive reception thanks to the combination of proven myopia control efficacy and the all-day comfort of a premium silicone hydrogel lens. We also launched MiSight in Japan in February and are seeing a similar enthusiastic response. Japan is one of the world's most significant vision care markets, and with an estimated 77% of elementary school children being myopic, it represents a substantial opportunity for MiSight.

We are supporting these launches with our most comprehensive professional engagement programs to date, highlighted by major conference engagement, high-impact regional launch events, extensive KOL education, and media initiatives reaching tens of thousands of eye care professionals. These efforts are driving very strong clinician activation rates, reinforcing our confidence that our early momentum will continue as MyDay MiSight expands in EMEA, across Asia Pac, and into Canada. MiSight remains the only FDA-approved contact lens for myopia control, and the first and only lens approved for myopia control in both Japan and China.

We are also continuing to invest heavily in myopia control R&D and have several exciting breakthrough innovations underway, which further supports our confidence in MiSight's ability to deliver consistent long-term robust growth.

To conclude our CooperVision commentary, let me highlight our performance relative to the market. This is calendar quarter data, so apples to apples with our competitors. In calendar Q4, we grew 10%, and the market grew 6%. For the full calendar year 2025, this translated into 6% CooperVision growth versus the market at 5%, marking our eighteenth consecutive year of market share gains.

Turning to CooperSurgical, we delivered quarterly revenue of $329,000,000, up 3% or up 2.2% organically. Fertility revenues were $127,000,000, up 3% organically. Growth was driven by strong global genomics performance, supported by continued commercial and operational execution across product launches, new clinical wins, and expansions within existing accounts. We also saw solid results in consumables led by media, Zymot—our sperm separation device that helps optimize fertility procedures—and Witness, our automated lab tracking system. These gains were partially offset by softness in The Middle East and lower equipment installations. Importantly, we are now seeing early but clear signs of recovery in the fertility market.

As we move through the first quarter, results steadily improved, supported by solid execution on contract wins and new product launches as well as strengthening underlying market trends. This momentum positions us well for continued improvement through the remainder of the year, though developments in The Middle East, where we hold a leading market position, remain a source of uncertainty. For the fertility market overall, the product and services segment that we operate in had delivered strong growth for many years before slowing in late 2024. While several factors contributed to the deceleration, the industry is now recovering, driven by renewed clinic interest in adopting new technologies along with improving cycles in the U.S. and several European countries.

Although a rapid rebound is unlikely, we anticipate steady improvement as we annualize last year's pressures and underlying activity normalizes.

Moving to office and surgical, sales were $202,000,000, up 2% organically. Medical devices grew 6%, driven by strong performance in our surgical OBGYN portfolio led by our uterine manipulators and related products, and continued momentum in our specialty surgical products, including our innovative single-use lighted cordless surgical retractors. This was partially offset by softness in some legacy medical devices, and PARAGARD declining 7%, which was expected against a difficult comp tied primarily to last year's launch of the new single-hand inserter.

To conclude, I want to recognize and thank our Cooper team for their dedication to operational excellence, investing in sales and marketing to drive organic growth, and maintaining disciplined cost control. Continuing to build a streamlined and technologically efficient company is no easy task, so thank you to the entire team. I will now turn the call over to Brian.

Brian Andrews: Thank you, Al, and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis, so please refer to today's earnings release for a reconciliation of GAAP to non-GAAP results. For our first fiscal quarter, consolidated revenue was $1,024,000,000, up 6.2% year over year and up 2.9% organically. Gross margin was 68.1%, exceeding expectations, driven primarily by a lighter mix of low-margin Asia Pac revenue at CooperVision. Excluding the impact of tariffs, gross margin would have been essentially flat. Operating expenses rose only modestly and improved as a percentage of sales, declining from 43.6% to 41.2% year over year, reflecting the benefits of the reorganization executed in fiscal Q4 of last year.

These efficiencies stem from the structural changes we have made as we transition to a smaller, more efficient organization that leverages technology, including AI, to automate work and optimize shared services. The impact of these efforts was particularly evident at Cooper, where expenses decreased year over year. Operating income increased a healthy 13.9%, resulting in a 26.9% margin. Interest expense was $22,400,000, and the effective tax rate was 15.1%. Non-GAAP EPS grew 20% to $1.10 with roughly 197,000,000 average shares outstanding. Free cash flow was very strong at $159,000,000 with CapEx of $102,000,000.

We deployed this cash by repurchasing 1,100,000 shares of stock for $92,000,000, making the final $50,000,000 payment related to our 2023 Cook acquisition, and applying the remaining balance towards reducing net debt to $2,400,000,000. Lastly, in February, we addressed our $1,500,000,000 term loan maturing in December 2026 by amending and extending $950,000,000 for another five years, to February 2031. The remaining $550,000,000 will be repaid in December 2026 when it matures, using our strong free cash flow and ample revolver capacity.

Moving to full-year fiscal 2026 guidance, our revenue expectations are essentially unchanged with consolidated revenues of roughly $4,300,000,000 to $4,350,000,000, reflecting organic growth of roughly 4.5% to 5.5%. CooperVision revenue is expected to be in the range of $2,900,000,000 to $2,930,000,000, up 4.5% to 5.5% organically. And CooperSurgical is expected to be in a range of $1,400,000,000 to $1,410,000,000, up 4% to 5% organically. For earnings, we are raising guidance to $4.58 to $4.66, reflecting our Q1 beat and stronger expected operational performance. Regarding tariffs, our estimate of approximately $24,000,000 remains the same for the year. Our expectations on interest expense and tax remain unchanged, with interest expense around $85,000,000 and the effective tax rate between 15%–16%.

Turning to cash flow, our cash conversion rate continues to improve, and we are increasing our fiscal 2026 free cash flow outlook to $600,000,000 to $625,000,000. For fiscal 2026 through 2028, we continue to expect to generate more than $2,200,000,000 of free cash flow driven by higher operating profits, improving working capital performance, and lower CapEx. From a capital deployment standpoint, our priorities remain unchanged. We are investing in growth and innovation, repurchasing shares, and reducing debt.

To conclude, I am proud of the operational excellence we are seeing across the organization. We are optimizing and leveraging prior investments in numerous areas, including IT, distribution, HR, and finance. And we are increasingly applying AI-enabled tools to streamline areas such as marketing, planning, forecasting, and support functions. Our reorganization efforts are delivering meaningful synergies, and the results are evident. Looking ahead, we have additional opportunities to further optimize the way we work. With our multi-year CapEx cycle winding down, our manufacturing teams are now evaluating ways to capitalize on the next generation production improvements developed over the past several years.

Early planning is underway, and while this work will take time, the results have the potential to be material. In the meantime, we will continue driving efficiencies by leveraging technology while consistently investing in initiatives to support sustainable organic growth. I will now turn the call over to the operator for questions.

Operator: Limit questions to one and one follow-up. Our first question comes from the line of Jeff Johnson with Baird. Please go ahead.

Jeff Johnson: Thank you, guys. Good afternoon. I guess with the first question, let me just back out and go more high level. Al, you reported a 10% calendar 4Q number. I think over the last three quarters you have been about 3%, 3.5% for CVI. So one, can you reconcile that 10% number versus the last few quarters at three? What is different in the number you are citing there versus what we see in CVI organic growth results? And then one follow-up question. Thanks.

Al White: Sure. Yes. I knew we were going to get that one. It is literally just a matter of the months and shipment of product. We had a weak November and December 2024, and we had a really strong January 2025. So just when you comp against that, the way that the shipments worked, it resulted in a really strong calendar Q4 for us.

Jeff Johnson: Alright. Fair enough. And I guess, again, maybe I will zoom even further out. And apologies for the feedback. But you know, you have been talking about kind of getting back to market growth, above-market growth, at least as you report CVI. How is that plan going so far? Maybe update us on the MyDay—you know, clariti to MyDay transition. Just in general, it still feels like your results are maybe lagging the market here a little bit relative to some of your peers. So how do you feel like you are doing in kind of getting back up and into above over the next couple of quarters? Thank you.

Al White: Yep. Great question, Jeff. I will break that up a couple different ways. If I look at The Americas, we are doing well. The U.S. had a good quarter. We are gaining a lot of traction. We have product launches and a lot of activity. The team is doing a fantastic job. So I would say we are in good shape with The Americas. When I look at EMEA, again, in good shape there. We took a step forward this quarter against the last one, won a number of contracts there. We have a number of product launches going on, and I would say we have better visibility for that market right now to improving sales.

So I feel pretty good about the momentum that we have in The Americas and the momentum that we have in EMEA right now associated with MyDay and clariti, frankly. And then I go to Asia Pac as the third one. And the results there have been a little tough for us. That is the area that we need to get figured out and get back to our old traditional growth rates, and we will be in fantastic shape. As I mentioned, we are doing a lot of stuff to drive growth in Asia Pac. We did see success in a number of areas where we have had problems.

We stabilized when it comes to a lot of the e-commerce stuff that we talked about. We have stabilized the China business. We had a changeover of some personnel, a number of leadership positions. In good shape in a number of countries. The one that we have left right now is Japan, and I can target that down to Japan older hydrogel products where some of our competitors are taking some share. We have not caved on price or anything along those lines. I think we are going to continue to have a little bit of pressure in Japan with traditional hydrogels again in next quarter because I think the region will probably be down because of it.

But then all of that success, the stuff that I am talking about, all those product launches in Asia Pac, the success of executing on those private-label contracts, all of that kind of stuff, the transition point on that happens in Q3. And then you are going to have Asia Pac growing again. So another one where I would say we had a number of points over the last year, and just a lot better, a lot clearer visibility right now on where those challenges are and where the successes are going to come from. So I think fiscal Q2 ends up being a step up certainly from this quarter.

And then as I have said all along, we will be back to rolling in Q3 and Q4.

Operator: From Wells Fargo, our next question comes from the line of Larry Biegelsen. Please go ahead.

Larry Biegelsen: Alright. That was a new pronunciation. Thanks for taking the question. Hey, Al. We heard your comments about The Middle East and IVF. Maybe you could just level set us on what your exposure is there and how you are thinking the war might impact your business. And I had one follow-up.

Al White: Sure. I will put some numbers around that. For us on a consolidated basis, The Middle East is about 2% of our sales. A lot of it is distributor, and obviously, Middle East is a very large region. So it will not have that much of an impact on us other than it could impact fertility because there is a decent amount of fertility business. We are number one in that region. We have good strength there. So it is just a matter of us being able to get product there. Women are obviously still going through fertility and so forth there. We have to be able to get product in.

If that situation extends for a period of time, it will be more challenging for us. Even with that, we still have a lot of good momentum in fertility, and I think we will still improve quarter over quarter. But that is the one question mark. Otherwise, I would even be more bullish on fertility.

Larry Biegelsen: Thanks. And, Brian, the margins were really strong in Q1. Remind us how we should think about the phasing for the year. How you are thinking about the, I guess, the tariffs—you said no change. But in light of this recent Supreme Court ruling, if that stood, would there be upside on tariffs? Thanks for taking the question.

Brian Andrews: Sure, Larry. I will start with the second part of your question, at least as it relates to tariffs. We have assumed $24,000,000 in the year. That is what we assumed as of the last guidance. We are going to sit tight. Obviously, we capitalize and release the impact of tariffs four months later. So any change to tariff rules or guidelines or whatever takes effect will not impact us until later in the year. But a 10% tariff makes very little impact and is pretty similar to the $24,000,000. So I would assume that if it goes up to 15%, that could be somewhere upwards of $4,000,000.

But for now, 10% is what it is, and that is what we factored in the guidance. As it relates to operating margins, it is the same story that we have been talking about from exiting last quarter. We are getting really durable savings from the synergies and the elimination of fixed costs from the reorganization that we talked about in Q4. We are leveraging prior investment activity, and we are being really disciplined. We are scrutinizing all non-revenue-generating expenses, particularly the back office, and we are investing in sales and marketing.

So the drop-through in operating margins was good in Q1, and I would expect you are going to continue to see stronger operating performance, which is why, frankly, we raised our guidance $0.13 at the bottom end and $0.10 at the midpoint based on stronger operating performance. But I am not going to get into gating at this moment.

Operator: And for Piper Sandler, our next question comes from the line of Jason Bednar. Please go ahead.

Jason Bednar: Hey, good afternoon. Thanks for taking the questions. I actually want to pick up on the line of question that Jeff had. But as far as the competitive landscape as it stands today and your share position, maybe talk about, Al, new fit activity across the quarter. Just what are you seeing in the data when you look at your performance versus peers? You can break it down dailies versus monthlies?

Al White: Sure. If I look at new fit activities, it probably has not really changed that much. At the end of the day, right now, we are taking wearers. So the fit activity continues to put us in a good position. Now you have a whole lot of other variables that go into it, I would say. But if I narrow it down to just new fit activity, whether it is dailies or FRP, we are taking wearers in both of those. We did this past quarter. So I feel good about that as continuing to be a good indicator of the future.

Jason Bednar: Okay. And then as a follow-up, it really seems like industry pricing dynamics have calmed down at least relative to where we were last year. It sounds like the latest round of increases here the last few months are sticking. It should be good for all the players out there. How are you thinking about future list price increases and managing these discussions with wholesalers and docs? Especially, as I think back, we went through multiple increases the past few years, usually like two increases a year. Do you think the market can absorb more than one price increase a year without negatively affecting demand here going forward?

Al White: Yeah. I do because of the technology that is coming out. We are launching, as an industry, new products, really innovative products. We have some great ones ourselves. There is nothing more innovative in the contact lens industry today than MyDayMySight that is launching out there. But the multifocals that we are launching are great products. Energys is a great product. I know some of our competitors have some products out there that are launching at good price points. Consumers are willing to pay for that high quality, and contact lenses are not particularly expensive at the end of the day. So the positive pricing that you are picking up on in your comment is true.

I feel positive about pricing in the marketplace right now. The only region I put a little caveat on that is still in Asia Pac. There are definitely markets in Asia Pac where there is some pretty competitive pricing out there. But generally speaking, I would say pricing is positive right now, and it is appropriate given the technologies that are rolling into the marketplace.

Operator: And from Stifel, our next question comes from the line of Jon Block. Please go ahead.

Jon Block: Great. Thanks, guys. Good evening. You know, the CVI number, I think I heard you at 3.3%. So it was a bit below expectations—even the bottom end and the midpoint. You gave that guidance, call it the first or second week in December. So maybe just talk to us—again, it was slightly below—but what deviated from expectations relative to when you gave it? And it would seem to suggest that maybe January was a little bit weaker than your expects. So can you give us any color on how things trended into February? And, yeah, sorry for the awful feedback.

Al White: Yeah. No. You are right, Jon. We were looking at Asia Pac being essentially flat for the quarter, kind of similar to what we did in Q4. That would have meant CooperVision consolidated growth would have been like 4.3%, something like that. And you are right, it was 3.3%. So that delta was very specific and very targeted, if you will, to what happened in Japan on those legacy products. We started seeing it some in December, and then we definitely saw that activity in January. So that is what happened. That is where it picked up. I thought that frankly the momentum we have with all the product launches and activity and everything would overcome that.

But that was a decent hit for us as we rolled through December and January. You are right. And that is why I said I think Asia Pac will probably be down one more quarter before all the positive energy that we have kind of overwhelms that, if you will.

Jon Block: Okay. Fair enough. And second one, apologies in advance for the boring question. But, Brian, when I look at the add-backs in the quarter, almost half of the add-backs were from a hit from natural causes and litigation, which is just a little uncommon and did not seem to be the case in prior quarters. So any color on what you can give around the add-backs, if you can elaborate a bit? Thank you.

Brian Andrews: Jon, I think you are talking about just in the “Other” category where we break out—I think it was $6,700,000 was related to other legal-related matters. Our stance is not typically to talk about what legal matters are going on. We obviously have insurance for a number of things, but there are some things that we do not have insurance on where we are defending ourselves or we have some legal-related matters that show up. So it is a little bit higher this quarter, but not too atypical from years past.

Jon Block: Okay. Fair enough. Thanks, guys.

Operator: From Jefferies, our next question is from Young Lee. Please go ahead.

Young Lee: Great. Thanks for taking the question. I guess to start, I was wondering if a little bit about—there is an update on how the supply dynamics have impacted your ability to win a new in the quarter? To supply dynamics? The package you are going to win?

Kim Duncan: Oh, for supply, you are probably—

Al White: —referencing some of the bidet capacity. We do not have those issues anymore. So I would say that when it comes to supply constraints, manufacturing or supply constraints or logistic challenges, I am very happy to say those are in the rearview window now. We do not have those challenges anymore. So that is not impacting us.

Young Lee: Yeah. Apologies for the sound quality. Do not think you heard the question fully, but I was just wondering if you were able to win more new contracts this quarter, just given the improvement in supply?

Al White: Oh, I got you. The answer to that is yes. We did win a number of new contracts. As a matter of fact, we won them in all three regions, and they were definitely MyDay-related. We won a bunch last year and as we were exiting last year, but we have continued to expand relationships, partnerships, and win additional MyDay business. So yep. We have.

Young Lee: Okay. Great. Very helpful. And then, I guess, to follow up, I wanted to get a little bit of color and update on PARAGARD. You know, it is a high-margin business. Although we know about the volume pricing dynamics. Are there any incremental updates from the competitive front, just given the potential for impact on the profitability side?

Al White: I would say no updates. As far as I am aware, that licensing agreement that you referenced on the competitive side has not closed. So I do not have any updates or any details on any of that. I think for us, PARAGARD was minus 7% for the quarter. We are still expecting that to be flat to up a little bit for this fiscal year. And then we will see how that plays. If that deal actually does happen, then we will get some color on their launch plans and so forth. But right now, I do not want to speculate on any of that.

Young Lee: Okay. Thank you.

Operator: From Barclays, our next question is coming from the line of Matt Miksic. Please go ahead.

Matt Miksic: Great. Thanks so much. I hope this is coming through okay. One question just following up on the market. There were some kind of unusual trajectory during last year in terms of the market. Based on your best guess and what you saw during and exiting Q4 on a calendar basis, do you think that is improving now? Do you think we are stable? Any further color on what the ups and downs were past year? And then I have one follow-up.

Al White: Yeah. I think I would say we are at least stable, if not improving a little bit. We did have, as a contact lens industry, a softer year last year. But it is at least stable. The reason I say improving, as I sit here and think about it off the top of my head, is because of pricing that somebody asked about earlier. I have kind of looked at the market and said about 1% is going to come from price, about 1% will come from wearers, and then you will have all the other stuff—the shift to dailies and so forth—that is happening that will drive it.

That 1% coming from price, I would certainly stand by that, and it could be potentially a little bit better than that. So I do think the market is well positioned for a decent year. Not a rebound of what it was years ago, but it is going to be a better year, I think, 2025 than it was in 2024.

Matt Miksic: Got it. And then just a follow-up on some of the dynamics that are driving growth this quarter and the quarter after. You mentioned Japan is down this quarter, improving by the third fiscal quarter, I think. How should we think about the impact of some of these private-label engagements that you announced and mentioned that you were able to close some more? When do those—or do you—feel those coming in this year? Do they just filter in and support sustainable growth? I mean, that is how to think about it?

Because it just seemed like there was quite a number of them that you signed, and I am just wondering if that is something we are going to notice as we get into the middle and the back half of this year.

Al White: Thanks. Yep. Good question. Yes. We are executing on those private-label contracts and a number of branded contracts that we won, and you will see those as we progress through the year. They got masked this quarter because of what happened in Japan. As I was saying, otherwise, we would have been kind of 4.3%, somewhere 4.4%, somewhere around there. But we are executing and doing well on those contracts. So the way I see it playing out is we continue to execute on those contracts, and we have good visibility on that. That is going to result in a better Q2.

But as I have said all along, it is going to be Q3 and Q4 when all those contracts and those launches really start coming together for us. So I think that we have one more quarter behind us of some of the challenges that we were dealing with, and we have one more quarter here in the quarter that we are in where we have some residual challenges in Asia Pac, still putting up a step in the right direction in Q2. Then we get back to the CooperVision of old and the more consistent solid revenue growth rates in Q3 moving forward.

Matt Miksic: Great. Thank you.

Operator: Our next question comes from Bank of America from the line of Travis Steed. Please go ahead.

Travis Steed: Hey, thanks for the question. I guess the first question I have is on Q2 revenue, kind of where you want the Street to shake out and the cadence for revenue growth for total company and CooperVision and CooperSurgical. We heard the comments on Japan, and if there are any other dynamics that you would point to that we should model for Q2.

Al White: Well, if I looked at it that way, I would say we will probably have another good quarter. I would expect The Americas. I would expect EMEA to be a little bit better than it was this quarter, and Asia Pac, hopefully, is the question mark today. It will be down a little bit in total. So I would assume that the Q2 results are a little bit better than what we did here. I would look at surgical pretty similar. Fertility should be a little bit better, even with some Middle East risk out there. And the rest of that business is coming along fairly well.

So I would think CooperSurgical posts a little bit better sequential quarter than what they did in Q1.

Travis Steed: Good. Thank you. On the second question, I wanted to ask on the strategic review. When do you expect that to be complete? What is the goal for the outcome? Anything else you could say on the strategic review would be helpful.

Al White: Sure. There is really not much else I can add on that. We announced that we were doing that kind of formally in December, went through the holidays and so forth, and we are very active on it right now with our adviser and the board and so forth. I do not want to comment or say anything right now. It probably would not be appropriate to go into any details until we get some concrete information. So I will hold off on that one, but certainly provide updates when we can.

Travis Steed: Okay. That is fair. Just wanted to ask. Thank you.

Operator: Our next question comes from BNP Paribas from the line of Navann Ty. Please go ahead.

Navann Ty: Hi, good evening. Thanks for taking my questions. One on CooperVision. If you could discuss MiSight again, solid performance in light of the STEALIST entering the market? And my second question is on the CooperSurgical. Your fertility pure play peer had supportive market comments. So what are you seeing in IVF cycles across the U.S., EMEA, and APAC? Thank you.

Al White: Sure. I will touch on the first one, which was the STELOSSA activity here in the U.S. That is going to turn out to be a positive for us. There is a lot more interest in myopia control, pediatric myopia issues, and the education that is coming because of STELOSSA and the attention that the optical community is now putting on myopia control is quite a bit more than it was when it was just us pushing it. There is going to be some push and pull from that because obviously younger kids are going to move into glasses much quicker.

But when you look at especially 11- and 12-year-olds who are in sports or any activities or anything else, concerned about their looks or whatever, we are seeing an increasing amount of fit activity when it comes to kids in that 10 to 12 age in the U.S. market. So I think at the end of the day, that is going to be a positive for us long term. I even think this year it is not going to be detrimental to us where I thought that it might be at one point. So I am happy that product is in the market.

I am happy with what they are doing, and happy with the promotional activity that is out there educating the marketplace. On the fertility side of things, as I mentioned, the risk of the downside that was there and that market continuing to trend down, I would take that off the table because we are seeing positives in fertility now. We are seeing improving IVF cycles in the U.S. We are seeing improving IVF cycles in some of the European countries. We are seeing fertility clinics starting to look at upgrades and so forth—new technology comes out, new equipment comes out.

So I would say that we are going to continue to see the fertility industry get a little bit better. I do not see a fast, huge ramp up or something like that. But I would say the downside is taken off the table, and I would say stabilization to improvement is what we are seeing right now.

Navann Ty: Thanks for the color.

Al White: Yep.

Operator: And from William Blair, our next question comes from the line of Steve Lichtman. Please go ahead.

Steve Lichtman: Thank you. Hi, guys. Al, you mentioned reinvestment in myopia control and it sounds like on the R&D side. Can you talk about the opportunities you see to build on the MiSight platform from an innovation perspective? And then I have a quick follow-up on free cash flow.

Al White: Sure. There is some really exciting stuff there. One is that we need to get a MyDay MiSight toric out into the marketplace. That is one of the products that the optical community really wants. We are doing a lot of work on that right now. That is a positive. We have kind of like a MiSight 2, if you will, that we are working on to even get better efficacy. We have also got some really cool, exciting stuff when you look at combinations with atropine and so forth that have the potential to really help kids that are not reacting to regular or traditional treatment. So you are right.

We are spending a decent amount of money in R&D on MiSight right now, or myopia control in general. And we are going to continue to spend that because that is just a great market. We have the opportunity to have that product continuing to grow a solid 20% plus for years and years and years and years. So we are investing in that pretty decently.

Steve Lichtman: Great. Thanks, Al. And Brian, the upside you are seeing on free cash flow this year and the raised guidance, is that coming from higher operating margin, better working capital management, maybe all the above? And what is exceeding your initial expectations heading into the fiscal year?

Brian Andrews: Hi, Steve. Yes, thanks for the question. Really all of the above. We are seeing stronger operating performance, and I touched on that earlier. But we are collecting better, we are building inventory more smartly. I guess “smartly,” that is a word, but we are building inventory in a more efficient manner. And FX is helping a little bit, but it is really just the combination of the operating performance and better working capital. Obviously, the lower CapEx helps too.

Steve Lichtman: Great. Thanks, guys.

Operator: Our next question comes from the line of Joanne Wuensch from Citibank. Please go ahead.

Joanne Wuensch: I was fascinated to hear how my last name was going to get pronounced. Good evening, and thanks for taking the question. Fundamental one and a bigger-picture one, please. Foreign exchange—what are you dialing in with all of the shifting U.S. dollar given the macro environment? And then my second question, I will just put it right up front. How are you thinking about CSI revenue improving throughout the year? What are the drivers or levers that we can see you pull? Thank you.

Al White: I will answer the second one, and I will let Brian answer the first one. On the CSI side of things, we will have PARAGARD, which is down 7%. We will finish the year kind of flat to up a little bit. I think Q2 will be another quarter because of the comp where it will probably be down a little bit, but then we will have a good back half of the year with that product. When I think about the medical devices, our specialty surgical team is killer. Those guys just do a fantastic job. So I think we will continue to have strength there.

And then, as I mentioned on fertility, just better visibility, more comfort in that market is at least stabilized and arguably trending up, which is going to put some improving growth rates on that. So I think Q2 is better. I think, frankly, Q3 is better than Q2 for CooperSurgical. So just progressing along with improvements, probably somewhat similar to Vision where the best quarter will be Q3, Q4.

Brian Andrews: Hi, Joanne. So I will take the FX question. As we were exiting last week, we were sitting more favorable relative to last guidance on FX. But with the Middle East conflict, the dollar strengthened. And so as we set the guidance ranges for this earnings call, we took out the revenue ranges by $6,000,000 at Vision and $1,000,000 at Surgical reflecting FX. But really, we kept the rates pretty similar to the rates from the last earnings call. It is a little bit conservative. So we are looking at a tailwind to revenues of roughly 1% and also a tailwind to EPS of roughly 1%. Very similar to the last call.

Joanne Wuensch: Thank you.

Operator: Our next question comes from JPMorgan from the line of Robbie Marcus. Please go ahead.

Robbie Marcus: Great. Two for me. First, Al, I wanted to get your thoughts—first quarter organic growth missed on CVI guide and overall. And it sounds like second quarter will still be maybe a little weaker than original expectations due to Asia Pac. You talked about third and fourth quarter and a lot of the private label drive in fourth quarter. And you did not flow that all through in the original guidance. How are you thinking about the conservatism of the guide now with the slower start to the year? And does the slower start maybe take some of the upside off the table as you left the guidance the same?

Al White: I would characterize it, honestly, the exact same. Where we had that softness in Japan that I talked about—I can pinpoint that softness and talk about what happened there. We have good visibility around what happened and how we are correcting that. But we have more strength in The Americas and more strength in EMEA than I would have said back in December. So I guess I would net that out and say, yes, we came in below our range and where we wanted to come in fiscal Q1. I would say The Americas is stronger than when we gave that guidance in December. EMEA is stronger than when we gave that guidance in December.

Asia Pac, probably pretty similar to where we gave that guidance because of a net positive of contract execution and product launches and wins, offset by the negative of the stuff I talked about. So net-net, I would put the odds of us being able to post a good year and success in the back half pretty similar to what we had in December.

Robbie Marcus: Great. I wanted to go back to the question on the PARAGARD competitor. I realize the deal has not closed yet, and you are not ready to talk about the competitiveness here. But I am guessing that was not included in the guidance. So did you include any competitive threats like that in the guidance for the year? I guess that is the question as we think about it. Thanks a lot.

Al White: Yes. When we gave initial guidance—I cannot remember, I thought I mentioned it on the December call—but when we gave the initial guidance, we assumed a negative impact because of the competitive launch and that it would happen at the end of this year. It is probably more likely that we will not have a negative impact, meaning that was a little conservative. But we will see. I do not know. That thing has not closed, and we are in March already of our year. So we are working well into our year at this point in time. We will see.

But to confirm, yes, we had included that in the initial guidance of assuming kind of flat to up just a little bit.

Robbie Marcus: Perfect. Appreciate you taking the questions.

Operator: From KeyBanc Capital Markets, our next question is from Brett Fishman. Please go ahead.

Brett Fishman: Alright. Thank you for fitting me in. Hopefully, there is not too much feedback. Just wanted to circle back on the 1Q operating margin performance, which I think you noted in the press release was better than expected and obviously is a top priority this year. I was just hoping you could unpack a little bit in terms of what went better than you thought and why you were able to call the operating margins as exceeding expectations this quarter?

Al White: A big part of that was just good, solid execution. We did all that work in Q4, and we knew the team was going to do a good job with it, and they have. Organizationally, we have done a really nice job. I would highlight AI, and I hate to sound like one more person talking about it. But the reality is that our organization has embraced it. This is not our organization all of a sudden right now getting on training and everyone is going to train on it and so forth. Our organization embraced it last summer.

We started implementing that stuff as we were going through the year, and we are seeing the positives come out of that work. The technology advancements at Cooper are fantastic. I am super happy, and we have a lot more to do. We saw those improvements in Q1, and we are going to continue to see the use of technology and AI advancements be a positive to us on our operating margins as we move through this year.

Brian Andrews: Yeah. And I guess not much to add to what Al just said. We talked about in Q4 we grew OpEx—it was basically flat year over year. And then here again in Q1, OpEx was roughly flat year over year. There is a lot that we are doing to drive synergies and efficiencies, leveraging prior investment activity, and we are just really being very disciplined about fixed costs in the back office. We want to leverage IT—we are doing that much more than ever before, as Al talked about. This is just great operational execution. Al talked about it and I talked about it in our prepared remarks, and I expect that to continue through the year.

Brett Fishman: Alright. Great. And then most of my questions were asked. Maybe I will just ask one more on some of the new product launches. You mentioned several incremental launches that are really phased throughout this year, including MiSight in Japan.