CooperVision Posts Record Quarter Amid Surgical Recall Charge

The contact lens and surgical giant beat earnings expectations for the tenth straight quarter, but a US$271.6 million recall-related charge dominated headlines.

CooperCompanies has reported record second quarter revenue of US$1.082 billion (A$1.50 billion) for the three months ended April 30, 2026, up 8% year-on-year and 5% on an organic basis, a result the company's chief executive described as reflecting strong execution across both its CooperVision and CooperSurgical divisions.

The headline number will be welcome reading for eyecare practitioners who distribute or prescribe CooperVision products, as the contact lens arm continues to demonstrate solid demand fundamentals despite ongoing currency headwinds.

CooperVision holds its ground

CooperVision contributed US$723.5 million (A$1.01 billion) to group revenue, up 8% on a reported basis and 4% organically. The toric and multifocal category was the standout performer, growing 7% organically to US$364.9 million (A$507 million) a result that reflects continued premiumisation trends in the contact lens market as more patients transition to specialty modalities.

Geographically, the Americas and EMEA were the primary growth engines, delivering organic gains of 7% and 6% respectively. Asia Pacific was the exception, slipping 6% in constant currency, a drag that will warrant monitoring given the region's longer-term growth potential.

Surgical arm accelerates

CooperSurgical posted US$358.0 million (A$498 million) in revenue, up 8% reported and 6% organically. The fertility segment was particularly strong, growing 10% organically to US$143.8 million (A$200 million) notable given that the division has been navigating the fallout from a December 2023 voluntary recall of embryo culture media.

The company said it has now reached agreements to resolve substantially all claims related to that recall, recording a net pre-tax litigation charge of US$271.6 million (A$378 million) in the quarter. The charge, comprising US$324.1 million (A$450 million) in accrued liabilities partially offset by US$52.5 million (A$73 million) in expected insurance recoveries, drove GAAP diluted EPS to a loss of US$(0.40), compared with a profit of US$0.44 in the prior corresponding period.

Non-GAAP picture considerably brighter

Stripping out the litigation charge and other one-off items, non-GAAP diluted EPS rose 26% to US$1.21 (A$1.68), marking the company's tenth consecutive quarter of exceeding consensus earnings expectations. Non-GAAP operating margin expanded 260 basis points to 27%, which management attributed to disciplined cost management and synergies from last year's internal reorganisation.

Free cash flow came in at US$96.4 million (A$134 million) for the quarter, with operating cash generation of US$182.8 million (A$254 million) partially offset by US$86.4 million (A$120 million) in capital expenditure.

Guidance raised

For fiscal year 2026, CooperCompanies lifted its total revenue guidance to US$4.285–$4.321 billion (A$5.96–$6.01 billion), implying organic growth of 3.5–4.5%. CooperVision is guided to US$2.883–$2.908 billion (A$4.01–$4.04 billion), while CooperSurgical is expected to reach US$1.402–$1.414 billion (A$1.95–$1.97 billion). Non-GAAP diluted EPS guidance was set at US$4.58–$4.66 (A$6.37–$6.48).

The company also reaffirmed its long-term free cash flow objective of exceeding US$2.2 billion (A$3.06 billion) across fiscal years 2026 through 2028.

CEO commentary

"Our performance reflects solid execution across our businesses, supported by new product launches, favourable demand drivers, and ongoing focus on operational discipline," said President and CEO Al White. He added that resolving the fertility media recall claims represented "an important step" allowing the company to move forward with its strategic review.

CooperVision results reinforce the ongoing momentum in premium contact lens categories, particularly toric and multifocal lenses, as an ageing population and growing myopia prevalence continue to expand the addressable market domestically and globally.