Cooper Companies (the) Stock Earnings Reports

Cooper Companies reported a strong Q2: revenue $1.08B (up 8%) and non-GAAP EPS $1.21 (up 26%), marking the tenth consecutive quarter beating consensus. Key drivers were CooperVision (CV) (+8% revenue; daily silicone hydrogel MyDay, Biofinity and MiSight myopia control performing well) and CooperSurgical (CS) (+8% revenue; fertility up 13% reported / 10% organic with strength in capital equipment, Witness lab tracking, genomics and consumables). Operating margin expanded (27.5% non-GAAP) due to back-office consolidation and cost efficiencies, particularly at CooperSurgical. The company generated strong free cash flow ($96M in Q2), reduced net debt to $2.3B and repurchased $13M of stock; management reiterated buybacks as a core capital-allocation priority and expects to be more active. They initiated a strategic review of CooperSurgical and have received multiple significant indications of interest; management is advancing discussions and expects a near-term update. CooperSurgical settled ~95%+ of claims related to a Dec 2023 embryo culture media recall: the net impact was $271.6M of settlements partially offset by $52.5M insurance recoveries (this GAAP charge was excluded from non-GAAP results). Fiscal 2026 guidance: revenue ~$4.28B–$4.32B (5%–6% reported; 3.5%–4.5% organic), CooperVision ~$2.88B–$2.91B, CooperSurgical ~$1.40B–$1.41B; EPS $4.58–$4.66; free cash flow target raised to ~$650M for 2026 (excluding litigation payouts) and $2.2B FCF target for 2026–2028 (inclusive of expected litigation payouts). Headwinds: Asia Pacific softness (notably Japan and parts of China) and planned rationalization of legacy hydrogel products, tariffs (~$22M assumed for the year) and near-term gross margin pressure from FX, tariffs, freight and reduced production as inventory is optimized with an AI-enabled system. Positives: strong momentum in MiSight (24% growth), MyDay and premium lenses; fertility market improving with secular tailwinds (delayed childbirth, expanded coverage) and continued margin / cash-flow improvements from operational initiatives.