COO - NASDAQ

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2025 The Cooper Companies, Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I would now like to turn the conference over to Kim Duncan, VP of Investor Relations and Risk Management. You may begin.

Good afternoon, and welcome to The Cooper Companies, Inc. first quarter 2025 earnings conference call. During today's call, we will discuss the results and guidance included in the earnings release and then use the remaining time for questions. Our presenters on today's call are Albert 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 revenues, EPS, operating income, margins, cash flows, and other financial guidance, expectations and targets, strategic and operational initiatives, market and regulatory 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 captions forward-looking statements in today's earnings release and are described in our SEC filings including The Cooper Companies, Inc.'s Form 10-K and Form 10-Q filings, all of which are available on our website at coopercos.com. Also, as a reminder, the non-GAAP financial information we will provide on this 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]. And now I will turn the call over to Albert White for his opening remarks.

Thank you, Kim, and welcome everyone to today's fiscal Q1 earnings call. We are off to a strong start this year reporting record Q1 revenues and earnings. We met our expectations for revenues and exceeded expectations for margins, earnings, and free cash flow, and this included overcoming the negative impact of currency. We are also outperforming our operational plans at CooperVision and have increased availability and accelerated product launch activity. This includes moving up international launch dates for MyDay Energous, increasing availability of our MyDay multifocal and extended toric ranges, and starting early-stage launch planning for MyDay MySite outside the US. We have also increased our private label availability as that part of our business has started accelerating. We will discuss all this during the call, but let me say we are in excellent shape driven by strong operational execution. Moving to the quarterly numbers, consolidated revenues were $965 million, up 4% year over year and up 5% organically. CooperVision reported quarterly revenues of $646 million, up 4% and up 6% organically. Cooper Surgical posted quarterly revenues of $319 million, up 3% and up 2% organically. Margins improved nicely and non-GAAP earnings per share were $0.92. For CooperVision, the Americas grew 8%, EMEA 6%, and Asia Pac 3%. Within categories, torics and multifocals grew 10% and spheres were up 3%. Within modalities, our daily silicone hydrogel lenses, MyDay, and Clarity grew 9% and our silicone hydrogel FRP lenses, Biofinity and Avera, were up 9%. Our myopia management portfolio grew 20% with MySite up 27%. As we discussed on our last earnings call, the quarter started soft with some channel inventory contraction but quickly returned to normal. The only area that continued to see struggles was China where our business was impacted. Turning to product details and starting with our premium daily silicone hydrogel lenses, MyDay is seeing healthy demand with torics, multifocals, and Energous all performing really well. MyDay Toric continues to see success with our parameter expansion rollout being received extremely well in new markets around the world. And we are also increasing availability in existing accounts where demand remains very high. The fantastic design and toric lens which mirrors Biofinity's design, combined with the widest toric SKU range in the market gives us a great competitive advantage and we believe we have a long runway of success in front of us. MyDay multifocal also had a strong quarter driven by the unique combination of its advanced design paired with an easy fitting system delivering very high satisfaction levels driven by an incredible 98% fit success rate in two pairs or less. That is critical for busy eye care practitioners who want to optimize chair time while capitalizing on the large, lucrative, and growing presbyopia segment of the market. And MyDay Energous continues to grow nicely with ECPs and patients loving its innovative digital boost technology designed specifically for today's digital lifestyle. We will be launching this lens in additional markets soon and believe it will be extremely well received. Wrapping up on MyDay, our investments in capacity expansion are running ahead of schedule allowing us to be more aggressive with all our MyDay activity which is obviously great to see given the strong demand. Turning to our Clarity portfolio, we continue posting nice growth with a very high-quality alternative to MyDay at a lower price point. We are receiving fantastic feedback from customers in the US and Canada on our redesigned Clarity multifocal, and we are launching in APAC later this month with more markets to follow. This upgraded multifocal mirrors the MyDay design providing wearers optimal comfort and vision while giving ECPs confidence they will have the same fitting success they currently enjoy with the MyDay Multifocal. Moving to frequent replacement lenses, Biofinity continues to deliver great results led by the strong performance of our Toric multifocals and industry-leading extended range offerings. Biofinity remains the number one lens in the world with more people wearing it than any other contact lens and the reason is simple. It is an incredibly comfortable lens. It has market-leading technology. It offers more prescription options than any other lens, and it is sold at a great price point. Turning to myopia management. After a soft start to the quarter, we saw a significant pickup in activity particularly in the US. MySite led the way, and we continue forecasting MySite growth of around 40% for the year. Supporting this growth is a recent realignment of our US sales force to double coverage, additional sales resources in key European markets, expanded digital marketing and CRM programs, and increasing activity around key account private label deals. In parallel, we are reinforcing CooperVision's leadership in this category with investments in R&D, and clinical study activity and with advocacy groups supporting the industry's continuing move to making myopia control standard of care. I am also happy to report that our capacity improvements in MyDay have allowed us to start planning for the launch of MyDay MySite outside the US. It will take a little while to get launched, but it is now on the radar. We expect the combination of the market-leading comfort and design of MyDay combined with the technology of MySite to make MyDay MySite a truly exciting entry into this market. Lastly, in this area, we are seeing tremendous growth with Sight Glass in China which is part of our joint venture with Essilor Luxottica. And we are seeing improving traction with OrthoK, which was up 9% globally. For the broader contact lens industry, we forecast market growth of 5% to 7% this year in constant currency with us taking share. This follows last year where the market grew 7% and CooperVision grew 8%. Factors driving the market remain largely the same, including the ongoing trade-up to dailies, growth in torics and multifocals, growth in wearers, improved pricing, and for us, growth in myopia management. To conclude on CooperVision, we received some questions around our private label business. So let me address those. To start, we have not changed our private label strategy. It is around one-third of our revenues, and it is a core part of our long-range strategic growth plan. A few points to note. Contact lens manufacturers produce lenses using different materials and different lens feeds such as lens thickness, size, and design. So you cannot replace them without patients noticing, especially with torics and multifocal. Also for private label, packaging, label, and distribution is more complex as you need tremendous flexibility within your logistics platforms to meet customer demands. And lastly, our private label portfolio is very diverse with a significant number of long-term contracts tied to a wide variety of brands including at times different brands within the same customer. Moving to Cooper Surgical. We reported revenues of $319 million, up 3% or up 2% organically. This was actually slightly ahead of our internal expectations remembering that we implemented an important IT system upgrade in fiscal 2024 which resulted in buy-in activity in Q1 and shipping disruptions in Q2 of last year. This meant a tough comp for Q1, but it is an easier comp for Q2. We also had strong capital equipment sales in fertility in Q4 of last year, which made for a tough quarter sequentially. Regardless, this was all expected and we remain comfortable with our full-year guidance of 4% to 6% organic growth. Moving to the details. Fertility posted quarterly revenues of $120 million, up 1%. This was an unusual quarter for us in terms of revenue growth but it was due to the unique items I mentioned earlier. The important takeaway is that this was a blip and we expect fertility to return to high single-digit to low double-digit growth for the remainder of the year. During the quarter, we saw strong demand for our leading portfolio of innovative products and services, including within consumables, reproductive genetic testing, and donor activity. Our pipeline of planned equipment installations strengthened nicely during the quarter. We are also continuing to see exciting activity with new innovation, including within our reproductive genetic testing business, where our cutting-edge AI-based testing methodologies are advancing efforts at detecting genetic variations at the DNA level in embryos. Our integration activity from prior acquisitions is driving efficiencies such as the recent consolidation of our donor egg and sperm storage into a centralized location. Regarding the broader fertility industry, the global market continues to expand driven by strong underlying macro growth trends. These include women delaying childbirth, improving access to treatment, increasing patient awareness, increasing benefits coverage, and improving technology. The World Health Organization estimates that one in six people worldwide will experience infertility at some point in their lives due to a variety of health factors, so this is a large industry that offers significant long-term growth potential. As a leader in the space, we remain deeply committed to supporting patients and clinics by delivering innovation, launching new products and services, providing extensive clinical training, expanding geographically, and advancing our R&D efforts. Moving to our office in surgical products and services, we posted sales of $199 million, up 4% or up 2% organically. Per my earlier comments, we had a tough comp in Q1, but expect much stronger performance in Q2, and we are already off to a good start. This performance will continue to be driven by strength in targeted minimally invasive gynecologic surgical devices, such as our Ally uterine manipulator portfolio, and within labor and delivery with products such as Fetal Pillow and our cervical ripening glue. We also saw strength in Q1 from PARAGARD, which grew 12%. Although this was primarily tied to channel fill associated with our new single-handed and a price increase. With that, let me conclude by saying that our focus remains on execution, taking share, driving profitability, and delivering on our strategic priorities, including increasing the availability of innovative products, expanding our state-of-the-art manufacturing capacity, optimizing our technology investments, developing and launching new products, and investing in our people. With that, I will turn the call over to Brian.

Thank you, Al, and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis, so please refer to the earnings release for a reconciliation of GAAP to non-GAAP results. For the first fiscal quarter, consolidated revenues were $965 million, up 4% as reported, up 5% organically. Consolidated gross margin was 68.7%, up from 67.3% driven by efficiency gains. Operating expenses increased 5% to 43.6% of revenues driven largely by commercial and R&D investments, offset by leveraging targeted areas within G&A. From a leverage perspective, we are continuing to see success in several parts of the P&L at both CooperVision and Cooper Surgical as our prior investment activity pays off. This is especially evident in our production and distribution activities, but also in certain support functions. So expect this to continue as we deliver efficiency improvements combining our back-office activity, and leveraging technology. Consolidated operating income was up 6.5%, improving the operating margin to 25.1%. On a constant currency basis, operating income grew a healthy 12%. Below operating income, interest expense was $25.3 million. And the effective tax rate was 14.3%. Non-GAAP EPS was $0.92, up 7.4% or up 14.2% excluding FX, with roughly 201 million average shares outstanding. With respect to FX, it was $0.06 negative for the quarter, $0.02 worse than what was included in our original guidance. Free cash flow was $101 million with CapEx of $89 million. Net debt decreased to $2.44 billion, with our bank-defined leverage ratio reducing to 1.91 times. To summarize fiscal Q1, this was a solid quarter and a good start to the year. We met our internal revenue expectations, delivered margin expansion, and took another step forward with free cash flow generation. Moving to fiscal 2025 guidance. We are holding CooperVision's revenue guidance range unchanged at $2.733 to $2.786 billion, up 6.5% to 8.5% organically and holding Cooper Surgical's revenue guidance range unchanged at $1.347 to $1.372 billion, up 4% to 6% organically. On a consolidated basis, this translates to revenues of $4.08 to $4.158 billion, up roughly 6% to 8% organically. We are raising our non-GAAP EPS guidance range slightly by increasing the bottom end to $3.94 to $4.02, up 7% to 9%, 11% to 13% excluding FX. Within this, we expect a very similar P&L to what we highlighted on our last earnings call with strength in gross margins and targeted OpEx leverage delivering solid earnings growth. We expect free cash flow to be in the range of $350 to $400 million and we will continue prioritizing debt reduction with those proceeds. With that, let me conclude by highlighting a few points. Our investment activity over the past several years is yielding positive results. We have emphasized our commitment to reporting improved financial returns and we are delivering on that with efficiency improvements driving higher gross margins, targeted OpEx leverage, double-digit constant currency, operating income growth, and an increase in our EPS guidance. We still have a lot of work to do, but we are on a great trajectory to continue our momentum and we remain laser-focused on strong execution. This includes leveraging our newly deployed IT systems, delivering efficiency from centralizing and harmonizing our organizational structure, including capitalizing on cross-functional back-office efficiency projects, and simplifying and standardizing our processes and procedures to reduce the need for further headcount. Our focus remains on ensuring all our activity produces strong operational success, earnings growth, and improving free cash flow generation. Now before moving to Q&A, let me make a quick comment on FX. Over the past two days, we have seen the US dollar weaken against most currencies. We did not update our guidance to reflect this move. But if rates hold, it puts us in great shape to reach, if not exceed, the top end of our EPS guidance range. With that, I will hand it back to the operator for questions.

We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you are called upon to ask a question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Jeffrey Johnson with Baird. Your line is open.

Good evening, guys. Can you hear me okay?

Yep. Hey, Jeff.

Hey, guys. So, Al, I wanted to start just on some of your MyDay commentary. You know, our conversations over the last couple of months maybe have suggested that there are actually some markets you do not have MyDay in. I think that is pretty clear that is Japan, but even some more markets beyond that. As you talk about now some of those MyDay manufacturing constraints coming off, I guess I am wondering, are there markets that you have been out of for six, twelve, eighteen months that you could go back into and it is almost a slam dunk to get some, you know, faster MyDay growth as you go back into those markets. And then I have one follow-up.

Yeah. I can probably answer that one very succinctly by saying yes. You are correct. There is demand out there whether it is countries that we are not in right now that we can reenter or go into, and then there are accounts within a number of those countries that are asking for more product, including within private label that I mentioned, that are asking for more product. And us just getting them more product, increasing availability and getting them more product or putting that product into a country or an account where the demand currently exists, should result in some nice sales growth.

Okay. Any way you could quantify you are out of markets that account for 5% of your global revenue that other lenses are in, anything like that, number one. And then maybe just you know, you do not talk very often about the private label business but since you brought it up, I thought maybe I would push you there just a little bit. You know, on private label, how has that been growing each of the last couple of years relative to your branded business? Faster, slower, about the same? And, you know, given some of the questions that have been raised with RFPs out there on one of your bigger clients right now on the private label side, would you expect that private label business to grow, you know, similar trend line relative to branded as you would seen in the last couple of years or any changes there on a go forward Thank you.

Sure. And MyDay, I will not quantify it other than to say as we are increasing production right now and things are improving and I am seeing product working its way through our channel, it certainly gives me more confidence especially in Q3 and Q4 this year. Right? I mean, we kept our guidance the same for a reason, and we have good reason to hold that guidance where it is based on what we are seeing internally in the topics we just discussed. On private label growth, the last couple of years, it has been growing in line. I would say roughly the same as what our branded business has been growing. We are starting to see or we have started to see a little bit of an acceleration in that part of our market. I would think as I sit here today, if I was a betting man, I would say that our private label business will grow a little bit faster than our branded business, probably for the remainder of this year and it would not surprise me as next year. You know, if customers changed their purchase habits, we have a tendency to see some increases in private label if they are looking for, you know, lower cost or bulk purchase opportunities and so forth. So I would think private label actually strengthens a little bit.

Thank you.

And our next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.

Hey, Al. Good afternoon. Thanks for taking the question. So, Al, I mean, the question is just asking, you know, Jeff's question maybe it a little bit differently. Maybe just help us understand why your growth was below the peers in the fiscal Q1. You know, maybe you can give us kind of the calendar year growth and maybe you could tell us what January and February did, just a little bit more confidence that you can accelerate the CVI growth, you know, from Q1. And it sounds like Al, sorry for the multipart question, but is it Q3 and Q4 with some of this supply comes online? I mean, how do we think about just a little more color on Q1 you know, relative to your peers and how to think about the acceleration through the rest of the year.

Yeah. You know, we spent some time on our last earnings call and through the quarter kind of talking about how we had a soft start to this quarter. Right? And we do not give quarterly guidance, so we did not quantify that. We did. We had kind of a weak end to last year, last couple weeks, and then our fiscal Q1 started slow. And then it started picking back up, and, actually, we had a strong January, and that continued. We had a really good February. So and I am optimistic about how things are moving forward now. I think the market is doing well, and I think we are doing well. I will go back and just kind of confirm comments I made before that we saw some channel inventory reductions that negatively impacted us at the beginning of November. I think we had a couple of competitors running some activity that probably just transferred some inventory holdings in the channel from one party to another party. So to me, whatever. I do not care about that kind of stuff. At the end of the day, when I look at our growth right now in our recent numbers, I am pretty bullish on where things set. I look at the quarterly gating, no reason we are not going to have a good quarter in Q2. I think we will. I think we have got the potential certainly to have better quarters at CooperVision in Q3 and Q4. When I think about the release schedules associated with that MyDay product I am talking about.

That is very helpful, Al. And just one follow-up. The non-hormonal IUD was recently approved which, you know, I know you have been expecting. What is assumed in the guidance for the competition to PARAGARD? And how do you think about the longer-term impact of a new competitor? Thanks for taking the question.

Sure. You know, I think that Perrigo's probably going to be the same as what we said. It will be down a couple percent to up a couple percent this year. We had a good start to the year. We have got some purchase in going with our single hand inserter that we have in the market right now. But before I get too optimistic on that because there is definitely channel fill there, you know, we want to see end-user demand increase. So for this year though, I would say for this fiscal year, yeah, somewhere in that kind of minus two to plus two, something like that. You know, when I look at the competitive product, you are right. It got approved. I mean, at the end of the day, they have a couple of hurdles that they have to get over, you know, that product is used to make a nitinol, which is the same material that was used in Assur, which anyone who knows our space will remember that product. You know, it is less copper, so it is less efficacious. It has a three-year label compared to our ten-year label. So you know, we will see how it goes. I think we are well-positioned. We have got a great PARAGARD team, so we will see how it plays out.

Super helpful. Thanks, Al.

Our next question comes from the line of Jonathan Block with Stifel. Your line is open.

Thanks, guys. Good evening. Brian, I will throw one your way to kick things off. Just gross margin was solid and certainly above our estimate, and you know, curious to anything to call out regarding the sustainability I think I heard PARAGARD of 12%. You know, I believe that is accretive to corporate gross margins, but would just love to get some color on, you know, your thoughts going forward because of course, everyone wanted the margins and now the reps were light. But the margins were really a standout. So in the quarter that is. So any color you can provide there would be helpful.

Sure, John. Thanks for the question. Yeah. You know, I would say, you know, the story on gross margins is sort of a continuation of what we talked about last quarter. You know, we are as we have been driving higher production in existing buildings, you know, we are seeing yields increase, but when we put those manufacturing lines, those high-volume manufacturing lines in existing buildings, we get better utilization, better allocation of overhead, absorption, you know, that all results in lower cost per unit. So those efficiency gains we were expecting to play out this year and that those efficiency gains will show up in gross margins year over year, probably every quarter this year, resulting in higher gross margins year over year on an as-reported basis versus last year. I would say what happened in Q1 which resulted in maybe higher margins than what you were thinking, also, it is just kind of was really tied to product mix and regional mix. As we have talked about in the past, you know, when we have strong America's revenue growth against sort of weaker Asia Pac growth, that results in a lift to gross margins. Then, of course, we had a product mix product mix advantages in Q1 with strong Biofinity sales and you referenced PARAGARD, the strong PARAGARD sales. So that probably gave us a bigger lift than maybe what you were thinking, but I would say, yeah, that the story around gross margins is going to be a good one for this year.

Okay. Great. That was very helpful. Thanks. And then I will shift gears and maybe essentially ask the same question there. Larry and Jeff did, but for the acceleration in CVI for the balance of this year, you know, against tougher comps, so obviously, the two-year stacks are accelerating even more meaningfully. Is it just this capacity thing getting better or are there any other variables you can point to it? Maybe just attack onto that I think the capacity issues are on MyDay. I believe last call, you talked about the constraints potentially going all the way to the end of, you know, fiscal 2026. And so has that now been pulled forward because you see more of a beat on how the manufacturing has gone over the past several months? Thanks.

Sure. Yeah. So much of the contact lens market is driven by upgrades. It is driven by the shift over to daily contact lenses. That is such a material positive. Right? And you see it from us. And from some of our competitors. So in this case, it is almost that simple, which is the demand is definitely out there for MyDay. It is just such a great product. I am wearing it now. I love it. You guys know that. You know, that as we produce more product and get it out to our sales force, they sell it. Regarding 2026, I would say, yes. We have improved the production. We pull some things forward. That would make me more confident in our fiscal 2026 maybe than I even was on our last earnings call.

Our next question comes from the line of Issie Kirby with Redburn Atlantic. Your line is open.

Hi, guys. Thanks for taking my question. I just wanted to follow-up on myopia with both my questions, actually. Firstly, on Sight Glass, would love a little more color on any sort of detail you can give around in the number of units sold in China, the number of children perhaps you are reaching with those products, and then remind us of the outlook for approval and rollout out. And then just as a follow-up on Sight Glass as well how we should really think about how the JV is flowing through the P&L and the impact on EPS over the next few years. And then I have another follow-up.

Sure. A couple of points on that. On the joint venture, just as a reminder, it is a 50/50 joint venture with Essilor Luxottica. We are both very passionate about myopia control. And believe it is going to be a fantastic market and believe it is great for kids, great for society. So, I will speak on both of our halves to say we are excited about it. We are passionate about it. When I look at the joint venture financial impact to us, we recognize that activity as a gain or loss below the operating income line. So it is not recognized in revenue. So that continues to run through our P&L as a loss. Which is fine for me. I mean, we are continuing to invest in the product and launch the product. I have mentioned last quarter, I think, we had launched the product in Spain under MiteEye glasses, and we have it in Canada and a few other markets. So we are continuing to kind of test it in a number of markets. As we move along with launch plans in a greater scale. I am not going to get into too many details when it comes to China because, again, this is a JV. But I will say that, we have seen some I guess, I would call dramatic increases in demand and unit activity in China. So I remain very, very bullish on SGV. It is a great product, great technology, and it is doing really well live in the market.

Great. Thank you. And then just to follow-up, I guess, on MySite within China. I think you mentioned China. The declining. Was that really to do with the OK business, or does that include MySite within China as well? And then just broader comments on the demand and the dynamic you are seeing from MySite in China would be great. Thank you.

Sure. As a reminder again, for China, for MySite and our OrthoK business, that is through our partnership with Essilor Luxottica. They did a great job. We had a good quarter. We had nice growth in MySite, China. We had nice growth with our OrthoKAY products in China. So we are back on good footing there and certainly moving in the right direction. So I applaud them in the relationship and how well it is going there. That had nothing to do with our myopia management business in China. That was our core business, if you will, the core contact business where we saw the declines.

Okay. Great. And just quickly screen to the follow-up. Sorry. The declines in China, is that just tied to broader macro weaker consumer? Just some color, and that would be great.

Sure. I think a little bit, but I think it was more specific to us than it was that. I think some of our competitors, I believe, had good quarters in China, and I believe it pushed their numbers up. If I had to look at one of the key deltas, when I look at market share and activity in the quarter, comparing ourselves to our competitors, I will bet you one of the biggest differences by far if you went to that if you got to that level of detail was them having some success in China and us declining. So I think that was more us. It is something some things that we need to fix in and straighten out.

Perfect. Thanks so much.

Yep.

Next question from Robbie Marcus with JPMorgan. Your line is open.

Oh, great. Thanks for taking the questions. Two for me. In the script, you said fertility met your expectations but only came in 1% well below the street. How do I think about the size of the capital pull forward? Or if it was really pull forward fourth quarter to first quarter, and if it was expected, how do you get confidence in the return to potentially double-digit growth for the rest of the year. Then I have a follow-up.

That is a very fair question. Yeah. We did we definitely had some capital pulled into Q4. I think I have mentioned that on last call, but it was a decent amount of capital that got pulled in. And then we have had a little bit kind of almost get pushed out a little bit if you will. Our capital backlog for installations improved quite a bit during the quarter, and we have good visibility on that as you could imagine. So one, I feel good from that perspective. Two, when I look over the year over year, we definitely had orders pulled into Q1 of last year, and we had a weaker fertility quarter in Q2, which made it a tough comp. So I think when we move into Q2 here, and frankly for the rest of the year, you know, I feel pretty good about fertility. I think fertility is something like fourteen of our last fifteen quarters was double-digit growth or something like that. So to me, this was an anomaly. We have good visibility on that. Our demand for our consumables is strong. Demand for our reproductive genetic testing is strong. Our donor activity is strong. So the team has really got their arms around it. That is why I called it like a blip. It seems like an oddity, but I feel pretty confident that you will see a return to something more normal, at least upper single digits and double digits the rest of the year.

Great. And then on China. APAC is about 20% of CVI sales. How do we think about the size of China there? And what is assumed in the rest of the year for guidance in China? Thanks.

Sure. So China would be a little bit less than 5% of our revenues on a consolidated basis. So not huge, but it is an important market for us. It could certainly definitely impact our Asia Pac growth rates when you have a struggle in China, especially when it is down. We have done some stuff there. We have already made some changes. We have some work going. We are making some we are seeing some progress already on that. We have incorporated those challenges into our guidance. It is being more than offset by some strength in some other countries. And by the increasing amount of MyDay capacity that we are releasing back through our channels.

Great. Thank you very much.

Yep.

Our next question comes from the line of Steve Lichtman with Oppenheimer. Your line is open.

Thank you. Evening, guys. Al, I was wondering if you could talk to what you are expecting for price in your contact lens business this year. And has some of the softening consumer sentiment created any pushback to date?

I would say no change from what we talked about last time. You know, the market is probably on a global basis 2% to 3% somewhere in there. I would say we are in that same range on a net basis, probably more in the mid-upper part of that. Because we took a little bit more price than some of our competitors this year. Have not seen that pushback. I mean, we are continuing to see very strong demand for the premium or the higher-priced products, if you will, the Toric, the multifocals. And then from a segment perspective, still seeing very high demand for our products and our competitors coming on the same when it comes to dailies wanting to wear dailies.

Got it. Thanks. And then, Brian, just wanted to go back to mix of expenses this year. You talked about the strength in gross margin. You also talked about some of the initiatives on MySite. Are those initiatives already embedded in sort of what we saw in the OPEX and the first quarter? Or, you know, should we anticipate that building a little bit? Anything more you could talk about on that front would be helpful. Thanks.

Sure, Steve. Thanks for the question. Yeah. I mean, we have talked about leveraging SG&A. You know, we did that last year with our strong OI growth. You know, we will do that. We will continue to see efficiencies within like I talked about earlier, manufacturing packaging and, you know, distribution. We are getting leverage from functional areas within G&A. And but, you know, the strong gross margins will allow us to balance our investment activity. And really ensure that we meet or beat our numbers. So we will continue to see, you know, an ebb and flow as we work.

Got it. Thank you, guys.

And, again, if you would like to ask a question, press star then the number one on your telephone keypad. We do request for today's session that you please limit to one question and one follow-up. Thank you. Our next question comes from the line of Joanne Wuensch with Citi. Your line is open.

Good evening, and thank you for taking the question. I will just put them both upfront. I am curious if you have a view on some of the language coming out of Washington as it relates to tariffs. And how you think about that and its impact on your business. And then my second question has to do with the market. As I look at all the participants that have reported so far, including yourself, there seems to be a market growing faster than 5% to 7%. What is the mismatch between lining up everybody's results and those market commentaries market growth commentaries? Thank you.

Couple of quick I mean, one I will not go too far into what is coming out of the administration and tariffs. Other than to say it does not really impact us right now. So I will not go down that path because I do not have to. On the market growth, yeah, the market grew 7% last year. As I mentioned, we grew 8%. So I had commented that I think the market will grow 5% to 7%. We will see how that plays out as we go through the year. But the underlying factors that drove that 7% market growth last year are still there. They are still there. The market is still healthy. It is still strong. We are seeing good consumption. We are seeing good demand. We have got good products as an industry that are going into the marketplace. Increasing availability. Replacement schedule against the older products, with newer products. So a lot of good exciting things going in the market. I do not know if the market goes to 7% again. I sure as hell hope it does. But, you know, when I look at it and say, hey, is it going to be somewhere in that 5% to 7%? I think it probably will be.

Thank you very much.

Yeah.

And our next question comes from the line of Jason Bednar with Piper Sandler. Your line is open.

Hey. Good evening. Thanks for taking the questions. Al, I wanted to start on the MyDay, MySite reference. You think you commented you are doing early launch planning. I know it is early, but what exactly does this entail? What are the prerequisites or trial work that might be necessary here? And then I also, I know it is very early days, but talk to us a little bit about pricing strategy, if you could. I guess I am wondering typically see silicon hydrogel lenses come with the standard price premium. Is that the right way to think about the approach? Are you off it on what the premium on top of MySite, or would you look to slot this new lens in at your existing price point and use the introduction as a way to make price on MySite more affordable.

Yeah. Jason, great questions. It is literally what we are talking about internally right now. There is some regulatory work that we have to do. In different markets to get the product approved and get it into the markets. So that will take us a little bit of time. And then we are working around the strategy. I mean, MyDay has an incredibly strong brand name, so I love MyDay, MySite because it is just it is perfect. Right? It is two leading products, connected together. When I think about pricing, you know, that is something we are working through right now. We need to work through, which is does pricing need to be lower on a more on the more traditional MyDay lens with a higher price MyDay, MySite, or how do we put those together? How do we sell that through private label? How do we sell that through independent practitioners? How do we think about ensuring that children can get this product? I mean, one of the things I remain passionate about is that this is for children and we need to get this product in the hand in the eyes of children and so forth. So if price is a challenge and we could sell more, if we had a lower-priced product, especially a really high-quality one like the existing MySite product, you know, I would be an advocate for that even if it costs us some challenges to getting there. Like, getting this product on kids' eyes, and building this marketplace is really important. So we are continuing to work through that internally, figure out that pricing strategy and so forth. Because at the end of the day, this is a big win. It is just a matter of how we get there. And I can tell you this is a big step. The other thing with MyDay, MySite is it is going to have a toric. And there is a decent percentage of the marketplace right now, maybe it is a third of the kids out there where optometrists are hesitant to fit MyDay because the kid has an astigmatism, we are going to be able to launch a MyDay, MySite Toric, and that is going to be another great entrance in this market.

Alright. That is really helpful. Thanks for all that.

Our next question comes from the line of Patrick Wood with Morgan Stanley. Your line is open.

Hi, beautiful. Thank you. I will keep it to one. US, target penetration, I would love to like, can you remind us kind of where you think we are up to today in target penetration for those who are asthmatic. And from the market research you guys are doing, it may be a dumb question, but, like, what proportion of those do you think who have not switched to Toric is it because they do not know they are asthmatic, or is it because they are choosing somehow not to for reason or other? Like, what is the marginal slip there if you see what I mean?

Yeah. It is a great question, and long answer. Just because when you break that toric market up into its segments and you look at monthly versus dailies and a lot of the daily torics are newer into the marketplace. And then depending upon what markets you are looking at with expanded range of torics and so forth, it gets pretty broad. The other thing about it is that your toric penetration in a market like the US is quite a bit higher than it is in Europe. And then it would be the lowest, generally speaking, in a lot of the Asia Pac markets out there. So it is clearly showing a lot of growth. It is good growth. If you looked at it on a revenue perspective, it used to be running for many years about 25% of revenues coming from Torics. That number continues to move up. I am not sure what it is at now, but 30%, something like that, low thirties. Because doctors are doing a better job identifying patients who have astigmatism and then fitting them correctly. And the old days where it was super difficult to fit someone in a toric and get the right toric and get a stable toric a lot of those days are moving past us. You know, the Biofinity toric is such a great design and such a stable product. And that same design being in MyDay gives you a lens that as a doctor, you are very comfortable fitting. You know you can fit it. You know the visual acuity is going to be strong, and you know the patient is going to walk out the door happy with that product. So without getting into a bunch of crazy numbers, I would say, penetration highest in the US, Americas, mid Europe, low Asia Pac, growing in all areas. And the majority of that growth coming either from daily silicone hydrogels or from Biofinity itself.

Love it. Thanks.

Yep.

Next question comes from the line of Craig Bijou with Bank of America. Your line is open.

Good afternoon, guys. Thanks for taking the questions. A couple follow-ups from me. One, Al, I guess, maybe a follow-up on the cadence of CVI growth through the year. You know, I heard your comments on Q3, Q4. Those are expected to be strong. You have a pretty tough comp in Q2. So maybe just a little bit more expansion on how to think about that growth in each of the quarters, and then I will throw my other one on here. EMEA, 6% growth this quarter. Slightly lower than kind of the double-digit that you guys have been doing the last couple of years. So just want to understand anything with EMEA specifically in Q1 and how to think about that for the rest of the year? Thanks, guys.

Sure. Yeah. EMEA has been putting out a good growth here for a little while, just fantastic team over there that is killing it. Got to get over there and see them because it has been a little while since I have been there. I should go there and tip my hat to the level of excellence that that team is delivering. But I would not take anything away from the 6%. I think they are going to put up good numbers and they are going to continue to put up they put up good numbers, they are going to continue to put up good numbers. If I look at CooperVision growth through the year, yeah, I mean, Q2 is going to be a fine quarter. It is a tough comp, but going to be a good quarter. Q3, Q4 have potential to have faster organic growth rates. Maybe the only other rental I would mention is, you know, Brian just ended his script kind of talking about the fact that we did not roll in the improvements from improved FX over the last couple of days. That is a benefit, obviously, to earnings if those rates hold. Would also be a benefit to topline, and that would push those benefits would push more on a forward basis, which would positively impact Q3 and Q4 on an as-reported basis.

Next question comes from the line of Brett Fishbin with KeyBanc. Your line is open.

Hey, guys. Thank you very much for fitting in the questions. Just wanted to ask one follow-up on PARAGARD. You know, first time that there has been a new entrance into this market in a really long time. So just curious if you could touch on maybe any changes in strategy you would be considering just given the changing dynamics maybe either around pricing or marketing of the product. Thank you.

Yeah. To me, continue to execute. That is what it is about. We have got a killer team there. They do a great job. They know the product. Extremely well. We went through a relatively length FDA approval process to get our new one-hand inserter or single-hand inserter approved. We are putting that product in the market, making sure everyone knows how to use it and so forth. So to me, it is like, no. You do not need to change. We need to keep executing. We need to keep doing what we are doing. We just had a hell of a Q1. Let us keep our heads down and keep executing and drive end-user unit growth on that because that is ultimately what is going to improve that product's performance.

Yeah. And then I will just ask one more follow-up on the same topic. I think you highlighted a couple of the advantages of PARAGARD versus this product. I think you touched on the efficacy and duration. But it feels like, you know, those are definitely good points. But just thinking about, you know, how it is incorporated into the guidance, it feels like still a pretty tight range. Just given how the product has swung positive and negative at times in the past. Maybe just any thoughts on, like, risk to that guidance and, like, how you will be evaluating that going forward? Thanks again.

Yeah. I think that the key probably to take away on that is we have all this variability by quarter with that product, which is kind of interesting. You know, last year, I think we grew 2% if I remember right. But the 2% came from some pretty dramatic swings up and down. It will not surprise me if that is similar this year where we get some dramatic swings up and down. But at the end of the day, I think when you look back on it on a full-year basis, it is probably somewhere in that kind of tighter range because, really, that is what it is doing. I mean, when I look at the non-hormonal market from a user or a unit perspective, it is really not doing that much. It is down probably from a unit perspective. So you are getting a little bit of price, and at the end of the day, you will get quarterly fluctuations. But the reality is you will have a product that is relatively flat. You know, hopefully, it is up a little bit.

Next question comes from the line of Young Li with Jefferies. Your line is open.

Alright. Great. Thanks for taking my questions. I guess, maybe, I guess, I would like to start you know, fertility was kind of an unusual quarter as you mentioned. The office business space on pumps. But wanted to get your updated views on, you know, continued thoughts on M&A or continued investment in CSR. You know, whether it is geographic expansion or products to expand the back.

Yeah. So I would certainly say, we have seen an increase in our R&D within CSI. We are going to continue to work there to develop new products. We are spending some money certainly within fertility and some within our specialty medical device side. In geographic expansion. So I think you will continue to see that that is where our focus is certainly with respect to Cooper Surgical.

Okay. Great. And then for the follow-up, just on the BBI spherical growth. You know, 3% organic, Pump was not too bad. It gets tougher. Later in the year. You know, when you factor in upgrade. It looks like, you know, volume I guess just kind of curious, you know, you are expecting the second half to have a big Please. Just wanted to hear about the relative confidence for spherical growth. For the rest of the year and, you know, what sort of driving the cost the second about.

Sure. That is a really good question. You know, one of the things that is driving that in the but well, the thing that is driving that is MyDay. Anytime that you are building out a toric expanded range, and we have by far the widest toric range in the market, is you are building a lot of parameters. Right? You are building a lot of SKUs a lot of lenses, and so forth out there. And we have been doing a lot of work on that. So as we accelerate our production right now, we are increasing our production levels on our spheres, and it is going to allow us to get more spheres into the marketplace. So that ends up being the answer. It is MyDay spheres.

Alright. Thank you.

Next question from Chris Pasquale with Nephron Research. Your line is open.

Thanks. One quick financial question, and I had to follow-up on MySite. On the financial side, you mentioned that the recent dollar weakness is not reflected in guidance. You remind us what you are assuming in terms of interest rates and whether any movement by the Fed could also represent some upside. And then on MySite, to get to that 40% goal for the year, growth does need to pick up from here. Is MyDay, MySite part of how you get there, or is that really more of an FY2026 you think 40% is within reach without it?

Yeah. I will answer that one quickly. MyDay, MySite would be a fiscal 2026 story, so that is not included in 2025 numbers. That will be an increase in MySite sales based off our existing platform.

Chris, I will take the first question. Interest expense or at least the Fed expectations, there is no expectation of any Fed moves later this year. As a reminder, we have a large part of our debt fixed as it is. So, really, a quarter-point move really only has about a half a million dollar impact or so to a quarter. So no, but no. Our interest expense assumptions for the year are largely unchanged.

K. Thanks.

Next question comes from the line of Anthony Petrone with Mizuho.

Thanks. Two quick ones here. One would just be on contact lens inventory trends. Both at the distributor level, but as well as big box retailers looking at Costco here after hours. It is down and one of the things they are talking about is how tariff is kind of impacting what they are going to have on the shelf. And I imagine tariffs were also going to have an impact at the distributor level. You guys have ten distributors on the CVI side. So do you think there is any risk just on a destock or a tighter inventory situation in contact lenses. And then on CSI, you know, just any thoughts on the executive order on IVF. On the one hand, it calls for expanded access. Which is good. But on the other side of the equation, it is calling for, you know, reduced out-of-pocket expenses and lower health care costs. So just thoughts on that executive order. Thanks.

Yeah. I think on the IVF side of things, I think that executive order and I will not say just that one because there has been other activity around the world. That is all positive. Continuing to look at pricing on that and what needs to be done in pricing is so forth is an ongoing challenge. I mean, frankly, our products are relatively small portion of the cost associated with fertility. That cost is very heavily driven by the pharma side. But, no, more patients and more support for IVF is a positive. On the channel inventory side of things, there is there could be a little bit of risk of that in spots around the world talking about tighter channel inventory. That could hit people as companies kind of tighten up their hold levels. I will say that for us speaking on behalf of Cooper, a lot of that is set up around contractual obligations where certain minimums need to be met because of the demand of the product and the flow through of the product. So I do not see that certainly as no question, not a significant risk or anything. That does not mean that there are not some fluctuations that could happen on a quarterly basis.

Very good. Thank you.

Yeah.

Our next question comes from the line of Navann Ty with BNP Paribas. Your line is open.

Hi. Thanks for taking my questions. Can you discuss further your private label contract or any high customer concentration or typical length of contract etcetera. And on PARAGARD, what have you seen since the approval of the low copper IUD that you mentioned? And do you expect less than competitive impact due to the nickel energy?

Thank you. Sure. And the private label contracts, I mean, we have a lot of them. And they span in time. Obviously, when you sign them, they are longer and time goes by and they go down, you renegotiate them and extend them. So we have contracts that go out as long as ten years. A lot of contracts that are in the two, three, four, five-year range because both of us are making a commitment on both sides. Right? We are making a commitment to have that product and labeled and produced and so forth and shipped to someone's stores, they are making a commitment around it that they are going to build a brand around it and continue to sell around it. So those are very much partnership type deals, and I would say that there is just a lot of them. It is a very diverse portfolio of products, and it even has multiple brands to the same customer. And numerous examples and different geographic locations and so forth. With PARAGARD, I really do not have too much to add on that. You know, competitive product was approved, and we will see what they do with it. And when they launch it and how they launch it, and they have to go through the full REMS process on that for training. So they will do what they are going to do. In the meantime, we will do what we are going to do on that one.

Thank you.

Yep.

And our last question comes from the line of David Saxon with Needham and Company. Your line is open.

Great. Hey, guys. Good afternoon. Thanks for choosing me in. Just two quick ones. I guess, first on CVI, I think in the script, you mentioned you realigned the sales force in the myopia management part of the business. So, you know, what drove that move? What is changing? And kind of level of confidence you can manage that transition without anything falling through the cracks. And then my second is just a follow-up on PARAGARD. I think a lot of that growth has been driven by pricing. So with this new launch, kind of, you know, everything about your ability to continue to take price and see that product grow? So much.

Sure. Well, on PARAGARD, that is a fully reimbursed product. IUDs are fully reimbursed. So that is what it is. I mean, we will see how that plays out in time. We are taking a price increase right now. It is kind of an inflationary plus price increase, but I think you will continue to see that. On the sales force, work that we are doing with respect to Myopia Managed, that work is done. We went ahead and made those moves and adjust to just some of our sales practices there. You remember over the years, I have kind of talked about how we had dedicated salespeople and shifted over to dedicated salespeople and specialists who are able to work on myopia control. And we have just some an amazing team there. I am super happy with that. I am super proud of the myopia management specialists that we have in the marketplace and the education they are doing and travel and the work they do to support that product by reorganizing the sales a little bit to put it more in the hands of our traditional sales force that is really strong. That is just going to benefit that product, and we are already seeing some of that play out here. As I mentioned, we saw acceleration as we went through Q1. So that is one of the things that gives me confidence as I think about us reaching that 40% for the full year.

Great. Thanks so much.

Yep.

That concludes the question and answer session. I would like to turn the call back over to Albert White for closing remarks.

Thank you. Thank you, operator, and thank you everyone for taking the time to listen to the call today. There is not really too much to add at this point, so looking forward to continuing to execute this quarter, and I am really looking forward to getting on our earnings call here at the end of the quarter.