The Cooper Companies Inc. (Coopercompanies) reported fiscal third-quarter revenue of $578 million, a 14% decline from the same period the prior year but higher than analysts’ consensus of $536 million. The company attributed the results to better than expected recovery in both its Coopervision Inc. (CVI) and Coopersurgical Inc. (CSI) businesses.

Coopervision

CVI sales totaled $449 million for the quarter, down 11% year over year. However, the decline was in low single digits in June and July, after a 30% drop in May. That improvement was seen across all major markets – the Americas, Asia Pacific and Europe, the Middle East and Africa (EMEA).

“With our relatively strong June performance of down 3%, we hit key milestones, including increasing our global market share to 25% and becoming the #2 contact lens company in the world,” Albert White, Coopercompanies’ president and CEO, said on an earnings call.

Misight (omafilcon A), CVI’s daily-wear, single-use, soft contact lens designed to slow the progression of myopia in children, tallied $1.6 million in sales for the quarter. Since launching this spring, Coopercompanies has seen strong interest in the lens and certified over 1,000 optometrists in the U.S. to fit it. The U.S. FDA approved the first-ever lens for myopia management in children in November 2019.

“Myopia management is in its infancy, but it’s set to become a brand new multibillion dollar category, and we’re at the forefront,” White said. “Regarding the total addressable market, if we narrow the market to just 8- to 12-year-olds, which covers the FDA’s approval for Misight, we estimate the U.S. myopia management market to be around $1.5 billion from a manufacturer’s perspective.”

He anticipates interest in pediatric eye care will ramp up as children head back to school, especially with increased screen time and videoconferencing due to the COVID-19 pandemic. Overall, the company’s myopia management line, which also includes ortho-k lenses, grew 15% in the quarter to $9 million.

White also noted a “halo effect” from the Misight launch that spurred positive activity in the company’s daily silicone hydrogel and Biofinity franchises. Biofinity and Avaira combined declined 8% in the quarter, with strength seen in Biofinity toric and Energys lenses.

Jeffries analyst Anthony Petrone called CVI’s results a “good showing on low expectations.”

“Looking to F4Q, guidance calls for -2% to +2% relative to up LSDs issued last Q suggesting that some combination of COVID related headwinds (new fit pressure, wearer behavior, restocking) will linger into year-end but possibly into early F2021,” he wrote.

Coopersurgical

Turning to CSI, third-quarter sales declined 24% to $129 million – but nonetheless exceeded expectations, given the impact of the pandemic on nonessential and elective procedures, White said. “Even more encouraging, both the fertility and office and surgical business segments posted improving results as we proceeded through the quarter and into August.

Paragard, an intrauterine device, experienced a strong rebound as offices and clinics reopened, snagging $34 million for the quarter. Still, Paragard was down 28% year over year, “basically because we had no sales in the first month of the quarter, and then everything kind of ticked back up,” White said. He expects that channel inventory will return in Q4, but Paragard will still be down for that quarter.

In fertility, the rebound has been uneven as the Asia Pacific region has lagged behind Europe and the Americas in reopening in vitro fertilization (IVF) clinics. In India, for example, where Coopercompanies has been seeing growth, only about 30-35% of IVF clinics are currently open, White said.

For the fourth quarter, management predicted total revenue topping out in the $665 million to $693 million range.

Other medical device sales, including Insorb and Endosee Advance, are also rebounding as deferred elective procedures are steadily rescheduled, management said.

Wells Fargo senior analyst Larry Biegelsen reacted to the results by raising his full-year estimate for the company to $2.43 billion in sales and earnings per share of $9.56, from $2.37 billion and $8.81 previously.

“While management believe the guidance is reasonable given the uncertainties of the pandemic a tougher comp, the down yr/yr sales outlook may prove conservative as both CVI and CSI already returned to ex-FX growth in Aug,” he wrote.

At 3 p.m. Friday, Coopercompanies stock was $326.23, up 18.52 from the previous day’s close of $307.71.

No Comments