CooperCompanies Keeps Surgical Unit After Strategic Review
The medical device company posted $1.066 billion of third-quarter sales and a $307.2 million U.K. tax benefit as CooperVision stalled.
CooperCompanies (COO), a global medical device company, completed a strategic review that examined a sale of CooperSurgical and said its board unanimously concluded shareholders would be better served by continued ownership.
The board said it evaluated strategic alternatives involving numerous parties and that certain temporary factors, including a competitive entrant in the non-hormonal IUD market and the company’s recent fertility litigation settlement, weighed on perceived valuation. Chair Colleen Jay said the board is aligned that retaining CooperSurgical is the best path forward given the offers received.
Revenue growth slowed to 1% year-over-year in the fiscal third quarter ended July 31, 2026, to $1.066 billion, including 1% organic growth, after 8% reported and 5% organic growth in the second quarter. CooperVision, the contact-lens unit, was the inflection: sales were $717.0 million, comparable year-over-year on a reported, constant-currency and organic basis, after 8% reported and 4% organic growth in the second quarter. President and CEO Al White said the company proactively reduced U.S. channel inventory, which weighed on results and will continue to impact the fourth quarter.
CooperSurgical revenue was $349.2 million, up 2% reported and 3% organically. Fertility revenue was $141.2 million, up 3% reported and 5% organically, after 13% reported and 10% organic growth in the second quarter. Office and surgical revenue was $208.0 million.
GAAP diluted earnings per share were $2.24, compared with $0.49 a year earlier, primarily due to a $307.2 million discrete tax benefit after the favorable completion of a U.K. tax examination of the company’s fiscal 2021 transfer of intellectual property to the United Kingdom. Non-GAAP diluted EPS were $1.15, up 4% from last year’s third quarter.
GAAP gross margin was 67%, versus 65% a year earlier, which the company attributed to fiscal 2025 inventory write-offs related to a CooperSurgical product-line exit. Non-GAAP gross margin was 67%, down 60 basis points year-over-year on higher manufacturing costs and unfavorable foreign exchange. GAAP operating margin was 21%, versus 17% a year earlier, on lower operating expenses and those prior-year write-offs. Non-GAAP operating margin increased 30 basis points year-over-year to 26%, which reflected expense management and productivity initiatives, partially offset by unfavorable foreign exchange.
Free cash flow increased 66% year-over-year to $273.0 million, reflecting cash provided by operations of $341.7 million less capital expenditures of $68.7 million. The company repurchased $339.1 million of common stock, about 4.9 million shares at an average $69.16. Following board approval of an expansion of the share-repurchase authorization from $2 billion to $3 billion, about $1.5 billion remains available.
The company updated fiscal 2026 guidance. It now expects fourth-quarter total revenue of $1.057 billion to $1.080 billion, with organic growth of 0% to 2%, CooperVision revenue of $692 million to $706 million, and CooperSurgical revenue of $364 million to $374 million. Fourth-quarter non-GAAP diluted EPS is guided at $1.05 to $1.09. Full-year total revenue is now $4.229 billion to $4.252 billion, with organic growth of 2% to 3%. CooperVision full-year revenue is $2.828 billion to $2.842 billion and CooperSurgical $1.401 billion to $1.410 billion. Full-year non-GAAP diluted EPS is $4.51 to $4.55. The company reaffirmed a long-term free cash flow objective exceeding $2.2 billion for fiscal years 2026 through 2028.
White said that following the completion of the strategic review, the company is focused on profitable growth, strong cash flow generation, disciplined capital allocation, and maximizing long-term shareholder value.