Cooper Companies (NASDAQ:COO) reported third-quarter fiscal 2026 revenue of $1.066 billion, up about 1% on both a reported and organic basis, as record free cash flow and earnings growth offset pressure at its CooperVision contact lens business from planned U.S. channel inventory reductions.
Non-GAAP earnings per share rose 4% to $1.15, including approximately $0.03 from tariff refunds, while operating margin increased 30 basis points from the prior year to 26.3%. The company generated quarterly free cash flow of $273 million, its highest quarterly total on record, bringing year-to-date free cash flow to $528 million, up 86% year over year.
Strategic review ends with CooperSurgical retained
Cooper said its board concluded a strategic review that included evaluating a possible sale of CooperSurgical. White said the company received significant interest and engaged with numerous parties, but the board unanimously determined that retaining CooperSurgical would better serve shareholders than pursuing a transaction at this time.
According to White, late-stage valuations were affected by temporary factors, including developments involving a competitive entrant in the non-hormonal IUD market and the company’s fertility litigation settlement. He said offers did not adequately reflect CooperSurgical’s intrinsic value and long-term potential.
The company said it would intensify its focus on profitable organic growth, disciplined capital allocation and share repurchases. White said the strategic process also highlighted opportunities to improve portfolio profitability and operational leverage.
Cooper repurchased $339 million in shares during the quarter, bringing fiscal year-to-date repurchases to $445 million. The board also increased its repurchase authorization by $1 billion, leaving approximately $1.5 billion available for future buybacks. Chief Financial Officer Brian Andrews said the company maintained leverage below two times.
CooperVision inventory actions weigh on reported growth
CooperVision revenue totaled $717 million, essentially flat from a year earlier. White said the Americas results reflected proactive U.S. channel inventory reductions, while EMEA and Asia-Pacific performance was broadly in line with expectations.
White told analysts that U.S. consumption continued to rise at a mid-single-digit rate during the quarter and in the first month of the fourth quarter. He said the reduction in CooperVision guidance was entirely related to channel inventory rather than a deterioration in underlying demand.
Without the inventory reduction, Americas revenue would have grown about 5% in the third quarter, White said. The company expects a similar inventory-reduction impact in the fourth quarter and expects to complete the vast majority of the effort by the end of fiscal 2026.
Management attributed elevated inventory to several factors, including purchases ahead of price increases, customer consolidation, IT upgrades and inventory associated with recently won private-label contracts. White said the company chose to accelerate the inventory correction rather than allow excess stock to work through the channel over a longer period.
CooperVision is also rationalizing legacy hydrogel products, which White said declined at a double-digit rate. The company expects that work, along with certain Asia-Pacific portfolio actions, to be largely completed in the fourth quarter.
- MyDay posted double-digit growth in EMEA and double-digit consumption growth in the Americas.
- MyDay Toric, MyDay Multifocal and MyDay Energys each delivered double-digit growth.
- MiSight organic revenue rose 20%, led by EMEA and the Americas, though China weighed on Asia-Pacific results.
- Biofinity was flat, as EMEA strength and made-to-order portfolio growth were offset by U.S. inventory actions.
White said CooperVision is expanding sales coverage, customer marketing programs and commercial analytics capabilities. In the U.S., the company plans to add sales capacity reaching roughly 5,000 additional customer locations. He said the company has won contracts and has a broad product portfolio but has not invested sufficiently in salesforce and marketing support to convert those wins into revenue.
Management expects newly hired sales representatives to be trained and deployed around early to mid-fiscal second quarter of 2027, with a more meaningful revenue contribution potentially arriving later in the year. White also said the company is accelerating certain product development efforts previously expected closer to 2030.
CooperSurgical posts fertility growth
CooperSurgical revenue was $349 million, up 3% organically. Fertility revenue increased 5% to $141 million, supported by broad-based portfolio strength, genomics demand, clinic wins and expansion within existing accounts. Softer capital equipment sales partly offset the gains following a strong prior quarter.
White said the company continued to gain market share in fertility, with growth led by the Americas. EMEA and Asia-Pacific results were mixed because of macroeconomic headwinds in the Middle East and China. He cited continued cycle growth, increased clinic investment and strong genomics performance as reasons for optimism about the fertility business.
Office and surgical revenue totaled $208 million, up 2%, with medical-device sales increasing 4%. Paragard revenue was flat. White said a competing non-hormonal IUD has received approval and its acquisition closed during the quarter, though the company did not provide further outlook commentary on its potential impact.
Tax benefit and fourth-quarter outlook
During the quarter, Cooper recorded an approximately $307 million discrete tax benefit following the favorable completion of the U.K. HMRC examination of its fiscal 2021 intellectual-property transfer and related assets. Andrews said the resolution provides clarity on the matter and is expected to extend meaningful non-GAAP tax benefits for at least another 10 years.
For the fourth quarter, Cooper forecast consolidated revenue of $1.057 billion to $1.08 billion, representing organic growth of 0% to 2%. CooperVision revenue is expected to be $692 million to $706 million, down 2% to flat organically, while CooperSurgical revenue is projected at $364 million to $374 million, up 4% to 6% organically.
The company expects fourth-quarter non-GAAP EPS of $1.05 to $1.09 and approximately $170 million in free cash flow excluding roughly $272 million in litigation-related payments. Andrews said increased commercial investments at CooperVision, foreign-exchange headwinds and lower tariff refunds are expected to pressure fourth-quarter gross and operating margins.
For fiscal 2027, Cooper did not provide full guidance. Andrews said a scheduled increase in U.S. taxation of foreign earnings is expected to raise the company’s non-GAAP effective tax rate to about 17.5% from roughly 15.5% in fiscal 2026, all else being equal.
About Cooper Companies (NASDAQ:COO)
Cooper Companies, Inc (NASDAQ: COO) is a global medical device company headquartered in San Ramon, California. Founded in 1958, the company has grown through strategic acquisitions and organic development to become a major provider of vision care and women’s health products. Cooper Companies operates through two primary business segments—CooperVision and CooperSurgical—each serving specialized markets within the healthcare industry.
The CooperVision segment develops, manufactures and markets a broad range of soft contact lenses, as well as related accessories.
