The Cooper Companies, Inc. COO reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of $3.24, which beat the Zacks Consensus Estimate of $3.20 by 4.9%. The bottom line declined 6% on a year-over-year basis.
GAAP EPS in the fiscal third quarter was $1.98, down 84% from the year-ago quarter. The company had recorded a tax benefit of $534.9 million in the year-ago quarter that was absent this year, resulting in a significant decline in GAAP EPS.
Revenues of this Zacks Rank #3 (Hold) company were $843.4 million in the quarter under review, surpassing the Zacks Consensus Estimate by 1.4%. On a year-over-year basis, the top line improved 10.5% and surged 18% at constant currency (cc). Revenues were up 9% organically. Strong revenue growth across all segments and geographies was partially offset by unfavorable currency movement, which hurt sales growth of the CooperVision (CVI) segment in the EMEA and the Asia Pacific regions.
Fiscal Q3 Segment Details
The segment’s revenues totaled $566.3 million, up 10% at cc and 2% on a reported basis. Organically sales were up 11%.
Per management, the segment witnessed an increase in revenues from Single-use sphere lenses (29% of CVI), reflecting an improvement of 13% at cc and 3% on a reported basis. Single-use sphere lens revenues totaled $163.8 million.
Toric (33% of CVI) revenues amounted to $185.9 million, up 11% at cc and 3% on a reported basis.
Multifocal (12% of CVI) generated revenues of $67.6 million, up 19% at cc and 10% on a reported basis.
Non-single-use sphere (26% of CVI) revenues were $149 million, up 3% at cc but down 4% reportedly from the year-ago quarter.
The Cooper Companies, Inc. Price, Consensus and EPS Surprise
The Cooper Companies, Inc. price-consensus-eps-surprise-chart | The Cooper Companies, Inc. Quote
Geographically, the segment witnessed an improvement in revenues in the Americas (39% of CVI), up 7% on a reported basis as well as at cc to $220.1 million.
EMEA revenues (39% of CVI) amounted to $220.2 million, up 12% year over year but down 1% at cc.
Asia Pacific sales (22% of CVI) improved 12% year over year to $126 million. However, sales were down 2% at cc.
The segment reported revenues of $277.1 million, up 39% at cc and 35% on a year-over-year basis. Organically sales were up 3%.
Sub-segment Office and Surgical products (60% of CSI) generated $165.4 million in revenues, up 36% at cc and 35% on a year-over-year basis.
Fertility (40% of CSI) revenues were $114.4 million, up 34% year over year and 44% at cc.
In the fiscal third quarter, gross profit was $552.1 million, up 7% year over year. Adjusted gross margin was 66% of net revenues, down 300 basis points (bps) year over year, primarily due to unfavorable currency movements.
Meanwhile, selling, general and administrative expenses declined 2.8% to $342.7 million. Research and development expenses increased 15.7% year over year to $28.7 million.
Operating income in the quarter totaled $140.6 million, which gained 39.8% year over year. Adjusted operating margin was 23%, down 400 bps from the prior-year quarter.
The company exited the third quarter of fiscal 2022 with cash and cash equivalents of $246.3 million, down from $399.2 million at the end of fiscal second-quarter 2022.
Net cash provided by operating activities during the fiscal third quarter was $263.9 million.
Fiscal 2022 Guidance
Cooper Companies has updated its financial guidance for the fiscal year 2022. It is to be noted that the outlook does not include the Cook Medical Reproductive Health buyout that was announced on Feb 7, 2022, as regulatory approval is pending.
For fiscal 2022, the company projects total revenues between $3.29 billion and $3.31 billion, reflecting 10% to 11% organic growth compared with the previous guidance between $3.28 billion and $3.31 billion, reflecting 9% to 10% organic growth. The Zacks Consensus Estimate for the same is currently pegged at $3.29 billion.
CVI revenues are estimated to be $2.24-$2.25 billion (organic growth of 11-12%). CSI revenues are expected to be within $1.055-$1.064 billion, implying organic growth of 7-8%.
Adjusted EPS is anticipated to be $12.72-$12.87, down from the previously guided range of $13.09-$13.29. The Zacks Consensus Estimate for the same currently stands at $13.13.
Cooper Companies exited the fiscal third quarter on a strong note, wherein earnings and revenues beat the consensus mark. The company witnessed solid performance across its core CVI and CSI units during the quarter under review, along with robust geographical performances. A solid financial outlook for revenues amid persistent pandemic-led challenges raises optimism.
Per management, the company continues to witness success with its daily silicone hydrogel lenses, which position it as one of the leaders in the soft contact lens market. The company remains optimistic about its myopia management program, which comprises MiSight and Ortho K lenses, and sustained strength in fertility.
However, an increase in selling, general and administrative expenses is concerning. Contraction in both gross and operating margins is disappointing. Unfavorable currency movement is likely to be a headwind in the upcoming quarter.
Earnings of Other MedTech Majors at a Glance
Some stocks in the broader medical space that have announced quarterly results are Bio-Rad Laboratories, Inc. BIO, AMN Healthcare Services, Inc. AMN and McKesson MCK.
Bio-Rad, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $3.38, which beat the Zacks Consensus Estimate by 37.4%. Revenues of $691 million outpaced the consensus mark by 3.9%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 46.75%.
AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.
AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.66%.
McKesson reported fiscal first-quarter 2023 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.2%. It currently has a Zacks Rank of 2.
McKesson has an earnings yield of 6.6% compared with the industry’s yield of 4.5%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 13%.
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