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Cooper Companies (COO) Q4 Earnings Miss Estimates, Revenues Up

The Cooper Companies, Inc. COO reported fourth-quarter fiscal 2022 adjusted earnings per share (EPS) of $2.75, which missed the Zacks Consensus Estimate of $3.09 by 11%. The bottom line declined 16.2% on a year-over-year basis.

GAAP EPS in the fiscal fourth quarter was $1.32, down 40% from the year-ago quarter, primarily driven by higher costs and expenses.

Revenue Details

Revenues of this Zacks Rank #3 (Hold) company were $848.1 million in the quarter under review, surpassing the Zacks Consensus Estimate by 1%. On a year-over-year basis, the top line improved 11.7% and surged 21% at constant currency (cc).

Revenues were up 12% organically. However, strong revenue growth across all segments and geographies was partially offset by an unfavorable currency movement, which hurt the sales growth of its segments — CooperVision (“CVI”) and CooperSurgical (“CSI”) — in the EMEA and Asia Pacific regions.

Fiscal Q4 Segment Details

CooperVision: The segment’s revenues totaled $561.8 million, up 10% at cc but down 1% on a reported basis. Organically, sales were up 11%.

Per management, the segment witnessed an increase in revenues from Single-use sphere lenses (30% of CVI), reflecting an improvement of 15% at cc and 2% on a reported basis. Single-use sphere lens revenues totaled $169.7 million.

Toric (33% of CVI) revenues amounted to $183.8 million, up 11% at cc and 1% on a reported basis. Multifocal (11% of CVI) generated revenues of $64.6 million, up 16% at cc and 5% on a reported basis.

Non-single-use sphere (26% of CVI) revenues were $143.7 million, down 8% reportedly but up 3% organically from the year-ago quarter.

Geographically, the segment witnessed an improvement in revenues in the Americas (40% of CVI), up 5% on a reported basis and at cc to $228.1 million. EMEA revenues (37% of CVI) amounted to $204.2 million, down 5% year over year but up 11% at cc.

Asia Pacific sales (23% of CVI) declined 3% year over year to $129.5 million. However, sales were up 15% at cc.

CooperSurgical: The segment reported revenues of $286.3 million, up 53% at cc and 47% on a year-over-year basis. Organically, sales were up 15%.

Sub-segment Office and Surgical products (62% of CSI) generated $177.8 million in revenues, up 59% at cc and 58% on a year-over-year basis. Fertility (38% of CSI) revenues were $108.5 million, up 33% year over year and 45% at cc.

Margin Analysis

In the fiscal fourth quarter, the gross profit was $536.6 million, up 6.9% year over year. The adjusted gross margin was 65% of net revenues, down 200 basis points (bps) year over year, primarily due to unfavorable currency movements.

The Cooper Companies, Inc. Price, Consensus and EPS Surprise

The Cooper Companies, Inc. Price, Consensus and EPS Surprise
The Cooper Companies, Inc. Price, Consensus and EPS Surprise

The Cooper Companies, Inc. price-consensus-eps-surprise-chart | The Cooper Companies, Inc. Quote

Meanwhile, selling, general and administrative expenses gained 14.9% to $358 million. Research and development expenses increased 13.7% year over year to $29.1 million.

The operating income in the quarter totaled $103.5 million, which declined 19.5% year over year. The adjusted operating margin was 22%, down 300 bps from the prior-year quarter.

Financial Position

The company exited the fourth quarter of fiscal 2022 with cash and cash equivalents of $138.2 million, down from $246.3 million at the end of the fiscal third quarter of 2022. Net cash provided by operating activities during the fiscal fourth quarter was $130.7 million.

Fiscal 2023 Guidance

Cooper Companies provided its financial guidance for the fiscal year 2023. It is to be noted that the outlook does not include the Cook Medical Reproductive Health buyout, which was announced on Feb 7, 2022, as regulatory approval is pending.

For fiscal 2023, the company projects total revenues between $3.455 billion and $3.515 billion, reflecting 6% to 8% organic growth. The Zacks Consensus Estimate for the same is currently pegged at $3.44 billion.

CVI revenues are estimated in the band of $2.325-$2.365 billion (organic growth of 7-9%). CSI revenues are expected in the band of $1.13-$1.15 billion, implying organic growth of 4-6%.

Adjusted EPS is anticipated in the range of $12.30-$12.60. The Zacks Consensus Estimate for the same currently stands at $12.76.

Key Picks

Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.

AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 11%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has declined 4.9% compared with the industry’s 30.2% decline so far this year.

ShockWave Medical, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.

ShockWave Medical has rallied 34% against the industry’s 25.9% decline so far this year.

McKesson, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.

McKesson has rallied 63.6% against the industry’s 12.6% decline so far this year.

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