CooperVision's revenues increased by 14 percent to $444.8 million in the first quarter of its financial year, ended Jan. 31. On a comparable pro forma basis, excluding foreign currency gains and the acquisition of Paragon in December, its sales grew by 7.6 percent, with increases of about 9 percent in toric lenses, 5 percent in multifocals, 11 percent in single-use spheres and 4 percent in other types of spherical lenses.
Geographically, pro forma sales rose by only 3 percent in the Americas, but they went up by 9 percent in Europe, the Middle East and Africa (EMEA) and 15 percent in the Asia-Pacific region. The growth in Asia was driven by a sales increase of more than 16 percent in China, where CVI is still going through the process of registering new products, and by progress in Japan with the MyDay family of products, Biofinity and specialty toric lenses.
CVI's relative weakness in the U.S. was largely due to the competition and to a tough comparison with the sales booked in the domestic market in the same quarter a year ago, after beefing up the sales force.
Offset by major increases in the rest of the world, the temporary problem in the U.S. led CVI to raise its sales by only 5 percent in the last calendar quarter of 2017 – an overall growth rate that was for once similar to that of the global soft contact lens market. According to CVI's own estimates and those of independent market researchers, CVI continued to perform better than the market in calendar 2017 with a sales increase of 7 percent, compared with an increase in the market of 5 percent to $7.61 billion.
With a pro forma increase of 38 percent, daily silicon hydrogel lenses drove CVI's growth in the quarter. The company's Avaira line of contact lenses suffered a slight decline due to its transition to an updated Avaira Vitality range that should be completed by the end of this year. Combined with those of CVI's Biofinity line, Avaira's sales went up by 9 percent.
CVI's gross margin increased to 67.1 percent in the latest quarter from 63.1 percent in the year-ago period. About half of the increase was attributable to the devaluation of the British pound and other changes in foreign currencies rates. The other half stemmed from a favorable product mix and general improvements in manufacturing efficiency.
Adding the results of CooperSurgical, which made a bigger acquisition, sales increased by 18 percent to $590.0 million in the first quarter for CVI's parent, Cooper Companies, but the group's growth was limited to 4 percent on a pro forma basis.
The consolidated gross margin remained steady at 63 percent, but the operating margin declined to 15 percent from 18 percent in the year-ago period, due to CooperSurgical's acquisition of a company called Paragard. On a non-GAAP accounting basis, the gross margin improved to 47.5 percent and the operating margin grew to 27.6 percent.
After extraordinary items, including an income tax provision of $197.3 million related to last December's tax reform in the U.S., Cooper Companies booked a net loss of $122.5 million for the period against net income of $75.8 million.
The company predicts that its operating margin will improve further this year to 28.5 percent, with strength in both of its businesses. In a conference call with investors, Albert White, chief operating and strategy officer of Cooper, ventured a forecast that it stands to reach an operating margin of around 32 percent in five years' time.
The consolidated turnover is seen rising this year to between $2.51 billion and $2.56 billion, with a first-time contribution of $165 million from Paragard and a sales increase for CVI of between 6 and 8 percent on an organic basis and in constant currencies.
In connection with the release of its quarterly results, Cooper announced that White will succeed Robert Weiss as president and chief executive of the group, effective on May 1. Weiss will remain on the board of directors and will act in an advisory capacity until Dec. 31 to ensure a smooth transition.
White has been serving most recently as executive vice president, chief financial officer and chief strategy officer of the group. He has also been heading up Cooper Medical, the holding company of CooperSurgical.
Weiss is retiring after more than 40 years with the group. Since he became its CEO a little more than ten years ago, its annual revenues have risen from slightly under $1 billion to this year's projected level of more than $2.5 billion, providing an annual return on investment of around 18 percent.