Hi, everyone. I'm Steve Lichtman, medical devices analyst at Oppenheimer. Welcome back to the 33rd annual Oppenheimer Healthcare Conference. Very happy to have with us up next, The Cooper Companies. So with us today is Brian Andrews, CFO. We're gonna do this in a fireside chat format. If you do have any questions, please key them into the chat box, and I will make sure to get them over to Brian. With that, Brian, thanks so much for joining us. I thought maybe we'd start really just on, you know, on the CVI side of the business and your market outlook. As you look out over the next five-plus years, you know, what's Cooper's view on market growth and the key drivers that get you there? Yeah. First of all, a pleasure to be here. Thank you for having me today, Steve. Yeah. The CooperVision market or the vision market as a whole, you know, I've been here for 17 years, and you know, I'd say, and I would echo this too, we're in the best position as a market that we've ever been in. So many things, so many, so many attributes driving industry growth, from the growth of wearers, to, you know, price being a help, the growth in torics and multifocals. Just, just the world becoming more myopic, the number of people needing vision correction continues to increase. And for us, myopia management, we've got a portfolio to treat myopia at a young age. So you put all these attributes together, and it's an industry that should grow, you know, mid to upper single digits for the next 10+ years. Frankly, if you look at just wearer growth being just kind of at a base level of, let's say, 2%-3% growth, price over that, if you're saying 5-6 years, price being somewhere between, call it, 1%-2%, over the longer term, you're, you know, just wearers and price alone should be, call it, 4%. And you have all those other attributes, sort of premium products and torics and multifocals and, just, you know, growth in myopia management and so forth. You get to a market that should grow 5%-6%, sustainably. Cooper are growing above market, both through our branded and store brand, portfolio, and just the strength across all of our modalities and extension products and unique product portfolio. Thinking, you know, near term, you know, I mentioned on your most recent call, incorporating some conservatism in the guidance for recession. So, you know, in what way could economic pressure affect the lens market in your view? Is it slower units? Is it less of a mix shift up to premium products? What way could it manifest itself, or what are you assuming? Well, I guess first and foremost, I would say that we're not seeing any evidence of a change, changing consumer or changing behaviors. We're not seeing people buy more one-month or three-month or six-month supply versus year. We're not seeing people trade down or go to lower priced products. In fact, we're seeing the opposite. We're continuing to see, you know, consumers that are choosing premium products over other products, and our MyDay franchise is doing incredibly well, as is our clariti, our mass market daily scleral and as store brands are doing well alongside our own brands. So I wouldn't point to anything that we're seeing right now. January was strong, February was strong, and March is starting off well for us. So, I think when it comes to, you know, if we do see certainly in our guidance, you know, we put up 10% growth. We've got a year to go implying deceleration. That, frankly, is probably frankly is a little bit of conservatism and prudence. And it's the early part of the year. We only we've got a quarter behind us and three more quarters to go. But if things continue as they as we're seeing them today, then we should be able to at least meet, if not exceed, our expectations that we've set for revenues. I think on the longer term, if we see a pullback in the economy, you know, you'll probably see, you may see more people choosing, let's say, clariti over MyDay, if they're a little bit more price sensitive. Store brands, I wouldn't have you be surprised if we started talking about our store brands leading the way, as key accounts are really focusing more on trying to drive stickiness within their own stores and repeat business with their own stores and improve their profitability. Again, we're not, I'd say, store brands and our own brands are growing at around the same pace. But we've got a lot of ways to fit the consumer and frankly, in higher gross margin products, clariti being a higher gross margin than MyDay and Biofinity a higher gross margin. But I'd much rather see a market growing in the mid to upper single digits, with us growing, putting up, you know, upper single digits to low double-digit growth than seeing a pullback in the market. But the market's gonna continue to grow even in a recessionary environment. It'll, you know, it'll probably slow down a little bit just based on some mix shifts that won't result in as strong a top-line growth. So far, so good. No, no, no, nothing that we're seeing to indicate any slowdown. That's helpful. You've talked, as the industry has talked about, some more flexibility, ability to increase prices in recent quarters. I think you took a price increase at the beginning of this calendar year, which is sooner than you normally do. I mean, or the prior year was the July one. So will that impact on comparables at all? I mean, as we sort of lapse that, or were you looking at maybe being able to do this twice a year looking forward? How, how should we be thinking about the pace of price increases overall? I think last year we were probably too slow to raise prices, and we probably didn't raise prices in retrospect to the magnitude that we should have last year. So we're getting a bigger lift from price this year versus last year. We're a bit more bullish on getting maybe, you know, above 2%. You know, we kind of, as an industry, we think we'll probably see something in the neighborhood of 2%-3% from price this year. We probably, as an industry, got 1%-1.5% last year on a net basis, on a true realized net basis, on a global basis. Oftentimes, people focus on the U.S. market, there's other markets outside the U.S. You're just not seeing price taking as much in other markets as maybe the U.S., but certainly you're seeing it in Europe and to some extent, Asia Pac. But I think as we think about us in this year, Cooper, we should get somewhere in the neighborhood of that, you know, 2%-3% from price and that's an improvement on last year and it's embedded in our guidance. And, I wouldn't think about any kind of special uniqueness around gating or how it's going to impact quarters like. You know, we tend to have a fairly seasonal business and revenues get stronger in the back half of the year. And so I think our revenue gating will reflect that. But, but I wouldn't really highlight anything. We'll always evaluate price increases. We don't have other price increases contemplated into our guidance for the back half of the year. But certainly if we see opportunities where we evaluate and think that we've got some things that we want to go after, then that could provide some upside. But that's how we factor in price for the year. Got it. You talked about your decision to, you know, maintain and even expand SKUs and ranges, while, you know, some of your competitors have cut back, actually. Maybe can you talk a bit about that decision, and do you see that they're benefiting you in the long run as you work with customers? Yeah. I mean, it's not surprising, especially in this environment, to see competitors cutting back their SKU ranges or their toric ranges. It's incredibly difficult to produce torics and to go out into the outer edges of the bell curve. It's not just from a manufacturing perspective, but also from a packaging and distribution perspective. It just makes your whole cost to serve the ability to-- You know, when we're talking about trying to drive, we're trying to meet demand and try to, you know, improve profitability. It's, you know, you're optimizing your existing manufacturing. It's easy to rationalize your portfolio to maximize profits. We have continued for decades now to lean into torics and multifocals and made-to-order and customer brands and store brands and so forth. You know, our SKU ranges continue to get expanded. We can fit 99% of a wearer that walks into an eye care practitioner's office with Biofinity. You know, we have toric multifocals, and we've got Energys in Biofinity and MyDay now. But even our toric ranges for our daily SiHy portfolio between clariti and MyDay are best in class. We're gonna continue to really lean into that, both on the manufacturing side, but also the packaging and distribution side, 'cause it's a big differentiator. It's really kind of white space. It's open territory. We don't have a lot of competition for that. It's hard to do, and we keep getting better at it. So, you know, it's something that that's kind of part of the fabric of Cooper, and I wouldn't say that that's going to change. That's, if anything, it's going to continue. We'll continue to iterate and invest in it, and that's across all competencies. Great. Wanted to get to a few questions on myopia management. I guess first, what's your, you know, near medium-term outlook for MiSight in the U.S.? You know, as you're continuing to roll this out, what do you see as the next key steps to, you know, drive perhaps faster growth of MiSight in the U.S.? Well, I guess I would say the story in the U.S. is not too different from outside the U.S. I mean, it's a new marketplace. It's, it's helping to drive growth in the rest of our product portfolio. You're seeing sort of a halo effect of, you know, when we see fitters fitting MiSight in their practices, they're fitting more Cooper lenses. It's driving, you know, it's providing 1.5 points of growth this year, and I would say for the next several years, it should drive, you know, at least one point of growth year after year. I think what we're not seeing is the hockey stick that we were originally hoping to see. It's still a very consistent, solid grower right now, both inside the U.S. and outside the U.S. You know, it grew 50%. MiSight grew 50% in the recent quarter. So growing from $93 million for the myopia management portfolio to $125 million at the midpoint of where we set expectations is good growth. And I would expect that that's gonna continue as we look forward. But we're certainly trying new things. We're innovating behind the scenes. We will be launching new products. We will be launching expanded ranges of SKUs for MiSight, including toric. We will have the silicone hydrogel MiSight at some point, and that'll offer us an ability to even bifurcate the market, you know, where you've got a mass market and a better price point and a premium product. So, you know, for all of the years of experience we have in developing MiSight, even just our experience around SightGlass, it helps to drive more and more innovation behind the scenes. We're learning a lot in all of the markets we're in about pricing and fitting and driving adoption, which we're then marrying up with other markets, including in key accounts. And so, you know, we're transferring those learnings and continuing to iterate, and I would expect that myopia management, while it won't be something that inflex higher with a big hockey stick, I do think it's gonna be a consistent, solid grower for years and years to come. You actually hit on my second question relative to the halo effect, which is, you know, obviously a separate and parallel driver of the actual MiSight revenue. Maybe shifting to SightGlass then, can you update us on performance of that JV outside of the U.S. and how that's tracking overall? I wanted to ask about the U.S. after. Yeah. I mean, as many people know, I mean, we've got, you know, SightGlass is a joint venture with Essilor. We're collaborating to grow the category. They're best in class when it comes to eyeglasses, spectacles, and we're a leader in innovation and thought leader in practice in myopia management. You put us two together and we can be successful together growing the category. Now, we're launching in several markets outside the U.S. with SightGlass. But as a reminder, this joint venture and half of the impact from the sale of this product and the investments tied to this product show up below the line. So, this activity is baked into our guidance. Launches are happening, and they're going well, but it's pretty early days. But I can't really comment beyond that too much because it's still a, you know, it's a 50/50 JV with Essilor, I'm not really at liberty to say much more. The relationship's great. It keeps getting stronger with those guys, you know, we've got top-to-top conversations and text messages happening between among Al and Paul and Francesco and, and looking for ways to really be mutually successful in growing the myopia management market. Can you give any further color, Brian, on the U.S. regulatory process? I know you guys touched on it on the last call, but, you know, I guess I would have thought that maybe the three-year data would have been enough. What did you hear back from the agency in terms of, you know, what they'd like to see to sort of, you know, give them further comfort to push this over the line? Yeah. You know, it was disappointing to us. I know we were pretty bullish going into, you know, in December thinking that we were gonna get an approval and. You know, unfortunately, the three-year data just didn't meet the requirements for approval from the FDA. We had really strong year one data, but year two data, which represented activity in COVID lagged year one. We kinda saw like good results followed by kind of not-so-great results, especially in a segment of the age population that were in the clinicals, the older kids. And then we saw a bounce back of efficacy in year three. And so, the results gave us, you know, confidence that we would get approval because it's not sitting on your eyes. You know, it's sitting on your nose. And we're getting good results out of the youngest of ages and still results out of the older kids, just maybe not quite at the level that they were looking for. Unfortunately, that optimism didn't turn into an approval. And so, at the end of the day, we're still optimistic that the product works, and we're continuing our clinicals. We'll have four-year data that comes out this summer. We'll go through that data. Hopefully, that's a continued trend on the year three data that's kind of up and to the right. Then we'll resubmit that to the FDA and see how that goes. But certainly, the conversations are ongoing. It's not a hard no, and we're trying to figure out, you know, what do they need to see, and what do we need to do to prove out that this is a viable and efficacious product that needs to be in the market? 'Cause certainly whether it's I mean, we'd love to see SightGlass in the U.S. market, but whether it's SightGlass or any spectacle for that matter, an Essilor Stellest spectacle in the U.S. market, the more that we can drive fittings at a very young age into a form of myopia management, you know, put glasses on a five, six, seven-year-old and their compliance isn't there, and therefore it's not as efficacious, but they're getting some good results, you're starting that conversation earlier with the parents. You're, you're, you're talking about trying to reduce the progression of myopia, and you're eventually graduating them or putting them into contact lenses, whether that's with glasses, you know, in part with glasses or just solely contact lenses. You just wanna drive adoption into a form of myopia management treatment as early as possible. So, you know, SightGlass, like I said earlier, it's being launched around the world. You're seeing some spectacles around the world. But, you know, we were, you know, we were hopeful. We'll hopefully get an approval eventually in the U.S. Overall, like, you know, we're continuing our clinicals and see where that goes. Should we expect to see something from you guys when the data has been analyzed or, not sort of set that expectation that we'll get a release in terms of headline data? I wouldn't set that expectation. I think we'll have to go through the data and see what it says. And, we'll have to have a, you know, we'll have a strategy and a discussion around how we wanna present this and, you know, go to the FDA. So, no, not sure when The Street will see it or when we'll share it publicly. You know, we first have to get the data and figure out what we're gonna do with it next. Shifting to the CSI of your business which, of course, has become, you know, a bigger part of the pie as you have made acquisitions here, Cook pending. Maybe dialing back to the beginning, as we did with vision, can you know, lay out for us your view on market growth, as you look out over the next five years and the drivers of that side of the business? Yeah. Well, I mean, we've really turned that business around over the course of the last several years from being kind of a low growth business to now more of a consistent mid-single digit grower. We've been putting up stronger numbers than that, obviously, in recent quarters. But over the longer term, you know, there's no reason why it shouldn't be, you know, consistently a mid-single digit grower. The strongest part of that business by far is the fertility business. It might be the strongest market that we are in. You know, we're, we're a dominant player in that market, especially outside of pharma, from fertility equipment, consumables, genetic testing around IVF, you know, embryos. And that market should grow mid to upper single digits for the next 10+ years, maybe longer, and we should be able to put up above market growth. So we've put up nine consecutive quarters of double-digit growth in fertility, and expect that this year we'll continue to drive, you know, really, really strong growth out of fertility, and that's becoming a bigger part of the equation. Certainly the other parts of our business, you know, Paragard is kind of a low to mid-single-digit grower. We've probably put more caution on that one. We used to talk about that being more of a mid-single-digit grower, but we just haven't seen staffing get back to pre-pandemic. We haven't seen fittings. You know, unit growth is kind of flattish around LARCs, long-acting reversible contraceptives, and IUDs in particular. And so, really what we have factored into this year is kind of just growth from price. But I do think that, you know, potentially we could see us taking price more regularly than we have been in the past, you know, maybe once a year. So that'll help drive at least sort of low to mid-single digit growth, and hopefully we can get some unit growth here at some point. But then you've got the stem cell business kind of in that same kind of trajectory. And then, you know, within our office surgical space, you've got some products that are putting up some really good growth numbers, but sort of in that also sort of low to mid-single digit space. You put it kind of put it all together, and you're in that mid-single digit grower. You know, we're obviously trying some things with Chrissy Teigen around, you know, stem cell. That's much more of a direct to consumer type of business. But happy with how we're performing there and certainly see opportunities to drive sustainable growth in that business. Certainly, I'm not gonna ask about Cook specifically in terms of close 'cause I know last call it was you can't comment, I guess. You know, excluding Cook or currently, do you still feel like you've got the scale, you know, even in a worst case scenario with the current business? Or maybe another way of saying, where are the still the general holes that you see in the portfolio, either product-wise or geographically? Well, yeah, I mean, Cook is disappointing, we're working through that and we've got until August to try to go through, you know, and work through whatever avenues we can to try to get something closed. If it doesn't, and we'll walk away and we have a $45 million breakage fee that we'll have to pay out. But during this time being, we're still continuing to invest in fertility. We're continuing to you know, invest in geographic expansion. There's a lot of opportunities for us to grow in new markets and expand in existing markets, we're putting infrastructure in place to be able to support that growth. You know, the GLS acquisition generate, you know, with that, a third of that business is coming from, you know, donor eggs and sperm, that's just a nascent market, man. It's just, it's such a huge opportunity for us. And supply, I mean, demand is way exceeding supply. So that's in the U.S, and outside the U.S. that we've got a big opportunity to really kind of leverage what our expertise in the U.S. and help our key accounts in the big IVF clinics to grow that part of their business. So, you know, I'm excited about fertility. I wouldn't say that we have any gaps in our fertility portfolio at all. Like we've got a phenomenal portfolio. It's really what's exciting about both businesses, and I'm gonna go back a little bit to vision and talk about surgical here. But what's exciting right now is where we've been acquiring businesses over the last several years, I'd say that our strategy now is really shifting much more towards internal investments, whether it's CapEx on the vision side or, you know, fertility and geographic expansion, those types of initiatives to drive organic growth. We've got such opportunities to drive above market growth just with low risk-High return internal investments, that I think that's we're really gonna be shifting more of our attention towards that type of activity than anything sort of inorganic. You might see a small tuck in here and there, but I would say by and large, it's kind of internal investments and then paying down some debt. All right. That actually dovetails into a question that just came through that, I know Brian is a good question, I know you've been asked before, but, you know, the question is. With strong independent growth stories with CVI and CSI, do the businesses need to be together long term? So maybe talk a little bit about the, where the synergy is between your two businesses. Well, I mean, we really, really like the markets we're in. We've got a dominant position in fertility. We've got a lot of opportunities to really drive above market growth. We haven't really gone after sort of general G&A cost containment efforts. We haven't really gone after shared services. They've been really operating as separate and unique businesses, but there's a lot of opportunity that we're starting to go after around those types of shared services. And there's to improve... You know, when I get the question around like, "Well, what happened?" You know, "How are you gonna start to get operating margins back? And how are you gonna start to drive operating margin expansion?" You know, some of that's gonna come from just leveraging the infrastructure we've put in and growing into our skin and, and, and, but some of it's gonna come from some of those initiatives around, you know, how do we, you know, whether we don't need HR people, separate HR people in all these places, and different legal people and finance teams and, let's start leveraging these systems we've been putting in place. And, and, you know, a lot of the back office and a lot of the things that we're doing, you know, how do we optimize that? How do we make that more efficient? So, you know, when you look at both businesses, I mean, CS, CooperSurgical is not a very capital-intensive business. Healthy gross margins. Operating margins, you know, absolutely can be in line with vision and, and together, we can continue to drive operating margin expansion. So, you know, we'll always, you know, we do from time to time, almost yearly, we'll do some of the parts analysis, and we'll take a look at, you know, is there value creation if we were to split the businesses? You know, to this point, that hasn't existed. And, but if there is a big dislocation and we don't think we're getting the appropriate value, then we've got to evaluate and kick those tires. But for now, we're excited about it. We see good opportunities to leverage both sides and we're going after growth and leverage. Wanted to ask about, maybe group them together, a few sort of non-core fundamental things that impact the P&L, of course, and your sort of latest views, and maybe try to mitigate some of the impact, particularly on the FX side. But, you know, with all the variability we're seeing, you know, how are you feeling overall in terms of the ability, you know, beyond operating to drive bottom line with tax rate policy changing worldwide, interest rates going higher and FX? Sort of the lay of the land of the non-operating part of the P&L. Yeah, I mean, I guess if I start with tax, you know, I feel pretty good about where we are and what we've been doing. And, you know, you can't make predictions on where things are going, but we can see the obvious, which is, you know, more and more restrictions and tax rates going higher. And, but on the whole, I think you've seen our tax rate trend higher, and now we've revised our guidance around tax for this year to be around 14.5%. That's a step up from last year of 12.8%. So I would say that, you know, as we look forward, it's probably those types of slight incremental increases from year to year. Our, our underlying effective tax rate is closer to probably 15.5%, and you've got discretes and other things that are driving it lower. But where we generate our profits will dictate sort of how that trends. But, you know, we've got a pathway towards kind of maintaining that and limiting, putting sort of a limit to the upside of where that'll go, as long as we continue to execute on some strategic initiatives that we're going after. On the, on the FX side, man, FX has been brutal for as long as I can remember. Certainly when I got the question on the earnings call about 2019 operating margins to 2023, you know, 1.5% is just from FX. This year, we're still dealing with a 2.5% headwind to revenues versus last year. And when I gave the 1% tailwind to EPS, you know, we get that tailwind, and that's due in part because of reversing the headwind that we experienced below operating income, just normal FX gains and losses that now we're reversing course this year and helping to offset the detriment from FX to operating income is helping us to get to at least a, you know, a slightly neutral, a slightly positive, I guess, tailwind to EPS. So i f we can start to see at least FX stay or even, you know, then that would be great. If they actually improve, it can start to become fairly material, depending on how much FX moves in our favor. Interest expense, you know, we've been climbing higher. We gave an interest expense estimate for this year of $110 million. We've baked in three-quarter point increases starting this month. But, you know, as hopefully, you know, that starts to abate, we've got $1 billion fixed at a roughly 80 basis points. We pay a point over SOFR right now. So, you've got $1 billion kind of hedged, and then the other piece of it that's floating is that $1.6 or so billion, and we're chipping away at that. We're gonna keep using our free cash flow to pay down debt. And hopefully we see a little bit of an abatement here and, and, and we're not talking about interest expense climbing higher relative to how we've guided. But, you know, that's how we factored it into this year. All right. Okay. Well, this is really helpful color. Unfortunately, we ran out of time. Brian, thanks so much for joining us today. And thanks everyone for dialing in. And hope you have a great rest of the week. Thanks so much. Thanks, Steve. Thanks, everyone.