库博公司 (COO) 2026财年第三季度业绩电话会：现金流创新高，视力业务去库存

核心要点

• CooperCompanies公布2026财年第三季度营收为10.66亿美元，按报告列报基准和有机基准计算均同比增长约1%。Non-GAAP每股收益（EPS）增长4%至1.15美元。
• 自由现金流达到创纪录的单季2.73亿美元。今年迄今的自由现金流增长86%至5.28亿美元，为本季度3.39亿美元的股票回购提供了支持。
• CooperVision营收基本持平于7.17亿美元，主要因公司主动削减美国渠道库存，抵消了健康的底层需求。管理层表示，若不进行去库存操作，美洲地区的营收本可增长约5%。
• CooperSurgical营收有机增长3%至3.49亿美元。在基因组学、新诊所客户拓展以及既有客户业务扩大的推动下，生育业务增长5%至1.41亿美元。
• 董事会结束了战略复核，并决定保留CooperSurgical业务，认为收到的收购报价未能充分体现该业务的内在价值和长期潜力。
• 管理层预计，2026财年第四季度综合营收将在10.57亿美元至10.80亿美元之间，有机增长率为0%至2%，Non-GAAP每股收益为1.05美元至1.09美元。

核心财务数据

在英国税务海关总署（HMRC）对其2021财年向英国转让知识产权及相关资产的事宜顺利完成审查后，公司确认了约3.07亿美元的离散税收收益。管理层预计，这一解决方案将在未来至少10年内继续带来显著的Non-GAAP税收优惠。

董事会还将其股票回购授权额度增加了10亿美元，使剩余额度达到约15亿美元。CooperCompanies将杠杆率维持在2倍以下。

业务与经营业绩

CooperVision

CooperVision第三财季的业绩受到美国渠道去库存的制约，而非终端需求减弱。管理层表示，在该季度以及第四财季的首个月，美国市场的消费需求继续保持中单位数的增长。

公司在第三财季完成了大约一半的计划去库存工作，并预计将在第四财季解决大部分剩余库存。此前库存偏高反映了多重因素，包括涨价前的提前采购、客户整合、IT系统升级以及与新自有品牌合同相关的初始备货。

MyDay依然是核心增长引擎。该系列产品在欧洲、中东和非洲地区（EMEA）录得两位数增长，在美洲地区的消费需求也实现了两位数增长。MyDay散光（toric）、MyDay多焦点（multifocal）和MyDay Energys均实现两位数增长。CooperCompanies还准备推出MyDay散光多焦点隐形眼镜。

MiSight实现了20%的有机增长。EMEA和美洲地区表现领先，而中国市场对亚太地区的业绩造成了拖累。管理层预计第四财季MiSight的增长率为10%出头（low-teens），全财年增长率约为20%。

Biofinity表现持平，原因在于EMEA地区的强劲表现和定制产品的增长被美国的去库存举措所抵消。Clariti在EMEA地区实现增长，但在美洲和亚太地区表现较为疲软。

为了提升商业执行力，CooperVision正在扩大销售覆盖面、营销计划以及由人工智能驱动的目标精确定位和分析。计划中的美国销售团队扩张将新增对约5,000个网点的覆盖。管理层预计，新招募的销售代表将在2027财年第二季度初至月中部署到位，并在下半年带来更为显著的营收贡献。

CooperSurgical

CooperSurgical实现营收3.49亿美元，有机增长3%。生育业务营收在广泛的产品和服务需求、基因组学、新诊所客户拓展以及Witness实验室管理平台更高普及率的推动下增长5%至1.41亿美元。资本设备销售较为疲软抵消了部分增幅。

门诊及外科业务营收总计2.08亿美元，增长2%。在外科妇产科（OB/GYN）和专科医疗器械产品组合的支撑下，医疗器械业务增长4%，而PARAGARD的营收保持持平。

管理层表示，生育治疗周期正在增加，各诊所也开始加大对资本设备的投资。公司正在增加对生育领域的研发投资，包括基因组学产品和加快新产品上市速度。

战略复核

董事会在评估了包括潜在出售在内的各种替代方案后，一致决定保留CooperSurgical。管理层将估值差距归因于暂时性因素，包括非激素宫内节育器（IUD）市场竞争对手的最新动态以及生育相关诉讼的和解。

公司表示，该诉讼事项已全面和解。公司对能够恰当体现其业务价值的战略替代方案仍持开放态度，但眼下资本配置的优先事项是盈利性的有机增长和股票回购。

管理层业绩指引

管理层预计第四财季的整体情况将与第三财季大致相似。CooperVision更大力度的商业投资、额外的外汇压力以及关税退款的减少预计将对毛利率和营业利润率造成拖累。

对于2027财年，公司未提供营收或盈利指引。公司预计，在其他条件不变的情况下，根据全球低税无形收入（GILTI）规定对美国境外收益征税的既定上调，将使其Non-GAAP有效税率从2026财年的约15.5%提高至2027财年的约17.5%。

风险与关注领域

• 美国渠道去库存将在第四财季继续对CooperVision施加压力。管理层预计大部分去库存工作将在2027财年之前完成，但预计随后不会带来补库存收益。
• 商业执行力滞后于合同赢取和产品组合扩张。管理层指出销售覆盖面不足和营销支持不够是主要制约因素。
• 传统水凝胶产品组合精简在美洲和亚太地区仍是近期逆风，尽管管理层预计相关工作将在第四财季基本完成。
• 中国市场依然面临挑战，特别是对MiSight而言。管理层提到了OK镜（角膜塑形镜）的价格压力、竞争产品以及碎片化的近视防控管理市场。
• CooperVision目前在快速增长的超高端日抛隐形眼镜品类中的业务布局有限，而竞争对手在该品类中能从每位患者身上获得更高的营收。
• 一款竞争性非激素宫内节育器已获得批准，并在未来上市前开启了培训。管理层将针对PARAGARD的进一步评述推迟至12月的财报电话会议。
• 汇率逆风、关税退款减少以及商业投资预计将对第四财季的利润率构成压力。

分析师问答环节要点

管理层表示，下半年CooperVision增长预期的下调完全归因于渠道去库存。美国市场的消费需求仍保持在中单位数，若不采取去库存举措，美洲地区第三财季营收本可实现约5%的增长。

公司预计第四财季去库存的规模将与第三财季相似。管理层指出，该问题集中在相对少数的美国分销商和电商客户中，因此渠道库存水平更容易量化。EMEA地区的受影响较小，因为其市场拥有更高比例的订阅和直面向消费者（DTC）模式。

在被问及2027财年时，管理层表示，预期CooperVision在隐形眼镜市场4%-6%的增长区间内实现增长是合理的，但并未出具正式指引。管理层预计更健康的渠道以及传统产品精简工作的完成将改善2027财年的起点状况。

管理层指出，执行力是CooperVision面临的核心问题，而非产能、物流、产品供应或合同赢取。公司正在扩大销售团队，并将原计划在2030年左右推进的部分研发项目提前数年加速进行。

在资本配置方面，管理层表示CooperVision的有机增长是公司的首要投资重点，其次是生育业务。股票回购仍将是自由现金流的重要用途。

财报电话会议完整文字实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2026 Cooper Companies Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the call over to Kim Duncan, Vice President of Investor Relations and Risk Management. Please go ahead.

Kim Duncan

Good afternoon, and welcome to Cooper Companies Third Quarter 2026 Earnings Conference Call. During today's call, we will discuss the results and guidance, the conclusion of the strategic review and current corporate developments. We will then use the remaining time for questions. Our presenters on today's call are Al White, President and Chief Executive Officer; and Brian Andrews, Chief Financial Officer.

Before we begin, I'd like to remind you that this conference call will contain forward-looking statements including statements relating to revenue, EPS, cash flow, interest, FX and tax rates, tariffs and other financial guidance and expectations, also strategic and operational initiatives, market conditions and trends and product launches and demand. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and are subject to risks and uncertainties. Events that could cause our actual results and future actions of the company to differ materially from those described in forward-looking statements are set forth under the caption forward-looking statements in today's earnings release and are described in our SEC filings, including Cooper's Form 10-K and Form 10-Q filings, all of which are available on our website at coopercos.com.

Also as a reminder, the non-GAAP financial information we will provide on this call is provided as a supplement to our GAAP information. We encourage you to consider our results under GAAP as well as non-GAAP and refer to the reconciliations provided in our earnings release which is available on the Investor Relations section of our website under quarterly materials. Should you have any additional questions following the call, please e-mail ir@cooperco.com.

And now I'll turn the call over to Al for his opening remarks.

Albert White

Thank you, Kim, and welcome, everyone, to our Q3 Earnings Call. This quarter included a number of notable developments, including earnings exceeding expectations, record free cash flow, solid fertility growth at CooperSurgical and the favorable completion of a significant tax matter. At CooperVision, however, we proactively reduced U.S. channel inventory that weighed on our results and will continue to impact Q4. Importantly, our underlying demand in the U.S. remained healthy throughout the quarter with consumption increasing at a mid-single-digit rate and we're now positioned to enter fiscal 2027 with a healthier channel and stronger foundation. We're also taking additional steps to strengthen CooperVision revenue performance, and I'll speak to these in a moment.

But first, I want to address the completion of the strategic review, which we announced in a separate press release today. Following a comprehensive evaluation of alternatives, the Board has concluded the strategic review. As part of the process, we conducted a thorough assessment of CooperSurgical, including a potential sale of the business, where we received significant interest and engaged with numerous parties. Ultimately, however, the Board unanimously determined that shareholders are better served by continued ownership than by pursuing a transaction at this time. The Board and our advisers believe several temporary factors influence valuations late in the process, including developments related to a competitive entrant in the nonhormonal IUD market and the impact of our fertility litigation settlement.

These factors contributed to what we believe was a temporary disconnect between CooperSurgical's intrinsic value and the offers received resulting in proposals that did not adequately reflect the full value and long-term potential of the business.

While the formal strategic review has concluded, our commitment to enhancing shareholder value has not changed. We gained valuable insights through the process and will intensify our focus on profitable organic growth and disciplined capital allocation, including share repurchases. The Board and management will also continue to evaluate opportunities to maximize long-term shareholder value and remain open to strategic alternatives that appropriately recognize the value of our operations.

Turning to the quarter. CooperVision reported revenue of $717 million, essentially flat year-over-year. EMEA and Asia Pac performed largely in line with our expectations while the results in the Americas reflected CooperVision's U.S. channel inventory reductions. Moving forward, we see opportunities to strengthen our growth globally through improved execution of our contract wins and product launches. And to support this effort, we're investing in expanded sales coverage, increased customer marketing programs and enhanced commercial execution capabilities, including AI-driven targeting and analytics tools. These initiatives are already gaining traction in Asia Pac, where our new commercial leadership team is fully in place and in the U.S. where we're actively expanding our sales force organization. These efforts are driving stronger customer engagement, including within our private label business, where new account wins and SKU introductions are expanding our customer footprint and deepening penetration within existing accounts.

We're also continuing to invest in our distribution infrastructure, including a new packaging facility in Puerto Rico that will expand direct-to-consumer and direct to customer fulfillment capabilities, enhancing service levels and supporting long-term growth. All these actions are well underway and position us to drive greater revenue growth in fiscal 2027 and beyond.

Turning to products. Our flagship MyDay franchise continues to perform well, highlighted by double-digit growth in EMEA and double-digit consumption growth in the Americas. This performance was driven by strong customer partnerships, ongoing expansion in high-value categories such as torics and multifocals, growing adoption of our premium MyDay Energys offering and the successful launch of MyDay MiSight.

MyDay toric delivered another quarter of double-digit growth, supported by the industry's broadest daily parameter range and the same market-leading toric design is Biofinity. MyDay toric maintains a meaningful competitive advantage, offering approximately 30% more prescription options than any other daily toric lens. MyDay multifocal also delivered another quarter of double-digit growth, supported by its advanced optical design and easy-to-fit platform. With favorable demographic trends and significant room for category expansion, we continue to view multifocals as one of the most attractive growth opportunities in contact lenses. And to build on this, we are preparing to launch MyDay toric multifocal, extending our leadership in optics, parameter range and clinical performance.

Finally, MyDay Energys delivered another quarter of double-digit growth, reflecting increasing recognition among eye care professionals and wearers of its differentiated combination of premium optic advanced material technology. For clariti, performance varied by region, with growth in EMEA, offset by softer performance in our other 2 regions. However, our next-generation clariti multifocal continues to gain momentum, supported by the same proven fitting design as Biofinity and MyDay. And we also recently completed the clariti family launch in Japan and initial [indiscernible] response has been encouraging.

Turning to Biofinity, strength in EMEA and within our market-leading made-to-order portfolio, including toric multifocals and extended ranges, was offset by the inventory moves in the U.S., resulting in a flat quarter. Regarding myopia management, MiSight delivered another strong quarter with 20% organic growth. EMEA and the Americas led performance while softness in China weighed on Asia Pac. Although this was partially offset by growing momentum in Japan following our MiSight launch earlier this year.

In EMEA, growth was supported by the ongoing launch of MyDay MiSight with back-to-school campaigns highlighting the benefits of a silicone hydrogel offering. Canada also launched MyDay MiSight in August and customer feedback has been excellent. Importantly, in these markets that have MyDay MiSight, the MyDay platform now supports patients across every stage of life, from [ IOB ] management and children through spherical, toric, multifocal and premium lifestyle offerings in adulthood.

Looking ahead, we expect MiSight growth to be in the low teens in Q4 against a difficult prior year comparison resulting in roughly 20% growth for this full year and setting the stage for a promising 2027, supported by continued momentum in existing markets and the upcoming launch of MyDay MiSight toric.

Lastly, on Vision, we're accelerating programs tied to new product development, and that ties nicely in with the opening of our Global Vision Center in the U.K. later this month. This state-of-the-art facility brings together R&D, our next-gen technical manufacturing teams and our commercial teams a single integrated environment. The investment will accelerate innovation, enhance collaboration and enable greater speed to market as we capitalize on one standardized manufacturing platform for all future product development.

Turning to CooperSurgical, revenue was $349 million, up 3% organically. Within this, fertility delivered another solid quarter, growing 5% to $141 million. By product category, fertility growth was driven by broad-based strength across our leading global portfolio of products and services, partially offset by softer capital equipment sales following a very strong prior quarter. Genomics was a notable contributor driven by robust global demand, along with continued adoption of witness our automated laboratory management platform. Performance was further supported by new clinic wins, expansion within existing accounts and increasing uptake of recently launched products and services, all resulting in continued global market share gains.

Geographically, growth was led by the Americas, where we continue to gain share, while EMEA and Asia Pac remain mixed as strength across several markets was offset by macro headwinds in the Middle East and China. Stepping back, the long-term fundamentals of the global fertility market remain compelling. Delayed family formation, expanding access to care, increasing treatment utilization and continued investments by fertility clinics supports durable long-term growth. Government support for family building also remains favorable.

Earlier this year, Denmark expanded publicly funded fertility coverage from 3 cycles to 6. Japan's reimbursement framework continues to improve access and affordability for assisted reproductive technologies. In the Middle East, investments in reproductive health care infrastructure continue to support growth in the UAE fertility market. And in California, large group health plans are now required to provide coverage for IVF and certain infertility treatments representing another meaningful step towards expanding patient access.

To conclude on Fertility, we expect continued strength, including a solid fourth quarter, supported by healthy market trends and growing momentum across our innovation pipeline particularly in genomics.

Turning to office and surgical, revenue was $208 million, up 2%. Medical Devices grew 4%, driven by continued strength in our surgical OB/GYN and specialty device portfolios while PARAGARD revenue was flat. Finally, CooperSurgical delivered another quarter of strong operating leverage, reflecting the improved profitability and cash generation of our streamlined business model.

Now before turning the call over to Brian, let me leave you with a few key takeaways. At CooperVision, underlying demand remains healthy, and our long-term growth drivers remain firmly in place including continued momentum in MyDay, strong demand for our toric and multifocal lenses and the ongoing success of MiSight. At CooperSurgical, we remain excited about the fertility market and the opportunities ahead, supported by our strong R&D pipeline. Finally, while the strategic review process was extremely challenging for our teams, it provided valuable insights, and we believe we are well positioned to execute our plans and deliver strong performance in 2027 and beyond.

With that, I'll turn the call over to Brian.

Brian Andrews

Thank you, Al, and good afternoon, everyone. Most of my commentary will be on a non-GAAP basis, so please refer to today's earnings release for a reconciliation of GAAP to non-GAAP results.

For the third fiscal quarter, consolidated revenue was $1.066 billion, increasing approximately 1% on both a reported and organic basis. Gross margin was 66.7%, down 60 basis points year-over-year. This was largely in line with our expectations, reflecting higher costs and foreign exchange headwinds. Operating margins increased 30 basis points year-over-year to 26.3%, driven by ongoing productivity improvements. Interest expense was $21.5 million our non-GAAP effective tax rate was 15.3%.

Before moving to earnings, I want to spend a moment on taxes. During the quarter, we recognized a sizable discrete tax benefit of approximately $307 million. Following the favorable completion of [ HMRC's ] examination, of our fiscal 2021 transfer of intellectual property and related assets to the U.K. Importantly, the closure of the examination provides clarity and certainty around a matter that has been under review for several years and is now expected to extend meaningful non-GAAP tax benefits for at least an additional 10 years.

Turning to earnings. Non-GAAP EPS increased 4% to $1.15, including approximately $0.03 from tariff refunds based on approximately 193 million diluted shares outstanding. This marks our 11th consecutive quarter exceeding consensus earnings expectations, reflecting disciplined execution, strong operational management, and the benefits of the reorganization completed in the fourth quarter of last year.

Turning to cash flow. We generated free cash flow of $273 million. The highest quarterly free cash flow in Cooper's history. This was driven by strong operating performance, improving working capital trends and declining CapEx all of which has contributed to year-to-date free cash flow of $528 million, up 86% from last year. This performance reinforces our confidence in achieving our goal of generating $2.2 billion of cumulative free cash flow in fiscal '26 to 2028. Supported by this strong cash generation, we repurchased $339 million of shares during the quarter, bringing fiscal year-to-date repurchases to $445 million while maintaining leverage below 2x. Given our confidence in the business and commitment to capital returns, the Board approved a $1 billion increase to our share repurchase authorization, bringing the remaining capacity to approximately $1.5 billion for future repurchases.

Turning to guidance. For Q4, we expect consolidated revenue of $1.057 billion to $1.080 billion representing organic growth of 0% to 2%. We expect CooperVision revenue of $692 million to $706 million, down 2% to flat organically. Within this, we expect regional performance trends to be broadly consistent with Q3, with the Americas reflecting the impact of channel inventory actions, EMEA delivering another solid quarter and Asia Pac continuing to face near-term challenges. We expect CooperSurgical revenue of $364 million to $374 million, representing organic growth of 4% to 6%. We expect interest expense of roughly $25 million, reflecting incremental borrowing associated with share repurchases and litigation-related payments. We expect the Q4 non-GAAP effective tax rate to be roughly 16%, resulting in non-GAAP EPS of $1.05 to $1.09. We expect around $170 million free cash flow, excluding litigation-related payments of roughly $272 million. Our foreign exchange assumptions are largely unchanged from last quarter.

In summary, we expect Q4 to be broadly similar to Q3 with the primary differences being greater commercial investments in CooperVision, additional FX headwinds and lower tariff refunds which will pressure gross and operating margins.

Looking ahead to fiscal 2027, it's too early to provide guidance other than to note that our scheduled [ GILTI ] increase of roughly 2% in the U.S. taxation of foreign earnings will impact our non-GAAP effective tax rate. All else being equal, we expect this increase -- we expect this to increase our tax rate from roughly [ 15.5% ] this year to roughly [ 17.5% ] in fiscal 2027.

To conclude, despite actions we took within CooperVision that weighed on performance, we delivered another quarter of earnings above expectations and record free cash flow. We also achieved a favorable resolution of [ HMRC's ] examination of our 2021 U.K. tax planning initiative and returned significant capital to shareholders. At the same time, we are intensifying our efforts to drive organic growth through new commercial investments and a more streamlined operating model. Together, these initiatives position us to accelerate growth, expand profitability and increase cash generation in the years ahead. Supported by our strong balance sheet and disciplined capital allocation framework, we remain confident in our ability to create meaningful long-term value for our shareholders.

With that, I will turn the call over to the operator for questions.

Operator

[Operator Instructions] Our first question comes from the line of Jon Block.

分析师问答

Jonathan Block

Thanks, guys. So Al, previously, the fiscal 2H '26 CVI growth was expected to be up roughly 4%, now fiscal 2H is expected to be flattish. And you made some comments around consumption. I just want to be clear, is the entirety of that revision inventory related, as you did call out consumption of mid-single-digit growth specific to the quarter. I'm just wondering if that consumption assumption was -- also applies to fiscal 4Q. So maybe you can just tease out the plus [ 4 to 0 ] in fiscal 2H, how much of that is destock versus underlying fundamentals?

Albert White

Yes, Jon, it's all destock. So the consumption in the U.S. market here has been running pretty steady all year in the mid-single digits. It was -- it did in Q3, and it did in the first month of this quarter. So I would expect consumption to remain as is. Meaning the entire reason for the reduction in the revenue guidance for CooperVision was tied to just channel inventory. That's it.

Jonathan Block

So thanks for the clarity there. I guess just an obvious follow-up, which would be, if you're exiting this year at flat off of pretty modest comps, just any high-level thoughts on 2027 with CVI. In other words, do we think it can go back to mid-single digits as it would revert back to consumption? Or should we think, hey, you're going to be below market this year, do we think below market next year really until some new products start to come out of the innovation hub.

Albert White

Yes. A couple of things on that. I mean, some of the moves that we're making that you see here in the U.S. with respect to the channel inventory are one that's impacting us. Another one that's impacting us has been for a little bit and will to end this year. is some of the portfolio rationalization we're doing with our legacy hydrogels. Our legacy hydrogels were down double digit across the board as we continue to kind of move away from those products. That work we're going to get completed here in our fiscal Q4, and that will put us in a significantly better footing back to kind of CooperVision of old or normal CooperVision, if you will, as we get into 2027.

Operator

Your next question is from the line of Jeff Johnson.

Jeffrey Johnson

Let me just stick on maybe that same line of question Jon was just asking and then I've got one other follow-up as well. But on the destock itself, Al, you may have just answered the question on some of the legacy hydrogel stuff. But what is actually driving that destock? And how do we think about the risk that, that bleeds over into the early part of '27. Have you ring-fenced that fairly confidently that this is a fiscal Q4 should be the last of it? Or how do we think about like the early '27 potential impact? And then one follow-up.

Albert White

Yes. We have ring-fenced that, so to speak. We have gone through that deep deeply and dug into all the details and where the channel inventory is and what's happening. A lot of it was tied to Biofinity but there was other -- there was stuff with dailies, and there was definitely, definitely inventory that was tied to some legacy hydrogels and some of those kind of products. But we're going to get that behind us here in Q4, at least the vast majority of it. Same with the rationalization in the moves in Asia Pac, so that we get back in good footing and get back to normal, if you will, in 2027.

Jeffrey Johnson

Okay. I guess I'll just push you a little bit on that. Just hearing your answer there, the different lines that destock, but why are they destocking? Has end markets slowed? Did you guys have too much inventory in the channel from past efforts to kind of prop up numbers? Is it competitive new product launches that are just requiring less CooperVision inventory? Just anything there?

And then you mentioned APAC there at the end of your answer. I guess my other question was going to be on APAC. Last quarter, you talked about fiscal Q3 being the last of the Cooper-specific issues there and you felt like the market was kind of flat, maybe down a little bit in Asia Pac and that you could get back towards that market rate in Q4. Has that assumption now changed? And if so, maybe why.

Albert White

Yes, I'll touch that one first, Jeff. So on Asia Pac, I would say that market is actually stabilizing to getting a little bit better, which is great news. I think I said last quarter, I'd have to go back and look that we were finishing up the a lot of the rationalization work and positioning work and so forth with respect to the legacy hydrogels and clariti entering. So that's what I'm kind of referencing saying that similar to last quarter, we're going to finish that up. We were probably halfway through it or maybe a little bit more. We took another chunk out of it here in Q3, and we'll finish that in Q4. So I think you'll get Asia Pac being back to relatively back to normal like as we start the year off.

If I look at the channel inventory in the U.S., we see channel inventory kind of go up and go down, and we've seen that many times over the years. We did have channel inventory trend higher here and that's been for a couple of different reasons. Some of it was people buying before price increases. Some of it's been consolidation activity. Some of it's been buying before things like IT upgrades go in. Most recently here, and like Q1 and Q2, you saw channel inventory move up associated with buying tied to some of the new private label contracts we won, and that was pushing up inventory without offsetting it in a different spot.

So this was something that we took a look at a long and hard look at it and said, "Hey, normally, what would happen here and what's happened in the past is that channel inventory would burn itself off over the next 1.5 years or something like that. and you'd move back to normal." And rather than doing that and dealing with that as we have many times over the 20-plus years I've been here, decided to go ahead and proactively accelerate that and just get that taken care of right now in Q3 and Q4 so that we won't have that overhang at all next year. And we'll go back to growth tied to consumption.

Operator

Your next question is from Larry Biegelsen.

Unknown Analyst

It's [ Ale ] on for Larry. Can you quantify the impact of the U.S. inventory reduction in fiscal Q3? I mean you talked about consumption being in the mid-single digits. So is that different versus what you reported for [ CVA ], is that the magnitude of inventory reduction in the quarter? And what's a seeing about the impact of the inventory in fiscal Q4? And I have a follow-up.

Albert White

Yes. So yes, just to be clear on that, the Americas would have reported growth around 5% in Q3 if we hadn't made the inventory reduction moves. We would envision Q4 is actually going to be pretty similar to what Q3 was. I would say, for the Americas, for EMEA and Asia Pac so you'll have a similar inventory reduction that will occur in Q4 in the U.S.

Unknown Analyst

Okay. So the magnitude should be similar, you're saying, for the inventory reduction in Q4?

Albert White

That's right.

Unknown Analyst

Okay. And then my other question is around the P&L for Q4. So I'm backing into an operating margin somewhere in the mid-20% just based on your EPS guidance. That would be down sequentially as well as year-on-year. So one, I just want to check that. And two, what's driving that lower margin? I mean, you have a tariff benefit in fiscal Q3. Is all inventory related or are there other factors in there? And if there's anything in your EPS guide about additional buyback in fiscal Q4?

Albert White

Sure. So nothing in the guidance with respect to buybacks, answer that one. When you look at your operating margin think and you're in the ballpark, and Brian kind of touched on it, the factors being tariffs, being FX is a little bit more negative and then be in investments in CooperSurgical. So we have started that investment activity in CooperSurgical. We started it during Q3, actually. So you're going to -- we're starting to see the impact of that. Now we'll get a return on that, of course, next year, but you're starting to see the impact this year.

Operator

Your next question comes from the line of Jason Bednar.

Jason Bednar

Sorry to hammer here, beat a dead horse, but I'm going to ask another one on the destock. Just a question on your confidence that this is just an Americas issue that won't bleed over to EMEA and maybe talk about how Americas is benchmarked versus EMEA, so we can have confidence that this issue just doesn't extend over to that geography and visibility that you have into the channel there. And maybe why not maybe take it from a different perspective, why not make some moves in EMEA, so that channel or that geography is on healthy footing heading into fiscal '27?

Albert White

Yes. So the difference is EMEA is a much greater subscription-based market we're actually seeing the U.S. move in that direction. That's one of the things I was talking about with the new Puerto Rico facility is that you're seeing more direct-to-consumer shipping activity. You see that in EMEA right now. That kind of prevents you from having like these inventory, these big inventory swings and so forth. So we just don't really see that EMEA, I mean you can get it with customers and so forth, of course, right? But but we just don't have that happening in EMEA. So I'm not worried about it in that region.

When you look at the U.S., it's centered on a relatively small number of players, if you will, between distributors and some online e-commerce. So it's pretty easy to straightforward tackle it, and that's what we did. And it's pretty easy to get an understanding about how much channel inventory is out there. What levels people need to hold in order to maintain customer service requirements and so forth. And you can look at that delta, and that's how you ring-fence it, so to speak, to be able to say, "Hey, I can do this, and I can quantify it within a couple of quarter period."

Jason Bednar

All right. All right. That's helpful. And then, Al or Brian, I think you both discussed today investments in CPI sales, marketing and R&D. Usually, that type of approach that's needed to accelerate growth comes at the expense of margins even if temporarily, but it doesn't seem like that's what you're suggesting today. So can you talk a bit more about the investment buckets and then your confidence level in posting margin improvement next year in the face of this spending knowing that we've already gone through some cost efforts coming into this fiscal year.

Brian Andrews

Sure. I'll take that one. Yes, so the commercial investments in sales force expansion, marketing programs, new product development, those -- the sales force adds tend to be a short-term detriment to margins as we bring in those sales force, train them up, get them deployed, that will be a short-term detriment for longer-term benefits. So we are addressing sales force expansion across our businesses, across regions. So I'm not going to get into 2027 guidance right now. Obviously, we've been leveraging parts of the P&L, and we continue to leverage that, and you see that drop through in profitability and earnings.

But in terms of next year, we'll get into next year in December in terms of how that's going to impact how the moves to drive long-term sustainable organic growth will impact our year, including gating in December.

Operator

Your next question is from the line of Robbie Marcus.

Robert Marcus

Two for me. One, when did you first start the destocking? And where are you now with channel inventory? I don't know if you measure in days in the U.S. where was it in the beginning of the year? And where was it last year, just so we could get a sense? And then I have a follow-up.

Albert White

Yes. So I would say -- well, I don't want to go kind of back and like build out by quarter. I don't think that's going to do anybody any good. But I look at it and say that we're -- I would say, halfway through it. We did it here in Q3, and we're going to do the other half of it in Q4.

Robert Marcus

Okay. But you're not willing to say if this year ran at above average or below average?

Albert White

Well, this year has run above average. As I mentioned, like there was stocking associated with some of the new private label contracts we've won, as an example, that is pushed up distributor inventory that we saw in Q1 and Q2, as an example.

Robert Marcus

Great. And then I know you're not giving '27 guidance. I think we're all grappling with so much of the movement and changes in guidance throughout the past several quarters. But maybe are you okay with leveraged EPS growth next year? And maybe like a 3% to 4% top line, still a touch lower than where the Street is? Or does the step-up in tax preclude the ability to get leveraged EPS growth?

Brian Andrews

Yes, as for as much as I'd like to give commentary on next year. I'm just not going to get into it right now not until December.

Operator

Your next question is from Joanne Wuensch. Please go ahead.

Joanne Wuensch

I'm going to try it from a different angle. If the third quarter and the fourth quarter are negatively being impacted by the channel inventory, and the contact lens market is growing 4% to 6%. Is it reasonable to assume that next year, you can grow within the range of the market?

Albert White

Yes. That is reasonable. I would say a couple of things, Joanne. And I give just a little color on that because your question is very fair. Like we don't have a manufacturing issue. Our team is strong. We're producing product. We don't have a distribution or logistics issue. We don't have a problem winning contracts. We won a number of contracts where we struggled is execution at the end of that, is actually executing and delivering revenues. So it's kind of like we're moving through this entire process, which is one of the things that's kept me optimistic. But then we're not converting at the very last stage of that. That actual commercial execution is where the struggling has happened.

So the sales force execution, this additional marketing the intensity around that kind of stuff and targeting and so forth is the key to success for us, right? It's not product, it's not getting customer products. It's not winning contracts. It's executing at the end on the sales. We don't have enough salespeople out there. Like [ Insights ] 2020, we should have moved faster around this. Like we don't have enough salespeople on the street. We have quite a bit less than our competitors have out there right now. So this is a matter of doing that last stage of investing. And we're on top of that. We're moving as fast as we can right now on that.

I'm not expecting this channel inventory to bounce back. We're taking it out, and we're going to manage it more aggressively to ensure stability there but I do expect better execution. We have a long history of strong execution. So I'm confident in the team and that we'll deliver that.

Operator

Your next question is from the line of Steve Lichtman.

Steven Lichtman

I just want to switch gears to CSI and on the decision to keep the business, you pointed to the valuation disconnect. But as you look at the 2 businesses together, coming off of this process. What was management and the Board's ultimate assessment of why the 2 together are stronger than a part? Because obviously, the lack of obvious synergies has been one of the questions from investors.

Albert White

Yes. Well, I would say that it's really the P&L. It's at the end of the day because if you take a look at the shared services concept that we deployed, remember, we did the restructuring in Q4 of last year and you've seen the savings. I mean, I know there's frustration over revenues. I have frustration over revenues, but I think this was something like our 11th straight quarter of beating earnings expectations. And some of those quarters, we beat an earnings expectations by 5%, 10%. I mean we beat earnings this quarter with CooperVision coming in way under what revenue expectations were.

So the strength of the P&L, when I look at it from a perspective of operating leverage and being able to drive that and drive cash flow, highest quarterly cash flow we've ever had in the company. And as Brian said, we're going to keep delivering a lot of cash flow. At the end of the day, yes, you're right. We have 2 different businesses. But the back office when it comes to finance, IT, legal and HR and so forth, it support very effectively both of these businesses so that we can generate good earnings and really strong cash flow.

And then we need to deploy that cash flow to stock buybacks and we did a lot of buybacks this quarter. We're going to generate a lot of cash next year, and that's going to continue to be our focus. So that's where the logic comes in of having the 2 companies together. And proof is in the pudding, which we've done. Now we need to get revenue growth going, and I get that. Within Vision, surgical is actually plug in along fine, even through all these disruptions. I mean, this was an incredibly disruptive process, like we thought we were going to sell CooperSurgical. Let's be clear about that. Like I got on the last call and I talked about that, right?

So everybody of this company was working on their normal jobs on the sale of the business, every piece of planning that we were doing, every budgeting, every IT plan had to go and have a with and without each of them and so forth. But we got through that. We got through the exercise, and we still delivered the earnings, and we killed the free cash flow. And now we turn our attention back to where it needs to be, which is driving revenue growth within CooperVision and investing heavier in CooperVision. And that's what we're going to do next. So it's one more box we need to check, and I think that's the last one that we need to check. But that's the logic of having the businesses together.

Steven Lichtman

Got it. Great. And then just follow-up to that, in terms of use of free cash looking forward beyond stock buybacks, you may have mentioned this in your release tonight, but is it fair to say that relative to inorganic, that Vision is going to be a higher focus now than on CSI all else equal?

Albert White

100%, yes. They're very heavy focus right now on CooperVision organic growth. That's where we need to put our attention, that's where we are putting our attention, and that's where we're putting our money. That doesn't mean that CooperSurgical is not going to do well and get its investments because fertility is very important to us. And and we're strong on the med device side. And we're going to continue to invest and grow those businesses, but the #1 focus clearing a way is driving organic growth at CooperVision right now.

Operator

Your next question is from the line of David Saxon.

David Saxon

Great. Maybe one on CVI, and I'll ask one on CSI as my second. So just on CVI follow-up to the sales and marketing investments. Like are there specific regions that need those additional resources? Do you need those additional sales reps to get to the mid-single digits next year. And then would love to just get your latest take on pricing and how the market -- how are you feeling about the market's ability to take price?

Albert White

Sure. So when it comes to the sales force expansion, I would start that with the U.S. market because right now, we are -- we've got consumption growing mid-single digits. That's probably in line roughly with where the market is. we should be doing better than that. Given the contracts we've won and so forth, we should be growing faster than market here. The addition of this direct sales force and the expansion that we're doing right now is going to add coverage for something like 5,000 additional doors so that's a big deal for us. Do we need to get that sales force in place to get to mid-single digit? No, because that's what we're doing right now on a look-through basis. Should we be accelerating that doing better? Yes, we should be.

When I look at Europe, they're in good spot, I challenge the European team there. We have a great fantastic leader running Europe over there and I've challenged him to maybe look at some expansion and hiring some more salespeople. Asia Pac is in pretty good shape right now. I just talked to the head of Japan, great guy, energized. He's got some really good ideas. I really -- I'm excited about what he's doing. He's doing some hiring over there. to focus in some different areas of the markets where we don't currently compete. And he needs to keep doing that. I stress that to him and the rest of the team, invest, drive growth. We're going to get -- these are all high-return models like we are going through this from a return perspective, I feel good about that. But so anyway, that gives you a little bit of color on the worldwide side.

Pricing, I would say, when I look at pricing and when I look at product mix, it's still pretty good in the industry. The higher-priced products are doing better. We see that with our competitors. We see that with products like MyDay MiSight, the MyDay torics and multifocals and so forth continue to perform better. So higher-priced products doing better and there still remains a potential to take price, like inflation is still out there. We see that, and there's still the potential for us to be able to take price, and we're actively looking at that right now.

David Saxon

Okay. Great. And then on CSI, maybe just talk about what you're seeing in terms of cycle trends, what the outlook is going into fiscal '27? And then you mentioned PARAGARD competition in the release. So I would love just an update there. I think that competitive launch was in August. So curious if you're seeing any impact there.

Albert White

Sure. On the fertility side of things, we are seeing a growth in cycles, and that's a positive. The other thing we're seeing is we're hurdling through that year period where we have some consolidation and you're starting to see fertility clinics investing more. There's more capital equipment opportunities out there. Our genomics team is absolutely killing it. They're doing a great job, taking a whole bunch of market share. We have somewhat of a new fertility team that started probably 6, 12 months ago that is really doing that. Our new leader, she's just fantastic, and she's doing a great job in killing it. So I'm super optimistic about the fertility market. Anybody who thinks that that's not a good market or that, that litigation settlement is going to disrupt our momentum and progress is just wrong. I just don't see that in the market.

When you look at the PARAGARD competition, we've talked about that in the past. We are the only -- PARAGARD is the only non-hormonal IUD in the market right now. There is a competitive product that received approval that was bought that it closed during this past quarter for us. They started their training and that product will get launched at some point in the future, and there's concern about that. And at this point in time, I'm going to hold off giving any guidance or commentary above and beyond what we've already given, but we'll certainly have a lot more color to be able to give on the December call.

Operator

Your next question comes from the line of Navann Ty.

Navann Ty Dietschi

Just CSI post strategic review. You mentioned some insights from that review. So can you maybe discuss that into more detail and the levers that you mentioned, including investment that you started in the quarter to drive fertility growth. If you could give more details.

Brian Andrews

Navann, it was a little difficult to hear. I think you were asking for the impact of -- or the -- do you say the impact from the strategic review tied to CSI? Can you repeat your question?

Navann Ty Dietschi

Yes. I think Al mentioned that you gained some insight from the strategic review and also mentioned some investment that you started in the quarter to drive fertility growth. If you could discuss that into more detail.

Albert White

Sure. So the insights is an important one because one of the things that the strategic review did was to really drill down into the profitability of our portfolio, all aspects of our portfolio, frankly, and take a look at profitability by product and take a look at profitability by geography and relationship. One of the areas where we've seen significant improvement is the profitability of CooperSurgical. And what it did is it kind of highlighted other areas where there's some opportunity for us to do a better job in terms of driving ongoing profitability improvement. So we're going to learn from that, like we learned a lot from the strategic review. It uncovered some different things, and it's going to make us a better company. It is making us a better company today.

I mean, right now, we are doing investments within fertility. We've added some investment activity, including within our R&D. We have great new Head of R&D, who is running that organization and pulling forward some launches. We've got some exciting stuff going in genomics there with some new launches and some expanded products that we have. I would say we're continuing -- that's where we're putting dollars. We're putting #1, first and foremost, is CooperVision organic growth; and number two, though, after that is fertility, where we are continuing to invest. And we believe that those investments are going to drive good fertility growth. And we also believe that some of the stuff that we've been covered and the insights is going to give us opportunity to continue to drive leverage in that business.

Navann Ty Dietschi

And you also mentioned the -- in the press release the valuation impact of the fertility settlement. Is that fully settled? Or is there anything else we should know about?

Albert White

That is fully settled. So there's nothing new on that. There was concern that, that settlement. You'll remember, that was from an issue we had in 2023. There was a concern that, that settlement would negatively impact our ongoing sales, not our operations. We haven't had any issues since then associated with the media and so forth. So I just don't believe that's accurate, and we haven't seen that. We didn't see it in Q2. We didn't see it in Q3. We're certainly not seeing it as we get rolling here in Q4. But but I appreciate whether that was a true concern on negotiating tactics, hard to tell.

Operator

Your next question is from the line of Anthony Petrone.

Bradley Bowers

You have Brad Bowers on for Anthony. Just maybe I wanted to ask one about the overall strategy or dynamics underlying the CVI business. Obviously, slowdown in growth is not unique to Cooper, but still growing below growth we got in the destocking dynamics, but obviously, you had also taken some share in some of the wider SKU ranges and obviously, some of the new products with MyDay, it sounds like the Americas growth is strong, but you even admit you wish you were growing better. So I wanted to hear about some of the more competitive dynamics and the confidence that those remain in your favor.

Albert White

I would say that those remain in our favor. So nothing has changed with respect to that. I will say that the area where losing share is the wrong word, but where we don't operate is kind of in the super premium segment. There is a part of the market, especially on the daily side that we refer to as super premium. It's really high-priced products and that's just not an area that we compete in right now, and that's shown a lot of growth, and it has very high revenue per patient.

So where we continue to do well, we continue to win patients. Our revenue per patient is not close to where some of our competitors are. And a lot of the market continues to get driven by that really premium segment. Now we are launching -- we've launched MyDay MiSight into that more premium segment. That's what's being launched into Europe. So I think there's some potential for us to gain some ground there. But that would be -- if I had to highlight 2 things, that would be one of them is not having products in the super premium space. And then the other one would be the desire to rationalize some of our legacy hydrogel products. Again, we're definitely seeing a negative impact from that.

Bradley Bowers

That makes sense. But obviously, punching above your weight given the underinvestment in -- not underinvestment, but smaller sales force than competition. Obviously, that is a tailwind, but just wanted to hear -- maybe remind us how productivity kind of ramps there. Obviously, the base is now lower, so it does kind of imply getting back towards that high -- mid- to even high single digits to your point, getting above consumption? And then also just impact, obviously apparent maybe the opportunity that, that would be obscured if there is strong growth in the U.S. by some of the OUS impacts? Just maybe help us figure that out as well.

Albert White

Sure. Just one quick point. As Brian just said that I met MyDay Energys, I think I said MyDay MiSight, but MyDay Energys is the premium product. With the sales force, I would say, if I had to put some parameters around that, we're recruiting now. We'll get people trained and have them out on the street executing. I would say probably in early mid-fiscal Q2.

So from that perspective, right, they need to visit offices and start doing their jobs and so forth and pulling revenues in. So that's probably a positive impact more in the Q3, Q4 time frame. Now I do think early in the year, we'll continue to have consumption be solid. So we'll still put up good results, but I believe we'll accelerate a little bit off that as we get the benefit from those employees. Frankly, same thing when I look at some of the other markets around the world.

Operator

Your next question is from the line of Brett Fishbin.

Brett Fishbin

I have to say a lot of mine have been asked. So maybe just a follow-up on kind of the last point. I was going to ask about your thoughts on underlying market share dynamics, just given the full year CVI growth guide for the Americas. It sounds like a lot of it has to do with salesforce and you're looking at some incremental investment activity. So maybe just the first part, is there anything else that stands out that you think might be driving, call it, full year growth in the Americas below market outside of that?

And then the second follow-up question is just how you're feeling about the product portfolio. I think your point about super premium lenses is really interesting. So just curious like how you feel about current offerings and maybe how active the R&D pipeline might be in regards to some new ideas or even new brands?

Albert White

Sure. I would say on the selling side, I would go back to sales execution. Like we've won some great private label contracts here in the U.S. with a few of the buying groups. We've won some really nice contracts in Asia Pac. Historically, when we win those contracts, we would see the sale of execution turn those into revenue growth. And that's what we've expected more of that, right? You've seen that in some of the guidance. You've seen it in some of my commentary. That's where that has not come to fruition yet. And where -- when we looked at it and peeled back the onion and said, well, why, what is the difference? What's happening? We have a full portfolio out there right now. I feel good about the portfolio. It's arguably the most robust that we've ever had, and we didn't build out the sales force and a lot of the marketing support commensurate with the size of the portfolio that we have right now. So we need to do this activity so we can capitalize on these contract wins that we have.

I will say with respect to R&D and new products, we have accelerated that activity had a number of meetings with the R&D team and with our commercial team. We are accelerating launch activity that we were looking at in the 2030 kind of time frame and pulling that forward a couple of years. So very, very active on R&D and laser focusing in on some new product introductions that we think are going to be pretty damn exciting. We were a little too broad on some things. So narrowing that down and executing and getting some new products into the marketplace is going to be beneficial for us. And I won't go too far on that yet, but we will spend some time in the near future going through some of those details.

Brett Fishbin

All right. Awesome. I'll keep it to one question. We'll look forward to hearing more about that in the next few years.

Operator

And our final question comes from the line of Issie Kirby.

Issie Kirby

I think most of might have been asked as well, but just wanted to touch on Asia Pacific and China in particular, which has been a drag for quite some time now. Can you remind us of that business for you guys envision? And just how you're thinking about it strategically? Like does it get to a point where it's really given the dynamics in the market, not necessarily worse you being there anymore?

Albert White

Yes. Well, China was another struggle this quarter. I mean it was the only market as an example where MiSight was actually down. It's not -- it's not been a great market for us. So we are reengineering there. We've got a new team in place. We're looking at some different growth opportunities to see the best way to reestablish and drive growth in that marketplace right now.

I do believe that I will say, within the context of Asia Pac, after many quarters of negative and product rationalization in China and some of the other markets, we are definitely coming to an end with that activity. I know you've heard that before, but I'll just tell you, when you look at the size of the business, I mean it's gotten to be -- it's just relatively small. I mean I think it's less than 2%, it is less than 2% of revenues this quarter on a consolidated basis. So the business just is getting smaller over there.

So it's a great question and a great challenge. And we are looking at seeing if we can [indiscernible] that business to drive success. And I do believe there are some opportunities there in some channels like e-commerce, where we can play differently and be successful. But we're taking a hard look at it right now because we want to get good revenues, if you will, right, profitable revenues and things that make sense. So doing work on it. That's -- I'll update you more as we get into December and give guidance on next year.

Issie Kirby

Can I just really quickly squeeze in a follow-up on what went on with MiSight in China in the quarter?

Albert White

Sure. We have not been able to gain traction with MiSight in China. And if I look around the world, in other markets that have spectacles, we continue to do fine. As a matter of fact, it just grows the overall marketplace. I think the unique thing with China ends up being Ortho K, probably more than anything. You've had a lot of pricing pressure on Ortho K because of government pricing policies. So it's really disrupted that marketplace. There's a lot of knockoffs there. There's a lot of disruption around pricing with Ortho K. There's a lot of knockoff spectacle lenses and so forth there. So although there's massive opportunity with a number of children that have myopia, the market itself is very disjointed right now.

Operator

And with no further questions in queue, I will now turn the call back over for closing remarks.

Albert White

Thank you, operator, and thank you, everyone, for taking the time. I know we had a lot to discuss today, and I'm sure we'll have a lot of follow-up calls with details. So I appreciate everyone's interest and look forward to catching up and providing an update on our next earnings call in December. Thank you.

Operator

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.