# Cooper Companies (COO) Financial Model

Free Excel 3-statement financial model and company analysis for Cooper Companies.

- Canonical: https://finamodel.com/companies/cooper-companies
- Industry: Medical Devices
- Downloadable model: Yes
- Excel download: https://finamodel.com/company-models/COO.xlsx

## Model Purpose

This model provides a comprehensive equity valuation and scenario planning tool for an equity research analyst covering the medical device sector, specifically to forecast The Cooper Companies' organic growth trajectory, margin expansion from recent reorganisation activities, and free cash flow generation for share repurchases and debt paydown.

## Company Overview

The Cooper Companies, Inc. (CooperCompanies) is a global medical device company operating in two primary distinct markets: contact lenses and women's healthcare. The company develops, manufactures, and markets a wide range of products to eye care professionals, obstetricians, gynaecologists, and fertility clinics globally.

Business segments:
*   CooperVision (CVI): Approximately 67% of total revenue.
*   CooperSurgical (CSI): Approximately 33% of total revenue.

Key geographies include the Americas (largest market), EMEA, and Asia Pacific. The business model is a mix of consumable medical products (contact lenses, fertility consumables) and durable medical equipment/devices (surgical tools, Paragard intrauterine devices), providing a high degree of recurring revenue. CooperCompanies holds a strong competitive position as one of the top four global contact lens manufacturers (alongside Alcon, Johnson & Johnson, and Bausch + Lomb) and is a market leader in the fertility and women's health space. Recent major events include a significant corporate reorganisation in late fiscal 2025 to optimise the workforce, the expansion of its share repurchase programme to $2 billion, and strategic bolt-on acquisitions such as obp Surgical and select Cook Medical reproductive health assets.

## Revenue Deep Dive



### CooperVision (CVI)

*   **Segment name**: CooperVision (CVI)
*   **Revenue driver formula**: "Contact Lens Volume x Average Selling Price (ASP) x FX Impact"
*   **Historical growth rate**: 4% to 7% organic CAGR over the last 3 years.
*   **Key growth levers and headwinds**: Growth is driven by the shift to daily silicone hydrogel lenses (MyDay, clariti) and myopia management in children (MiSight). Headwinds include legacy hydrogel declines, particularly in Japan, and macroeconomic softness in certain Asian markets.
*   **Pricing dynamics**: Highly competitive but rational oligopoly; pricing power exists in premium daily and specialty lenses (toric, multifocal).
*   **Revenue recognition notes**: Recognised upon transfer of control (shipment or delivery), net of estimated rebates and returns.
*   **Seasonality**: Relatively stable, though the fiscal third quarter (ending July) often sees a slight uptick due to back-to-school eye exams.

### CooperSurgical (CSI)

*   **Segment name**: CooperSurgical (CSI)
*   **Revenue driver formula**: "Procedure/Cycle Volume x Product Price x FX Impact"
*   **Historical growth rate**: 3% to 6% organic CAGR over the last 3 years.
*   **Key growth levers and headwinds**: Growth is driven by global fertility clinic expansion, genomics testing demand, and Paragard IUD sales. Headwinds include fluctuations in US fertility cycle volumes and hospital capital equipment budgets.
*   **Pricing dynamics**: Regulated medical device pricing; fertility consumables command premium margins due to clinical criticality.
*   **Revenue recognition notes**: Consumables recognised upon shipment; equipment may have deferred revenue components if bundled with service contracts.
*   **Seasonality**: Fertility cycles can dip slightly in the winter holidays (fiscal first quarter).

## Cost Structure



### Variable Costs / COGS

*   **Line-by-line breakdown**: Manufacturing labour, raw materials (polymers, silicone), overhead, freight, distribution, and tariffs.
*   **Gross margin range**: 65% to 68% (GAAP), with non-GAAP gross margins typically 100 to 200 basis points higher.
*   **Key input costs and commodity exposures**: Resin, silicone, packaging materials, and global shipping rates.
*   **How COGS scales with revenue**: High operating leverage. As production shifts to higher-volume automated lines for daily lenses, unit costs decline, though this is occasionally offset by initial scale-up costs for new product lines or tariffs.

### Operating Expenses

*   **R&D**: Typically 3% to 4% of revenue. Covers clinical trials for new lens materials, myopia management studies, and fertility genomics research.
*   **SG&A**: Typically 38% to 42% of revenue. Heavily driven by the global sales force, marketing campaigns for new product launches (e.g., MyDay), and corporate administrative costs.
*   **Depreciation & Amortisation**: Significant amortisation of intangible assets due to historical M&A activity, usually excluded from non-GAAP metrics.
*   **Stock-Based Compensation**: Typically 1% to 2% of revenue.
*   **Restructuring / one-time charges**: Frequent due to continuous integration of acquisitions and the major fiscal 2025 reorganisation which incurred approximately $89 million in charges.

### Margin Profile

*   **Gross margin**: 66% to 68% non-GAAP.
*   **EBITDA margin**: 28% to 31% non-GAAP.
*   **Operating margin**: 15% to 18% GAAP; 25% to 27% non-GAAP.
*   **Margin trend**: Expanding on a non-GAAP basis due to the fiscal 2025 reorganisation savings and operating expense leverage, despite slight gross margin pressure from tariffs.

## Balance Sheet Structure

*   **Total assets**: Approximately $10 billion to $11 billion.
*   **Key asset categories**: Goodwill, intangible assets, property, plant and equipment (PP&E), and inventory.
*   **Goodwill & intangibles as % of total assets**: Very high (typically >50%) reflecting a long history of serial acquisitions in both the vision and surgical spaces.
*   **Working capital profile**:
    *   **Days Sales Outstanding (DSO)**: 50 to 60 days.
    *   **Days Inventory Outstanding (DIO)**: 150 to 180 days (high inventory is required to maintain thousands of contact lens SKUs across different prescriptions and base curves).
    *   **Days Payable Outstanding (DPO)**: 30 to 45 days.
    *   **Net working capital as % of revenue**: Typically 20% to 25%.
    *   **Is working capital positive or negative?**: Positive. The company requires significant inventory investment to support revenue growth.
*   **PP&E**: Heavily weighted towards highly automated contact lens manufacturing facilities in Puerto Rico, Costa Rica, and the UK.
*   **Right-of-use assets / operating leases**: Material but manageable, primarily related to global distribution centres and office space.

## Capital Expenditure & Investment

*   **Capex as % of revenue**: 8% to 10% historically, trending towards 8% as major facility build-outs complete.
*   **Maintenance capex vs. growth capex**: Approximately 30% maintenance, 70% growth (adding new manufacturing lines for daily silicone hydrogel lenses).
*   **Major capex programmes underway or planned**: Expansion of manufacturing capacity for MyDay and MiSight lenses.
*   **Capitalised software / development costs**: Minimal relative to physical manufacturing capex.
*   **M&A pattern**: Serial acquirer. Mix of bolt-on technology acquisitions (e.g., obp Surgical) and larger transformational deals (e.g., Generate Life Sciences, Cook Medical assets).
*   **Typical acquisition multiple paid**: 3x to 5x revenue for high-margin medical device assets.

## Debt & Capital Structure

*   **Total debt**: Approximately $2.5 billion to $2.7 billion; net debt of approximately $2.4 billion as of early fiscal 2026.
*   **Debt/EBITDA ratio**: Typically managed between 2.0x and 2.5x.
*   **Credit rating**: Investment grade profile, though specific ratings depend on recent M&A leverage.
*   **Key debt instruments**: Syndicated revolving credit facility and term loans (e.g., $950 million term loan extended to 2031).
*   **Maturity profile**: Staggered, with near-term repayments managed via free cash flow.
*   **Interest rate profile**: Mix of fixed and floating, with interest rate swaps often utilised to manage floating rate exposure.
*   **Covenants**: Standard leverage and interest coverage ratios.
*   **Share repurchase programme**: Highly active. $290 million repurchased in fiscal 2025; new $2 billion authorisation approved in late 2025.
*   **Dividend policy**: Very low yield. The company pays a nominal semi-annual dividend, preferring to return capital via share repurchases.

## Cash Flow Characteristics

*   **Operating cash flow conversion**: Strong, typically 1.2x to 1.5x of GAAP net income due to high non-cash amortisation charges.
*   **Free cash flow margin**: 10% to 15% of revenue. Fiscal 2026 guidance targets $575 million to $625 million in FCF.
*   **Major non-cash items**: Amortisation of M&A intangibles, depreciation of manufacturing facilities, and stock-based compensation.
*   **Working capital cash flow impact**: Inventory builds for new product launches act as a use of cash, partially offset by strong cash collections.
*   **Capex intensity**: Moderately high due to the precision manufacturing required for contact lenses.
*   **Cash tax rate vs. GAAP effective tax rate**: Cash taxes are often lower than the statutory rate due to manufacturing in tax-advantaged jurisdictions (e.g., Puerto Rico, Costa Rica) and excess tax benefits from stock-based compensation.

## Sheet Structure

1.  **Assumptions**: Hardcoded inputs for macroeconomic drivers, segment growth rates, margin profiles, tax rates, and capital allocation.
2.  **Scenarios**: Scenario manager (Base, Bull, Bear) toggling organic growth and M&A spend.
3.  **Income Statement**: Consolidated GAAP and Non-GAAP P&L, mirroring the 10-K structure.
4.  **Revenue Build**: Detailed segment build for CVI (Toric, Multifocal, Sphere) and CSI (Office & Surgical, Fertility).
5.  **Margin Build**: Bridge from GAAP to Non-GAAP gross and operating margins, adjusting for amortisation and restructuring.
6.  **Balance Sheet**: Standard assets, liabilities, and equity.
7.  **Cash Flow Statement**: Indirect method starting from net income, detailing working capital changes, capex, and financing activities.
8.  **Working Capital Schedule**: DSO, DIO, DPO calculations and resulting balance sheet line items.
9.  **Debt & Interest Schedule**: Tranche-by-tranche debt build, mandatory repayments, and interest expense calculation.
10. **PP&E & Intangibles**: Capex, depreciation, M&A additions, and amortisation waterfall.
11. **Shareholders Equity**: Retained earnings, share repurchases, and dividend payouts.
12. **DCF Valuation**: Unlevered free cash flow calculation, WACC, terminal value, and implied share price.
13. **Outputs & Charts**: Summary dashboard of key metrics (Non-GAAP EPS, FCF, Net Leverage).

## Key Financial Relationships

1.  "CVI Toric & Multifocal Revenue = Prior Year CVI Toric & Multifocal Revenue * (1 + CVI Toric Organic Growth) * (1 + FX Impact)"
2.  "CVI Sphere & Other Revenue = Prior Year CVI Sphere & Other Revenue * (1 + CVI Sphere Organic Growth) * (1 + FX Impact)"
3.  "Total CVI Revenue = CVI Toric & Multifocal Revenue + CVI Sphere & Other Revenue"
4.  "CSI Office & Surgical Revenue = Prior Year CSI Office & Surgical Revenue * (1 + CSI Office Organic Growth) * (1 + FX Impact)"
5.  "CSI Fertility Revenue = Prior Year CSI Fertility Revenue * (1 + CSI Fertility Organic Growth) * (1 + FX Impact)"
6.  "Total CSI Revenue = CSI Office & Surgical Revenue + CSI Fertility Revenue"
7.  "Consolidated Revenue = Total CVI Revenue + Total CSI Revenue"
8.  "Non-GAAP Cost of Sales = Consolidated Revenue * (1 - Non-GAAP Gross Margin %)"
9.  "GAAP Cost of Sales = Non-GAAP Cost of Sales + Restructuring Charges in COGS + Amortisation in COGS"
10. "Non-GAAP SG&A = Consolidated Revenue * Non-GAAP SG&A %"
11. "Non-GAAP Operating Income = Consolidated Revenue - Non-GAAP Cost of Sales - Non-GAAP SG&A - Non-GAAP R&D"
12. "GAAP Operating Income = Non-GAAP Operating Income - Amortisation of Intangibles - Restructuring Costs"
13. "Interest Expense = Average Total Debt Balance * Weighted Average Interest Rate"
14. "Ending Share Count = Beginning Share Count - (Share Repurchase Spend / Average Share Price)"
15. "Non-GAAP EPS = (Non-GAAP Net Income - Preferred Dividends) / Ending Share Count"

## Cross-Sheet Dependencies

*   The **Revenue Build** feeds the top line of the **Income Statement** and drives the **Working Capital Schedule** (Accounts Receivable).
*   The **Margin Build** dictates COGS and Opex on the **Income Statement**, which in turn drives Inventory and Accounts Payable on the **Working Capital Schedule**.
*   The **PP&E & Intangibles** sheet calculates depreciation and amortisation, feeding both the **Income Statement** and the **Cash Flow Statement**.
*   The **Cash Flow Statement** determines the cash available for debt paydown or share repurchases, feeding the **Debt & Interest Schedule** and **Shareholders Equity**.
*   *Circularity Risk*: Interest expense on the **Debt & Interest Schedule** lowers net income, which lowers cash flow, which changes the debt balance required, which changes interest expense. A circuit breaker toggle must be included.

## Sign Convention

*   Revenue, assets, and equity balances are entered as positive numbers.
*   Expenses (COGS, SG&A, R&D, Interest, Taxes) are entered as positive numbers in the assumptions but subtracted in the Income Statement formulas.
*   On the Cash Flow Statement, cash inflows are positive and cash outflows (capex, debt repayment, share repurchases) are negative.
*   Contra-asset accounts (Accumulated Depreciation) are entered as positive numbers but subtracted from gross assets to yield net assets.

## Things Most Likely to Go Wrong

1.  "The company reports heavily on a non-GAAP basis; failing to bridge GAAP to non-GAAP operating income will result in EPS forecasts that do not align with management guidance or consensus."
2.  "Foreign currency translation can swing reported revenue by 2% to 4% YoY; the model must separate organic constant-currency growth from FX impacts."
3.  "CooperCompanies has a massive intangible asset balance; amortisation is a huge non-cash charge that must be added back to calculate true operating cash flow."
4.  "Inventory levels are structurally high (DIO > 150 days) due to the SKU intensity of contact lenses; assuming standard manufacturing working capital ratios will artificially inflate forecasted free cash flow."
5.  "The fiscal 2025 reorganisation is expected to yield $50 million in annual pre-tax savings starting in fiscal 2026; the model must reflect this step-down in SG&A/COGS run rates."
6.  "Share repurchases are a primary use of free cash flow; failing to forecast a declining share count will result in understated EPS."
7.  "Tariffs impact gross margins; the model must allow for manual gross margin overrides rather than assuming a fixed historical average."
8.  "The company's fiscal year ends October 31; calendarising the model incorrectly will misalign results with peer benchmarking."

## Validation Checks

1.  "Consolidated non-GAAP gross margin should remain in the 66% to 69% range; flag if outside this band."
2.  "Non-GAAP operating margin should be in the 25% to 28% range based on recent guidance."
3.  "Capex as a % of revenue should not fall below 7% given the capital intensity of contact lens manufacturing."
4.  "Free Cash Flow should reconcile to management's target of $575 million to $625 million for fiscal 2026."
5.  "Debt/EBITDA should remain below 3.0x to maintain the current credit profile."
6.  "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every forecasted period."
7.  "Effective tax rate should remain between 14% and 16% due to the company's established global tax structure."
8.  "CVI organic growth should not exceed 8% without flagging, as the broader contact lens market grows at approximately 4% to 6%."

## Key Assumptions (Default Values)

| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| CVI Organic Revenue Growth | 4.5 | % | Midpoint of management's FY26 guidance |
| CSI Organic Revenue Growth | 3.5 | % | Conservative estimate based on recent fertility market trends |
| FX Impact on Revenue | 0.0 | % | Assume constant currency for baseline forecasting |
| Non-GAAP Gross Margin | 68.0 | % | Aligns with recent Q1 FY26 performance and product mix |
| Non-GAAP SG&A Margin | 38.0 | % | Reflects savings from the FY25 reorganisation |
| Non-GAAP R&D Margin | 3.5 | % | Consistent with historical investment levels |
| Effective Tax Rate | 14.5 | % | Aligns with management guidance for FY26 |
| Capex as % of Revenue | 9.0 | % | Historical average required to support daily lens capacity |
| Days Sales Outstanding (DSO) | 55 | Days | Based on historical balance sheet averages |
| Days Inventory Outstanding (DIO) | 165 | Days | Reflects high SKU count requirement for contact lenses |
| Days Payable Outstanding (DPO) | 40 | Days | Based on historical supplier payment trends |
| Share Repurchase Spend | 300 | $M | Assumes continued aggressive use of the $2B authorisation |
| Average Interest Rate | 5.5 | % | Blended rate on current term loans and credit facilities |
| WACC | 7.5 | % | Standard discount rate for a large-cap medical device company |
| Terminal Growth Rate | 2.5 | % | Long-term growth rate of the global healthcare market |

## Data Sources & Benchmarks

*   **Filings**: SEC EDGAR (10-K, 10-Q, 8-K) and the CooperCompanies Investor Relations website (investor.coopercos.com).
*   **Key Peers**: Alcon Inc. (ALC), Johnson & Johnson (JNJ - Vision segment), Bausch + Lomb (BLCO), and fertility peers like Vitrolife.
*   **Industry Data**: Contact Lens Spectrum annual reports for market share data; CDC and global health organisation data for fertility cycle volumes.
*   **Consensus Estimates**: FactSet or Bloomberg for consensus revenue and EPS estimates to validate model outputs.

## Sources

*   The Cooper Companies, Inc. Q4 2025 Earnings Release and Call Transcript (December 4, 2025)
*   The Cooper Companies, Inc. Form 10-K for the fiscal year ended October 31, 2025
*   The Cooper Companies, Inc. Q1 2026 Earnings Release (March 5, 2026)
*   CooperCompanies Investor Relations Presentations (2025/2026)

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## Frequently asked questions

### What does The Cooper Companies do?

The Cooper Companies is a global medical device company specializing in two main areas: contact lenses through CooperVision and women's healthcare products via CooperSurgical. They develop, manufacture, and market products for eye care professionals, obstetricians, gynecologists, and fertility clinics worldwide.

### How does The Cooper Companies generate revenue?

Cooper Companies generates revenue through a mix of consumable medical products, such as contact lenses and fertility consumables, and durable medical equipment. This diversified approach, with segments like CooperVision and CooperSurgical, provides a high degree of recurring revenue.

### What are the key capital expenditure assumptions for The Cooper Companies' financial model?

The financial model assumes a Capex_Pct_Revenue of approximately 9.9%. Historically, Cooper Companies' capex has ranged from 8% to 10% of revenue, trending towards 8% as major facility build-outs are completed.

### What is the primary purpose of the financial model for The Cooper Companies?

The financial model provides a comprehensive equity valuation and scenario planning tool for equity research analysts. It aims to forecast the company's organic growth trajectory, margin expansion from recent reorganization activities, and free cash flow generation for share repurchases and debt paydown.

### Is an Excel financial model available for download for The Cooper Companies?

Yes, an Excel financial model for The Cooper Companies is available for download. This general corporate model provides forecasts for the period FY2026 through FY2030, allowing for detailed analysis of the company's future performance.

### Why does The Cooper Companies maintain high inventory levels?

The Cooper Companies maintains high inventory levels, typically resulting in 150 to 180 Days Inventory Outstanding, due to the extensive range of contact lens SKUs required. This significant inventory investment is necessary to support revenue growth across thousands of different prescriptions and base curves.

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