Alcon Inc. (NYSE:ALC) Q4 2022 Earnings Call Transcript

Operator: Our next question comes from the line of Matthew Mishan with Keybanc Capital Markets.

MatthewMishan: I first wanted to start on ocular health. I mean I guess with some of the headwinds you’re seeing in solutions, I was just hoping you can call out trends in, let’s call it, OTC and kind of dry eye. Are we kind of underestimating or some of the success you’re having in that area, especially with driving growth from the new sales force?

David Endicott: Well, good question, Matt. Thanks for it. If you look at the full year impact in the IOL business for us, we’re reporting a 7% number for the year. If you look at that, you take it apart, underlying sustained Pataday and kind of all the rest of our eye drops business probably grew at 8%. And we had about a 6% offset with the CLC business. So think of that growth kind of organically being naturally drawn down to 2%. And then, of course, the pharma stuff adds some inorganic to it to get to 7. So the markets are growing, we think, kind of in that, again, mid-single digits number and we’re outperforming as we are in contact lens and also in the surgical business. So I don’t think it gets as much attention which is interesting because it’s actually a nice bit of business for us.

But I would say that the big news for the quarter and I think until we get out of this is that we’re losing some ground on contact lens care and that’s a supply chain problem that we’ve had for almost a year now with one of our — with a basket in peroxide solution product. So we are doing all we can to get that sorted out. We’re selling everything we can make but we aren’t making as much as we used to. We’re going to hopefully solve that in the middle part of the year but it is going to be hand to mouth until then. Directionally though, very good underlying growth.

MatthewMishan: And then a follow-up on some of the contact lens commentary you had. I guess where you said it’s a little softer for the fourth quarter. I guess just where — why — do you have a sense of why you’re seeing kind of some of that softness? Is it staffing? Is it supply constraint? Or is it — are you kind of seeing the consumer start to moderate its purchases?

David Endicott: Yes. I mean, we’ve looked at it quite a little bit. And the fourth quarter in the U.S. was different than what it was in international. Obviously, we had a very good quarter internationally. But I would say, wrapping around on a relatively soft number. So, I think what we’re watching very carefully is contact lenses are part — good news is our contact lenses is, people don’t stop wearing contact lenses. They don’t just quit. What they do, it’s part of their basic expense in a month. And so they — but what they do is they shop for private label, they do shop for deals in different channels and they do stretch their lenses. And so we’re aware of that; we saw it as a phenomenon in the ’09 frame and I think when we looked at the fourth quarter, what we saw mostly was price and mix driving the U.S. growth.

So in real terms, the units were basically flat to slightly down. And again, we’re being very careful with that to try to figure out what that really means. I think directionally, it’s probably short-lived and it will bounce back to relatively normal growth but we’ll have to see where that plays out.