The Cooper Companies Inc. (NASDAQ:COO), a leading medical device company, announced its third quarter fiscal 2026 results on September 9. Topline went up 1% to $1.066 billion in comparison with the same quarter last year, which also included 1% organic growth. The company posted quarterly adjusted diluted EPS of $1.15, which represented a 4% jump from Q3 FY25. During the quarter, $339.1 million was spent on repurchasing around 4.9 million of the company’s common shares. This leaves management with $1.5 billion of repurchase capacity, which remains available after the Board had raised its buyback authorization from $2 billion to $3 billion.
Fertility Growth and Strong Cash Flow Offset CooperVision Weakness
The quarter featured several encouraging highlights. These include earnings that exceeded projections, notable growth across the fertility segment within CooperSurgical, record free cash flow generation, and a major tax resolution in the company’s favor.
GAAP gross margin went up from 65% in Q3 FY25 to 67% during the recent quarter, largely reflecting the comparison against fiscal 2025 inventory write-downs tied to a CooperSurgical product line exit. Adjusted operating margin improved by 30 basis points to 26%, supported by cost discipline and productivity gains, though partly offset by currency headwinds.
Interest expense fell to $21.5 million from $25.4 million a year prior, reflecting lower rates and reduced average debt. Free cash flow surged 66% to $273.0 million, driven by $341.7 million in operating cash flow less $68.7 million in capital spending.
Due to unfavorable currency movements and rising manufacturing costs, the Q3 gross margin settled at 67% on adjusted basis. This was a 60 basis point drop from Q3 FY25. Certain areas of the business grant caution, such as the CooperVision segment. It generated flat organic growth amid notable weakness across the Asia Pacific and Americas regions.
CooperVision’s revenue also fell below consensus estimates as U.S. channel inventory reductions weighed on sales. Within the Americas region, CooperVision sales went down 2%, both on reported and organic basis. For Asia Pacific, segment revenue dropped by 10% and 5% on reported and organic basis, respectively. Organic revenue was affected across some other categories as well. The sphere and other lens category dropped 1% year-over-year.
Hedge Fund Sentiment
Hedge fund interest across 1,000+ hedge funds tracked by Insider Monkey shows marginal increase in institutional exposure in the stock. According to 13F filing data, total number of hedge funds that held positions in the stock jumped to 52 by the end of second quarter in 2026, relative to 49 funds in the previous quarter. Short interest for the stock sits at 4%, which indicates modest level of active betting against the stock.
With 15.03 million shares, BlackRock is the largest institutional investor in The Cooper Companies, owning 7.71% of the outstanding shares. Other notable institutional names include Vanguard Capital Management and State Street Corporation, which held 6.54% and 4.56% of outstanding stock, respectively.
What’s Next
The recently concluded quarter strengthens Cooper’s strategic position through enhanced balance sheet flexibility and robust cash flow generation. Despite such strength, the management lowered its full-year guidance for FY26. Total revenue projections between $4.229 billion and $4.252 billion imply an organic growth in the range of 2% to 3%. Estimates for adjusted diluted EPS sit between $4.51 and $4.55. The management also reiterated its long-term free cash flow target in excess of $2.2 billion through FY28. These targets resonate with the company’s strategic priorities of profitable expansion, strong cash flow generation, efficient capital deployment, and long-term value creation for shareholders.
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