Earnings call transcript: Alcon Q3 2025 earnings beat estimates, stock surges

Alcon AG (NYSE:ALC) reported its Q3 2025 earnings, showcasing a solid performance with an earnings per share (EPS) of $0.79, surpassing the forecasted $0.7634 by 3.48%. However, the company slightly missed its revenue forecast, posting $2.59 billion against an expected $2.6 billion. Following the earnings announcement, Alcon’s stock surged by 5.26%, closing at $81.43, reflecting investor confidence in the company’s strategic direction and product innovations.

Key Takeaways

• Alcon’s EPS of $0.79 exceeded analyst expectations, resulting in a 3.48% surprise.
• Revenue for Q3 was $2.59 billion, slightly below the forecast but up 5% year-over-year.
• Stock price increased by 5.26% post-earnings, indicating positive market sentiment.
• New product launches and strategic investments are expected to drive future growth.
• The company anticipates tariff pressures in 2026 but remains confident in its growth outlook.

Company Performance

Alcon demonstrated a steady performance in Q3 2025, with sales increasing by 5% year-over-year to $2.6 billion. The surgical franchise, a significant revenue driver, also grew by 5%, contributing $1.4 billion. Vision Care sales matched this growth rate, reaching $1.2 billion. Despite a slight dip in core gross and operating margins, the company’s focus on innovation and market expansion remains strong.

Financial Highlights

• Revenue: $2.59 billion, up 5% year-over-year
• Earnings per share: $0.79, down $0.02 from the previous year
• Core gross margin: 62.9%, down 50 basis points
• Core operating margin: 20.2%, down 60 basis points
• Free cash flow: $1.2 billion generated in the first nine months of 2025

Earnings vs. Forecast

Alcon’s Q3 earnings per share of $0.79 exceeded the forecast of $0.7634, marking a 3.48% surprise. However, revenue slightly missed expectations, coming in at $2.59 billion compared to the $2.6 billion forecast, a marginal shortfall of 0.38%.

Market Reaction

Following the earnings release, Alcon’s stock price rose by 5.26%, closing at $81.43. This increase aligns with the positive earnings surprise and reflects investor optimism about the company’s ongoing product innovations and strategic initiatives. The stock’s current price is within its 52-week range of $71.55 to $99.2, showing resilience amid broader market volatility.

Outlook & Guidance

Looking ahead, Alcon maintains its full-year sales guidance of $10.3 to $10.4 billion, with an expected constant currency growth of 4-5%. The company anticipates an acceleration in Q4 driven by new product launches. However, it also foresees tariff pressures amounting to $50-$100 million in 2026 but remains confident in its ability to deliver sustainable growth.

Executive Commentary

CEO David Endicott emphasized, "We’re investing heavily in training, clinical support, and workflow integration," highlighting the company’s commitment to enhancing its operational capabilities. He also stated, "Our innovation pipeline is strong, our execution is focused," underscoring Alcon’s strategic priorities.

Risks and Challenges

• Tariff pressures anticipated in 2026 could impact profitability.
• Slower growth in international markets, particularly Japan and Europe.
• Competitive pressures in premium IOLs and other product segments.
• Potential supply chain disruptions affecting production and distribution.
• Macroeconomic factors, including currency fluctuations, could influence financial performance.

Q&A

During the earnings call, analysts inquired about the progress of the Unity VCS placement and the initial reception of the PanOptix Pro. Management confirmed that the Unity VCS placements are tracking expectations, and the PanOptix Pro has received a strong initial response. Additionally, discussions around the potential Star Surgical acquisition were addressed, reflecting Alcon’s strategic interest in expanding its market presence.

Full transcript - Alcon AG (ALC) Q3 2025:

Conference Operator: Greetings, and welcome to the Alcon Third Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Dan Cravens.

Please go ahead, sir.

Dan Cravens, Investor Relations, Alcon: Welcome to Alcon’s third quarter twenty twenty five earnings conference call. Yesterday, we issued a press release, interim financial report and presentation. You can find all these documents on our website at investor.alcon.com. Joining me on today’s call are David Endicat, our Chief Executive Officer and Tim Stonesipher, our Chief Financial Officer. Our press release, presentation and discussion will include forward looking statements, including statements about our future outlook.

We undertake no obligation to update forward looking statements as a result of new information or future developments, except as required by law. Our actual results may differ materially from those expressed or implied in our forward looking statements. And as such, should not place undue reliance on any forward looking statements. Important factors that could cause our actual results to differ materially from those in our forward looking statements are included in our Form 20 F, earnings press release and interim financial report, which are all on file with the Securities and Exchange Commission and available on their website at sec.gov. Non IFRS financial measures used by the company may be calculated differently from and may not be comparable to similar measures used at other companies.

These non IFRS financial measures should be considered along with, but not as alternatives to, the operating performance measures as prescribed per IFRS. Please see a reconciliation between our non IFRS measures with directly comparable measures presented in accordance with IFRS in our press release. For discussion purposes, our comments on growth are expressed in constant currency. In a moment, David will begin by recapping highlights from the third quarter. After his remarks, Tim will discuss our performance and outlook for the remainder of the year.

Then David will wrap up, and we will open the call for Q and A. With that, I’d now like to turn the call over to our CEO, David Endicott.

David Endicott, Chief Executive Officer, Alcon: Good afternoon, everyone, and thank you for joining us. We entered 2025 knowing that would be a year of building toward the second half, and the third quarter reflects that progress. While there’s still work ahead, we’re encouraged by the momentum we’re seeing in equipment and ocular health. I’ll begin with surgical equipment, where we’re seeing clear signs of strength with Unity VCS. As expected, the launch is delivering on its promise of greater efficiency and workflow optimization in vitreoretinal and cataract procedures.

Surgeons are responding positively to the introduction of four d Phaco technology. Unlike traditional systems, the four d Phaco tip moves in a unique multidirectional pattern that enables more efficient lens removal while delivering significantly less energy into the eye. This motion, combined with real time fluidics, is designed to enhance chamber stability. The result is greater control and confidence for surgeons and greater efficiency for the hospital or ASC. Importantly, as we articulated in the past, we’re being deliberate in pacing installations so that surgeons can observe these significant gains in efficiency.

We’re investing heavily in training, clinical support and workflow integration so that each site can fully realize the benefits of Unity. This approach is helping us build durable momentum and strong customer advocacy and reflects our long standing commitment to customer backed innovation with the surgical community. We’re also gearing up for the launch of Unity CS, the stand alone cataract version, which will be widely available in the coming months. Together, Unity VCS and CS represent a step change in surgical performance, and we’re excited about the momentum heading into next year. Turning to implantables, PanOptix Pro is proving to be a meaningful differentiator.

It builds on the success of Clarion PenOptix, but now with 94% light utilization and half the light scattered compared to its predecessor. These enhancements reflect a significant advancement in optical design by providing more uninterrupted light distribution and greater image contrast. Importantly, the launch of PanOptix Pro is beginning to stabilize market share dynamics in The U. S. Trifocal IOL category.

Now turning to contact lenses. I was pleased with our results this quarter as we continued to outpace the market. Our toric modalities, in particular, delivered double digit growth in the quarter and are expanding access for astigmatic patients. It’s important because studies show that more than forty percent of patients are astigmatic, yet less than half are fitted with toric lenses, representing significant growth opportunity. These lenses feature our proprietary eight and four design, which helps reduce eyelid interaction and allows these lenses to settle quickly.

And for wearers, this means clear, stable vision and exceptional comfort. This enhances the patient experience as well as supports practice growth and retention for eye care professionals by expanding access to more astigmatic patients. Now moving to ocular health. I’m very pleased with the continued strength of the SUSTAIN family of artificial tears, which delivered high single digit growth in the quarter. We continue to see encouraging momentum in the adoption of our multidose preservative free formulations led by SUSTAIN Pro, which we launched in January.

These formulations are helping us meet the growing demand for preservative free artificial tears. We’re also encouraged by the early performance of Tripteer, which we launched in August. Unlike traditional prescription dry eye drops, Tripteer is the first and only prescription drop that stimulates natural tear production as early as day one. This mechanism of action directly and rapidly addresses the core problem in dry eye disease rather than supplementing for evaporation or treating the resulting inflammation. This makes Triptir a meaningful advancement for both prescribers and patients.

While it’s still early, the breadth of initial uptake has been very encouraging. Prescriber trialing is high, and we’re seeing adoption from both ophthalmologists and optometrists. To support access and streamline the patient experience, we partnered with an easy to use digital pharmacy platform to simplify fulfillment. This collaboration is helping patients start the therapy quickly and conveniently, which is especially important in the early stages of launch. Now more broadly, our commitment to innovation and clinical excellence was on display at the recent ESCRS and AAO conferences.

We supported over 40 studies reinforcing the value of our technologies across cataract and refractive care. I’ll take a few moments now to highlight three topics. First, there was new data on Vivity ATIL showing strong patient satisfaction in complex cases like early AMD and mild corneal irregularities. These findings reinforce Vivity’s differentiated value proposition in the premium IOL segment. Second, there were time and motion studies that demonstrated statistically significant efficiency gains with Unity VCS compared to the legacy systems.

With cataract volumes rising and incidence of retinal disease increasing, demand for ophthalmic care is outpacing the supply of eye care professionals. These results demonstrate that Unity helps address this imbalance by enabling more efficient procedures and supporting higher patient throughput. Finally, a head to head study comparing Wavelight Plus and SMILE Pro revealed that Wavelight’s ray tracing technology significantly outperformed SMILE in visual outcomes. Using a three-dimensional digital twin of the eye, Wavelight Plus achieved twenty, twelve point five vision or better in ninety eight percent of the cases versus eighty two percent with SMILE Pro. It also delivered superior precision, astigmatism correction and contrast sensitivity.

These results underscore the potential of personalized LASIK to set a new benchmark for refractive surgery and reinforces Alcon’s leadership in ophthalmic innovation. Moving now to market dynamics. Global cataract procedure volumes grew approximately three percent in the quarter, which is an improvement but remains below historical averages. Additionally, global ATIOL penetration was up 130 basis points. In Vision Care, we estimate that the global contact lens market grew approximately 4% in the quarter with a strong U.

S. Market partially offset by weaker growth internationally. And before I pass it to Tim, I’ll briefly comment on our proposed acquisition of Star Surgical. We continue to view the transaction as attractive and believe that Alcon is best suited to maximize the value of their implantable collamer lens. And we believe that the ICL is complementary to our refractive laser business.

So we like this deal, but it isn’t essential to our long term growth plan. Last week, we published a presentation expressing our perspective on the upcoming shareholder vote. We believe our offer represents an attractive premium across multiple measures and creates value for both Alcon and Star shareholders. So to wrap up, despite a soft first half, we’re encouraged by recent signs of improving market conditions and the robust performance of our recently launched products. Our innovation pipeline is strong, our execution is focused and our teams are energized.

I want to thank our associates around the world. Your dedication and passion continue to drive Alcon forward. I’m proud of what we’ve accomplished together and excited for what’s ahead. With that, I’ll turn it over to Tim, who’ll walk

Tim Stonesipher, Chief Financial Officer, Alcon: you through the financials. Thanks, David. Our third quarter sales of $2,600,000,000 were up 5% versus prior year. In our Surgical franchise, revenue was up 5% year over year to $1,400,000,000 Implantable sales were $432,000,000 in the quarter, up 2% versus the prior year period. As David mentioned, we’ve been very pleased by the surge in response to The U.

S. Launch of PanOptix Pro, which is beginning to stabilize share dynamics in an increasingly competitive market. In consumables, third quarter sales of $745,000,000 were up 5%. This growth reflects improving global cataract procedure volumes as well as price increases. As David mentioned, while procedure volumes in The U.

S. Improved during the quarter, they were still not back to historical rates. In equipment, as we expected, we saw significant acceleration in the third quarter with sales of $243,000,000 and growth of 13, driven by the launch of Unity VCS. Turning to Vision Care. Third quarter sales of $1,200,000,000 were up 5%.

Contact lens sales were up 5% to $7.00 $7,000,000 in the quarter, primarily driven by product innovation and price increases. This growth was partially offset by declines in legacy products, including DAILIES AquaComfort Plus, where we’ve limited our promotional activity. In Ocular Health, third quarter sales of $462,000,000 were up 6%. Growth was led by eye drops for dry eye and glaucoma, including SUSTAIN, latan and initial sales of Triptyr, which we launched in August. There was also some pressure resulting from the divestment of certain eye drops to Ocumension in China, which we will lap in the fourth quarter.

Now moving down the income statement. Third quarter core gross margin was 62.9 percent, down 50 basis points year over year, mainly driven by incremental tariffs. Core operating margin was 20.2%, down 60 basis points, driven by lower gross margin, sales and marketing investments behind new product launches and increased R and D investment. Third quarter interest expense was $51,000,000 broadly in line with last year. Other financial income and expense was a net benefit of $3,000,000 The average core tax rate in the first nine months of the year was 17.4%, down from 18.5% in the prior year due to higher discrete tax benefits in the current year.

Core diluted earnings were $0.79 per share in the quarter, down $02 versus last year. Turning to cash. We generated $1,200,000,000 of free cash flow in the first nine months of the year compared to $1,300,000,000 in 2024, primarily due to increased capital expenditures. Our robust cash generation has enabled us to return $550,000,000 to shareholders in the first nine months of the year, comprised of $384,000,000 in share repurchases and $166,000,000 in dividend payments. Regarding tariffs, we incurred $57,000,000 of tariff related charges in the first nine months of the year.

Of this amount, 38,000,000 was recognized in cost of sales and $19,000,000 was recorded on the balance sheet for product not yet sold. As we enter the fourth quarter, we expect to see a step up in tariff related charges and cost of sales. Given tariffs are capitalized in the inventory and only recognized in cost of sales when the inventory is sold, this creates a timing lag between when the tariff is paid and when it affects profitability. Due to our inventory cycles, we will start to see the full financial impact in Q4. We continue to expect a full year impact of approximately $100,000,000 to cost of sales, and we expect to offset this primarily through foreign exchange as well as operational actions.

Now moving to our outlook. Our outlook assumes that aggregate eye care markets grow low single digits for the remainder of the year. Exchange rates as of the October hold through year end and the current tariff structure remains in place. Based on these assumptions and our year to date performance, we are reaffirming our full year guidance across all metrics. Sales remains on track at 10,300,000,000.0 to $10,400,000,000 with constant currency growth of 4% to 5%, and we continue to expect acceleration in the fourth quarter driven by new product launches.

R and D is expected to finish toward the high end of our 8% to 10% of sales range, which also reflects the impact of recent acquisitions, including Orion. Our core operating margin outlook remains 19.5% to 20.5% and non operating expense is unchanged at $185,000,000 to $2.00 $5,000,000 We maintain our core average tax rate guidance at approximately 18% and our core diluted EPS range of $3.05 to $3.15 reflecting flat to 2% constant currency growth. Looking to 2026, while we won’t formally guide until February, I’d like to share some color around expected headwinds and tailwinds. On tailwinds, we expect continued acceleration from new product launches, including Unity VCS and CS as well as TripTier, PanOptix Pro and Precision seven among others. These innovations should enable Alcon to grow faster than the market, and at the same time, we’ll maintain disciplined cost management so that sales growth outpaces SG and A, driving margin expansion through operating leverage.

On headwinds, although we’ve operationalized some mitigating actions, we expect a net incremental impact from tariffs of roughly 50,000,000 to $100,000,000 in 2026 versus 2025, which reflects an evolving sales mix as well as our inventory cycles. And with regards to investment, in 2026, we’ll see the full year impact of AURYON and initiate the Phase III clinical trial early in the year. Combined, these are expected to pressure core operating margin by an incremental 40 basis points. Beyond that, we remain focused on disciplined execution and are confident in our ability to deliver sustainable growth and long term value for shareholders. Finally, I’d like to extend my heartfelt thanks to associates across the organization for their dedication and hard work.

And with that, I’ll turn it back to David.

David Endicott, Chief Executive Officer, Alcon: Thanks, Tim. To wrap up, I’m encouraged by the progress we saw across the business in the third quarter. The successful launch and growing adoption of Unity VCS, the strong reception for PanOptix Pro and the early promise of Tripteer all underscore the strength of our innovation engine. As we discussed at our Capital Markets Day, remain intently focused on the long term. The markets we serve are resilient, underpinned by powerful demographic and technological trends.

We’re investing behind operational excellence and R and D so that Alcott continues to lead our industry. And our long term vision is anchored in a steady flow of new products, a commitment to innovation and a deep understanding of our customers. With our global reach, dedicated teams and rich pipeline, I’m confident that Alcon is well positioned to accelerate growth, expand patient access and deliver sustainable value to our shareholders. And with that, let’s open our line for Q and A.

Conference Operator: Thank you. We will now be conducting a question and answer session. And our first question will come from Anthony Petrone with Mizuho Group.

Anthony Petrone, Analyst, Mizuho Group: Thanks and congratulations here on the quarter. One on Unity and one on just the underlying U. S. Market. So on Unity, it looks like the cycle is sort of getting started here.

The company has commented in the past that 10% of the base, that 30,000 base, is sort of how to think about this cycle, but it could be more front end loaded. So maybe just a little bit on the shape of what that S curve will look like into 2026. And then the underlying surgical market in The U. S, it’s still below normal levels. What were the trends in October when you think about underlying cataract volumes, for instance?

And what is the early view on how this is going to shape up into 2026? Thanks.

David Endicott, Chief Executive Officer, Alcon: Yes. Thanks, Anthony. Just a little bit on the cycle. I don’t have a lot different to say really here than what we’ve said at the Bernstein conference or the times we’ve talked about this. We have a 30% or so or sorry, a 30,000 unit base that you stretch out over ten years and you kind of come up with an average and it’s obviously a little more delayed in the back end and a little faster in the front end.

But again, we’ll see that kind of take shape as we go. We’ll give you a good sense of where we are. I think we put out on our website not too long ago an estimate of the shape of several of those first couple of years. So I would refer back to that because that really hasn’t changed and we’re kind of right on track with what we expected this year. So we feel fine about it.

And I would think about it kind of off of what we’ve given already. On The U. S. Cataract market, the quarter in the third quarter at least was improved obviously in The U. S.

A fair bit. It was improved overall a fair bit too globally. So I guess it was 1% growth or so, it was flat in The U. S. Last quarter.

Total this year obviously was 3% in the cataract procedure market. So significant move up relative to front half of the year. But again, I think we’re careful right now about what one data point doesn’t make a trend. And so let us get into the beginning of the year next year, give you a better number when we look at guide. We’ll have a good sense of the full fourth quarter.

And I think, look, if we’re seeing what I think we said, which I’ve said before is kind of regression in the mean, the historical levels should be somewhere around 4%, U. S. Something around 3%. So we’ll see. But I guess that’s been our historical view and remains what we believe long term is the trend.

Analyst: Thank you.

Conference Operator: And our next question comes from Ryan Zimmerman with BTIG.

Analyst: David, on the STAR transaction, you guys put out, I think, pretty pointed comments about your views about it. I guess what I would ask is if if it were to fall through, even after this new go shop period, you know, you you highlighted a number of alternative ICL offerings in the market, either coming or in the market. Why wouldn’t one of those fit your needs? And I guess, what in your view makes STAR’s technology attractive other than they’ve been in the market, they’ve had success for some time?

David Endicott, Chief Executive Officer, Alcon: Well, let me say that I don’t have a lot to add to my prepared remarks because obviously, it’s a sensitive period. And I’d encourage anybody really who is interested in detail around this transaction to have a look at what we posted online. I think we like their product. We like their team a lot. I think it would be a good complementary business to us.

I said in my notes, I think it fits nicely with our laser business. Same customers, same we have bigger geographies. We can take care of this, I think, more efficiently. But there are a limited number of approval a proven ICLs. This is a proven one.

It’s been in the market a while. I think it has very the material is unique. It’s a columnar material. And I think directionally, lot of people who’ve used these products and used other people’s products, I think, look at it and say, okay, this is well known. And with elective procedures, you want well known.

So what you don’t want is to be experimenting with new things. Now that doesn’t mean somebody can’t come up with a great product, just means it’s going to take some time to establish it. The challenge for Star is obvious, which is as kind of a standalone single product company, they’re just going to have a difficult and very unlikely path to profitable growth. So ultimately, their shareholders will make a choice between a return to the unaffected share price and a long journey with activists in control of that company, or they can take a certain generous premium from us. But either way, we’re going to be in a good place.

So we’ll figure that out when we get there. But I think directionally, we hope that this gets done. But as I said in the notes, if it doesn’t, we’ve got a great plan.

Analyst: Okay. Very helpful. And then the second one for me. I could be wrong, correct me if I’m wrong, but I think you folded your hydrous sales force into the broader cataract sales force or something to that effect. Maybe just talk to us about kind of where you stand in surgical glaucoma today and kind of what happens from here.

I mean, you’ve moved earlier in the treatment cycle with the Belkin product and some of the drops, but kind of where you what your outlook is on surgical glaucoma, I think, would be appreciated. You.

David Endicott, Chief Executive Officer, Alcon: No. Look, we’re bullish on this. I mean, look and I’m going to reframe what you said a little bit, not because it could be understood that way, but it isn’t that that’s not the circumstance. We have actually expanded the number of people that are going to be selling hydrus. So we have our in theater group is selling both IOLs and hydrous now.

And remember, that’s we had a certain number of hydrous folks, but they didn’t do any IOLs, and we had a whole bunch of IOL folks who didn’t do any hydrous, which didn’t make any sense to us since they’re talking to the same person in the same OR at the same time. So what we’ve really done is we’ve said, let’s consolidate that group, make it bigger. And then what we’re doing with the Voyager and Vallada product is we’re creating a new expanded group to add reps into the clinic to go after glaucoma specialists in the clinic where they’re treating SLT and in the retina space where they’re treating AMD. So we’ve actually expanded in these areas. And again, I’ve said this before, which is we have some really nice white spaces here.

We’ve got glaucoma, we’ve got retina, we’ve got refractive. We are moving towards those spaces, not away from them. So I would be I wouldn’t misinterpret our intention here. We are going to get bigger in both spaces, both intervention especially in interventional glaucoma, which we continue to believe is the way of the future.

Larry Biegelsen, Analyst, Wells Fargo: Thank you. And

Conference Operator: we’ll go next to Graham Doyle with UBS.

Kavya, Analyst, UBS: Hi, thank you for taking my questions. This is Kavya in for Graham. Just a couple, please. First is, so you look set to exit the year at a 7% plus top line growth. But why isn’t that a good starting point when we’re thinking about next year?

And then second question is just on equipment again. So at a recent conference, you outlined targets for next year implying 50% volume growth. Is that a sensible starting point for next year for half of equipment that is driven by Unity?

David Endicott, Chief Executive Officer, Alcon: Look, I think we’re not going to comment too much on next year until next year. And I think the reason we give a range, of course, is because these are assumptions we’re making about the trajectory and the market, and we’ll see. So I think the obvious opportunity here is to be at the high end of that. If it doesn’t happen, it won’t be a surprise to us. We’re looking to just try and do as much as we can right now and think about the long term.

So we’ve been very careful about Uniti VCS in particular because it really, at this point, is so far in front of every other piece of equipment that’s in its class. We just don’t have to rush because the worst case scenario is somebody is going to buy one of our other pieces of equipment. So think what you’re going to see next year in equipment is a robust year. I think it will accelerate from this year for sure. But I wouldn’t want to venture a percentage guess until we really get through this year and get into a place where we’re really guiding with some certainty around the assumptions.

So let me do that for you in February.

Kavya, Analyst, UBS: And

Conference Operator: we’ll go next to Tom Steffen with Stifel.

Tom Steffen, Analyst, Stifel: Great. Hey, guys. Thanks for taking the questions. First one, just on Unity. I know it’s early, but can you talk a bit about, I guess, how placements are trending relative to initial expectations?

And then maybe how the order book is building compared to those expectations as well?

David Endicott, Chief Executive Officer, Alcon: Sure. Tom, I mean, it’s kind of as expected. I think we gave some expectations recently at a conference. I think we’re on those. Our order book, we don’t comment on directionally.

It’s been very healthy. We could ship a lot more if we chose to. We are being clear about our intention to train these very carefully and make sure people realize the benefits of them. I mean, the basic idea here is we’re trying to get more efficiency in the OR. And to do that, you have to work with both the surgeon and the staff.

And what you have to really do is begin to think about, well, if I did 20 cataracts in a day, could I do 21? And how would I do that? It has to do a lot more with the turn of the room, the priming of the machine, the transfer of settings, so everything moves smoothly, the priming of the handpiece. There’s a great deal of detail on this. But what we’re getting and what we demonstrated at the data we showed at the Academy is we’re getting more surgeries in a day.

And that’s a beautiful thing for the surgeons and for patients who need the surgery. So I think we’re patient on this. I can tell you that we’re right on track with what we expected and our book is very strong.

Tom Steffen, Analyst, Stifel: Got it. That’s great. And then, Tim, maybe for you, appreciate the comments on kind of the inputs to margins next year between tariffs, Orion, etcetera. But can you touch a bit on sort of how we should be thinking about underlying op margin expansion next year? I think in the past, you’ve talked about 150 bps to each 25 by our math is tracking towards closer to 50 bps to 75 bps 4Q closer to 100 bps.

Just curious if there’s any refined thinking on sort of what models should be contemplating on underlying op margin expansion going into next year or what gives you the confidence in that 150 bps plus? Thanks.

Tim Stonesipher, Chief Financial Officer, Alcon: Listen, I think there’s no doubt that this year has been challenging. It’s been an unusual year for us, right? If you look at the revenue growth of 4% to 5%, that’s been below what we have typically delivered in prior years. We’ve got the tariff pressures, which is a new pressure point. We’ve got the Orion investment.

We had seven launches this year. So we’ve obviously put more marketing and sales in our product launches to make sure that those are successful. All of that, that’s what you’re seeing this year and the margin pressure. I still believe if you normalize it and you look at historical improvements, we’re kind of in the 150 basis 200 basis point margin improvement. I believe we can continue to do that.

And if you assume that, then we do have incremental pressure, as I said in my prepared remarks, on tariffs. We do have some incremental pressure on a full year of AURYON. So but net net, we’d expect to continue to get nice margin expansion next year. Got it. Thanks.

Conference Operator: And our next question comes from Matt Miksic with Barclays.

Matt Miksic, Analyst, Barclays: Hey, thanks so much for taking our questions. A question on tariffs. You mentioned you capitalized tariff expense moving through the P and L. I know you’re not giving a ton of color on ’26, but on the gross margin line, any directionally the effect of that, we expect kind of a flatter gross margin offset by some of the other operating changes you’re making? Does the FX kind of offset that in the gross profit line?

And then just one quick follow-up on IOL.

Tim Stonesipher, Chief Financial Officer, Alcon: Yes. Listen, we’ll give you more color on ’26 when we get to the February call. But when you think about gross margin, again, we’re going to have an incremental 50,000,000 to $100,000,000 of pressure that’s going to show up in your gross margin line for next year. And that’s basically driven by that we’ve got a full year impact of the margins. We’re not going to have the FX benefit that we had this year.

But we do have a lot of operational actions that are going to help mitigate some of that pressure. So I sort of think about it in that 50,000,000 or $100,000,000 range. And then there are going to be some other things that you’re going to see in the gross margin, Ryan. You’re to see a mix impact. You’re going to see some other things.

So we’ll give you more color in 2026 when we get there.

Matt Miksic, Analyst, Barclays: Okay. And then just there are some competition has been one of the challenges, maybe volume growth has been another. It seems like things are kind of improving here a little bit. Competition, as you know, is expected to kind of heat up a little more next year. So given that this year was a tough year, is next year kind of an easier year?

Or do you expect this kind of battle on those two fronts to continue to actually launch Adaptive and OpticsPro and additional data on Vivity or other factors that can kind of help you move the needle on or kind of stabilize care and maybe move the needle on volumes? Thanks.

David Endicott, Chief Executive Officer, Alcon: Yes, Matt, let me give you some context, I think, that may help. Mean, look, I think, as I’ve said in the past, the next couple of years are going to be very difficult competitively. I think there’s just a it’s just not going to be a big growth driver for us because there’s just a lot of entrants, as correctly point out. Now that said, let me make a couple of really positive remarks. I think we’ve lived also through some slower market, which I think is not a sustainable idea for a long period of time because there’s just too many cataracts out there.

The second one is that the ATIOL penetration was up 130 basis points this year or sorry, this particular quarter. And it’s been up consistently in some really important markets, The U. S. And others. And that’s partly due to the competitive selling that’s going on out there.

More docs are trying it, more people but that actually benefits us quite a lot in markets where we have the majority of the ATIOLs. So in The U. S, where we still have the vast majority of the ATIOLs, that’s really what helps us is the penetration moving up. You stabilize share and penetration moves up, we look pretty good. So think about that dynamic a little bit as an offset to what is going to be price pressure and share pressure in most markets.

Last point I’ll make is we are in the process still of launching PanOptix Pro around the world. We haven’t had any really competitive time in Europe and in Japan and a few other places where we’re just getting Pro going. We won’t get Pro PanOptix Pro until next year in Europe. So I think we’re seeing I think we see it in Japan right now. I mean, reception has been so strong in The U.

S. We’ve had to kind of delay a few launches just to make sure that we got the right amount of inventory to go in with. So we’re excited about what the next series of products does. And even in that vein, we just got Vivity on the Clarion material in Europe, and that’s having a nice impact, I think. So we’ve got that.

We’ve got a few other products. We’ll talk more about product flow and implantables next year. But I do think that somewhere between the products that we are we have and are launching, the ACI Well penetration and some improvement in the markets, it’s going to be tough because there’s going to be a lot of competition, but I think we’ll weather through it. I think we have a solid performance this quarter. I’d like to see us somewhere right around market growth going forward.

Conference Operator: And David Saxon with Needham and Company has our next question.

Dan Cravens, Investor Relations, Alcon0: Great. Thanks for taking my questions, David and Tim. So maybe I’ll start on the contact lens market. So I think The U. S.

Kind of drove that 4% growth. So would you consider The U. S. Market kind of in that normal 4% to six range? And then what’s driving that international weakness?

And then relative to the DACP comments, I mean, I’m guessing kind of you’re in the later innings of converting that base. So maybe talk about how you think about the mix benefit you could see going forward relative to what you’ve seen historically?

David Endicott, Chief Executive Officer, Alcon: Yes, really good questions, David. Thank you. A couple of comments on the global market. Look, globally, it’s still at the normal in the normal range, just at the low end of 4%, right? We’ve always said kind of mid single digits.

And The U. S. Was considerably better than that and the international market considerably lower than that. But I think really what’s happening internationally is Japan is really struggling, has for a while. I think it was negative, it might have been flat, I can’t remember quite right off the top of my head.

But that’s a big market. And Europe, to be fair, Europe wasn’t super strong either. So I think it was below kind of historical averages. So I mean, I think some of that is just a little bit of product, I would just say, lack of new product flow in those markets. We’re just getting some things in those markets right now that we’re excited about.

So I think we should see I expect to see kind of normal market growth going forward. But The U. S, I think, in particular, has this 6% growth that we saw in The U. S. Was a nice effort, but you still see some of that being given back and a significant amount of price rebating to consumers.

So my sense of where we’re going is that the branded products that do really well are going to build the international market. The branded products in The U. S. That have been around for a stretch will continue to do well, but I think you’ve got some newer ones in there that are fighting on price that may hold some of the share movement that we have back just a little bit as we go forward. On DACP, the mix is certainly benefiting us on a gross margin basis.

It doesn’t really help us a ton on a share level, but it does help us at the margin level. So we’re trading that into P1, we’re trading it into DACP or sorry, the DT1. But the overall share in The U. S. In dailies is challenged by competition significantly and price competition in particular.

Dan Cravens, Investor Relations, Alcon0: Okay. And then maybe just on Tripteer, I mean, IQVIA, it seems like the TRxs are kind of ramping more gradually than what we saw with another launch a couple of years ago from a competitor. So maybe just talk about that launch, how it compares to kind of your internal expectations and how we think about how we should think about that ramp heading into next year? Thanks so much.

David Endicott, Chief Executive Officer, Alcon: Yes. Look, Tripteer is going really well. As I said in the notes, the eye care community is very excited and we’re pleased with the amount of trial and uptake across the potential prescribing base. Perhaps most encouraging is that patients are playing back the unique efficacy of this mechanism. It’s not a supplement to the lipid layer.

It’s not an anti inflammatory, which again, it’s going right at the kind of basic mechanism to create tears. And that is the very core of the disorder. So, I mean, we’re very excited about what’s happening there. I think you got to be careful with the audited data because the audited data source does not capture the third party that we’re using to manage the initial uptake of the product. So we’ve got a platform that has been used by several companies in eye care.

If you go back and you look at some of those launches, you’ll find in a number of companies that do this work, but there’s a digital prescribing platform that helps patients get access to new prescription products, which makes the sample easier, the prior auth easier, the prescription adjudication easier, and it actually delivers it to their home. So it’s a pretty cool deal. And a number of folks have used it, so it’s very commonly understood by the ophthalmology community, and they’re taken to it quite rapidly. None of those prescriptions and that’s the majority of what’s going on is captured in that audited data you’re using. So just be a little cautious about what’s in there right now.

Conference Operator: Moving next to Veronika Dubajova with Citigroup.

Dan Cravens, Investor Relations, Alcon1: Questions. I will keep it to two, please. One, just want to get your flavor. I see lots of questions around Unity and whether that’s tracking in line with expectations, but there is a number of other products driving growth this quarter. So just would love to get your high level thoughts on what how you feel about the Tripteura uptake relative to what you were looking at and hoping for this early on.

And I think, David, you’ve touched upon Pro, but maybe just a similar question. And if I can relate it to that, I might have missed it, but what your PCIOL market share in The U. S. In the third quarter and how that moved sequentially? And then one for Tim, I guess if I look at the full year guide, the exit range for the fourth quarter is still pretty wide.

I think technically, mathematically, the guidance implies 5% to 9% organic sales growth for the fourth quarter. So I’m just curious if you have a point there where you feel more comfortable given everything that you see at this point in time?

David Endicott, Chief Executive Officer, Alcon: Veronica, let me try and break your two questions into the four that you asked. Just kidding.

Dan Cravens, Investor Relations, Alcon1: Fair enough.

David Endicott, Chief Executive Officer, Alcon: Look, the Tripteer growth I just commented on, it’s been it’s better than expectations for us out the gate. I think we’ve got a lot of trial, and I think we’re just kind of excited about the patient response right now because we knew the product was going to have a little bite to it. But what’s exciting to hear is that this thing really works. And when you talk about efficacy that works, all eye drops have a little bit of that bite to them. So we’re excited about that balance that we’re hearing back from the patients and the doctors that says, this is really working and we like what we see.

There’s more to come. We’re early, so I should be a little careful about that and circumspect on it. But I think in terms of uptake and breadth of prescribing and all the things that we look at metric wise, doing very well. On Pro, I would just say PanOptix Pro has done really well, better than we expected in many ways because we at some level, we had a certain amount of consignments we thought would take over. We kind of ran out of them, I think, somewhere along in the third quarter.

We couldn’t ship some to the Japan market, which we were trying to get on a little bit sooner. I think we’re just getting them out now. So I think we’ve been excited about the people who, once they’ve tried it, they really like it. And they’re describing back to us exactly what we had hoped for, which is, look, less light scatter and less and more light usage. So a little bit of kind of clarity at distance seems to be the common language we’re hearing.

So the qualitative is good. The stability of the share quarter to quarter, we had it’s very hard to read this because remember that there was a recall by one of our competitors in the second quarter, it bounced back in the third. You’ve got a little bit of noise in there from some slowdown in some of the other competitors. But generally speaking, our share is very good. It’s well above we have a significant majority of the PCIOL market and the majority of the the whole of the ATIOL market.

I’ll just add one other thing, which is we grew share all over the world in toric, and we grew share all over

Tim Stonesipher, Chief Financial Officer, Alcon: the world

David Endicott, Chief Executive Officer, Alcon: in just normal monofocal business. So when you look at the kind of unit volumes for us right now, we look solid all over the implantables business. PCIOL is still going to be just for balance, a very significant competitive fight all over the world. We just like our chances better today, and we’re doing well. Q4 exit rate, I’m going leave that to Tim.

Tim Stonesipher, Chief Financial Officer, Alcon: Veronica. Thanks for the question. Yes, it is a wider range than we typically have. Would say the thing that’s a little different this year is the challenge we’ve had in calling the markets as well as the new product launches and how those are going to do. So I would say our base case is sort of at that midpoint.

If markets are a little bit softer and launches don’t go as well as we anticipate, then that would be at the lower end. If the markets come back, roaring back and the launches continue to do really, really well, that’s how you get to the higher end. But the base case is really more towards the midpoint.

Conference Operator: And our next question comes from Larry Biegelsen with Wells Fargo.

Larry Biegelsen, Analyst, Wells Fargo: Thanks for taking the question. Maybe Tim or David, can you help us with a framework for your equipment growth because there’s a lot of components there. So we can make an assumption on the phaco and vitrectomy placement based on the color you provided at Baird, which I think showed an incremental 1,200 placements in 2026. Can you confirm that that’s about the phaco vitrectomy is about half of equipment sales? And how is the rest of equipment sales trending in 2025 and 2026?

Just so our estimates aren’t complete guesses. And I had one follow-up.

David Endicott, Chief Executive Officer, Alcon: Well, look, on the mix, the mix is moving around right now. I would say the mix is we really haven’t tried to sell much cataract right now. So I’m not sure I can give you a lot of direction on it right now, Larry. We’ve sold mostly VCS units this year. We sold a few CS lately.

But we sold for a period of time, we had an orientation that there was going to be a much higher demand for CS than VCS. We are finding out that particularly in a number of markets that people really want both machines because they’re it creates an efficiency that I think is unique. I don’t have a really good number for you to give you right there. The remainder of the equipment, I would just say, is really pretty positive. I mean, we’ve got we’re just getting started with Valletta.

I think I’m encouraged about that. That’s all going to be new for next year. The Voyager thing is really, I think, we just kind of gotten the most of the world kind of glaucoma specialty area world kind of technically onto this notion that you should start with SLT. That was job one that we did this year. I think you’re going to see a real uptake of Voyager as we move into next year.

We’ve had pretty good run of it this year. But I think as we convert a new sales force to do both of those next year, you should see Valletta and Voyager do well and contribute quite a little bit. And then I think lastly, I would say that the our biometer still does well. Our microscope does well. We’ve got some new stuff coming that we’ll talk about in January.

So I’d probably say we’re going to have a good year next year in equipment. Did you hit refractive? Oh, I did. Oh, Wavelife Plus. Yes, you’re good point.

Wavelight Plus, I think what was most exciting about Wavelight Plus this year has been the ability to kind of refresh the market on how important LASIK is and importantly, how much we can improve it. So when you talk about the percentage that we can get to 2012.5% or better is really unique. And obviously, we’re targeting one of our competitors that has a competitive procedure. But frankly, you just can’t do better than the installed base of LASIK machines we’ve got once you get our new Wavelight Plus product in. So that’s done pretty well and a little bit better than expectations this year.

Again, small part of their business, but really cool and on the front edge of what we’re trying to do in cataract refractive.

Larry Biegelsen, Analyst, Wells Fargo: That’s helpful. Just one follow-up on contact lenses, David. Is there any consumer element here? If we look at kind of the year over year change in growth, I know at Baird, you talked about just less price, but there’s been a pretty big change in the last year or two in the contact lens market growth. In Japan, you just talked about a lack of new product flow.

But is there a consumer element here where consumers are stretching lenses, buying less bulk? Anything else you can add? Thank you.

David Endicott, Chief Executive Officer, Alcon: I’d have to I mean, I’d have to think about that a little more than I have. But I think there is always some we’ve always known that there was some consumer effect in here. Whether or not it’s really affecting this market, I mean, data would be it just depends on what data you’re looking at. I mean, I think if you think about the moving annual total on the contact lens market is as of third quarter was 5%. So right in the center of what we would call the normal range, mid single digits.

It’s been 4% for a couple of quarters. That is easily explainable by the lack of price that went into the market this year relative to prior years. And we were catching up. We had a lot of inflation through COVID. Almost everybody took a significant amount of price in ’twenty three and ’twenty four.

And I think ’twenty five, people just, I think, are taking a little bit of a breather, give the consumer some room. But typically, we’ve kind of regressed it, you don’t see a lot of change in consumption or trade up. We’ve looked at it in the February. We’ve looked at it before and we try to correlate it with consumers. It’s not highly correlated, let me say it that way, but I wouldn’t say it’s not correlated.

Larry Biegelsen, Analyst, Wells Fargo: Moving

Conference Operator: on to Jeff Johnson with Baird.

Dan Cravens, Investor Relations, Alcon2: Thank you. Good morning, guys. Good afternoon. One maybe follow-up question on Udbe. I know you’ve gotten a lot of questions on it so far, David.

But again, referring back to the chart that you put up at our conference, you did talk about some volumes there. We’ve kind of beat that to death today. What kind of price premium are you recognizing on DCS and do you expect to recognize on CS relative to Constellation and Centurion in the past? At one point, we had heard it was going be 20% to 30%, then we heard maybe it was coming in a little lower than that. Just how should we model maybe or think about the price premium on the newer technology?

David Endicott, Chief Executive Officer, Alcon: Well, look, mean, VCS’ list price, think, $185,000 We’ve given some discounting, but not much. And I think you can do the math off of the base two products. There is a premium to the box itself and there’s a premium to the packs as we go through it. It does depend how big the customer is and what they’re buying and what the commitments are and how long the contracts are. So it’s a little tricky.

But early on, I would just say that the ASP on the product is exactly or better than where we expected. So we don’t see any challenge with pricing right now. So I would be thinking about it as pretty much as we’ve described in the past, probably a 10% to 20% premium on procedure.

Dan Cravens, Investor Relations, Alcon2: All right. That’s helpful. Thank you. And then just over on Trip Gear, can that product be profitable next year? Or will DTC spending maybe push profitability on that product into 2027?

And when it’s being sold today through BlinkRx, when you get it on the fully reimbursed commercial plans, do you start recognizing more revenue? And maybe that’s an ignorant question and it’s something I should know. But the pricing on BlinkRx is pretty aggressive right now, and that’s a good thing. But when you go to a fully reimbursed on the P and L, will you start recognizing even more than revenue per patient or per box of vials?

David Endicott, Chief Executive Officer, Alcon: Well, look, first on the profitability of DTC, I mean, we won’t begin to run DTC on Tripteer until we have sufficient reimbursement for patients that it is that it makes good sense. I don’t know and I haven’t really looked at the product level P and L. But what I’d say is that we don’t really expect to be fully reimbursed at kind of peak until 2027. So I would be thinking modestly about DTC for next year and I would maybe it happens, maybe it doesn’t, really just depends on the pace of reimbursement. Through the third party we’re using, which you’ve correctly identified, I would say just we do pay them for their service, and we will recognize more revenue once it comes into our hands.

But that’s more of just exiting that relationship and taking it up in a normal way once we get through the kind of heavy lifting that they do to get the reimbursement, the prior auth, all the work that they do to kind of get this available and then ship it to the patient’s home. So all that is a service that is very useful in early days, but helpful not forever.

Dan Cravens, Investor Relations, Alcon2: Understood. Thank you.

Conference Operator: And we’ll go next to Young Lee with Jefferies.

Dan Cravens, Investor Relations, Alcon: Young, are you there?

Tim Stonesipher, Chief Financial Officer, Alcon: Gary, we can move Okay. On to the

Conference Operator: Jack Reynolds with RBC. Please go ahead.

Dan Cravens, Investor Relations, Alcon3: Hi, there. Thanks for taking the questions. I had a couple, please. The first is on the PCI roll penetration. Could you talk about the penetration in The U.

S. Versus Europe, I guess, versus APAC, if you got that data as well? And are you kind of how are you seeing pricing develop in Europe? And then kind of coming back to cataracts kind of more generally, because I’ve actually dropped off the call when the Q and A started. So I think I missed a bit of your first answer.

But could you just reflect kind of on what you think drove the weakness earlier in the year? Kind of do you have any better visibility on what the cause of that was? And then therefore, kind of what’s driving the kind of the more positive Q3 kind of beyond kind of the mean reversion aspect? Is there anything kind of fundamental driving that? And then what are you seeing so far in Q4?

David Endicott, Chief Executive Officer, Alcon: Yes. Well, let me start with PCI oil penetration. The U. S, I think, was 120 or 130 basis points up. APAC, I don’t remember.

And EU, we generally don’t break those down. But I think what I would say is that Japan, EU, very strong APAC, generally very strong, better than The U. S, I’m sure. And what you see, I think, in the offset is China wrapping around on a large volume influx from our VBP win last year. So they on a quarter on quarter basis, they were down quite a lot in penetration, but I wouldn’t overread that.

That was that’s really just holding back. So what you’re seeing, I think, is a good bit of competition and promotion driving the market to use more PCI IOLs. That’s a good thing for everybody. And so we’re excited about that. On the pricing what was the pricing question?

Pricing in Europe. Pricing element in Europe. The pricing element in Europe is obviously probably the lowest in the world or near it. So I think we watch that very carefully because it probably portends pricing around the world, only once you get all of the players in as you do in Europe. My sense is that it’s probably bottomed out, but it’s hard to know.

What I think is good news is that pricing around the world has held pretty stable. And I think our as we introduce new products, we are able to get a little price. So if you think about Pro on PanOptix, we’re obviously bringing it in at a slight premium to PanOptix, which gives us some flexibility around the core pricing model that we have. I think stable but generally declining over time will be the answer.

Dan Cravens, Investor Relations, Alcon3: Perfect. And then just on the cataract volume piece, kind of any color you could share there?

David Endicott, Chief Executive Officer, Alcon: I mean, look, mean, there’s 1,000 ideas on cataract volume and what it is. Look, here’s what we’re certain of. There are some certainties that we can say. One is there’s way more cataracts today than there was last year. And there are fewer surgeons in the world, at least in The United States and in Europe than there were last year by a little bit.

So there is a productivity challenge that has generally improved every year, and there was a pause in productivity. Now why was there a pause in productivity? I don’t know. The short version is it could have been staff, it could have been consumers didn’t want to go in. I don’t think so.

It could be a general younger docs taking over for older docs who sold their practices. That’s definitely part of it. It could be private equity dynamics that have taken over practices in The U. S. We’ve kind of collected a lot of those ideas, thrown them into a bucket and said, look, this is going to revert to the mean generally because there’s too many cataracts to deny that kind of service.

We will figure out a way. It’ll be more days in surgery by the surgeons and probably people picking up their in office work as a consequence. That could be a collaboration with other professionals, other kinds of eye care professionals. But there’s going to have to be a pickup in productivity. I think that’s naturally driven by the folks who own these practices and naturally driven by the private equity group.

So I think it comes back to the mean. And I would one day, we’ll know the secret answer to that one, but I’ve been trying at it for about two years, and I’ve been wrong. So I’ll just give you the bucket of it and let you pick.

Dan Cravens, Investor Relations, Alcon3: Great. And then can I just squeeze on one last one? On Unity, so I’m not going ask about placements, but I was wondering, in the accounts where you have made a placement, are you seeing kind of higher pull through of consumables? Kind of are you seeing that kind of that efficiency gain being utilized by surgeons?

David Endicott, Chief Executive Officer, Alcon: I don’t have that data. So I’m not sure. I wouldn’t expect it to be higher per se, because in the beginning, especially the first, what has it been, six months, nine months, we’re getting these guys trained and moving. If anything, it’s probably a little bit slower. But I think what you get to when you get up to speed is a faster throughput for the facility.

So I think we’re in a good place in the long run, but I wouldn’t worry too much about it in the near term.

Conference Operator: And we’ll go next to David Adlington with JPMorgan.

Dan Cravens, Investor Relations, Alcon3: Hey, guys. Thanks for the questions. Firstly, just on PanOptix Pro. Just wondered what sort of price premium you’re actually achieving if that’s in line with your expectations and whether you’d actually changed your PanOptix pricing at all? And then secondly, just on just wanted to check if there’s been any stocking in either PanOptix Pro or in Oculo Health?

David Endicott, Chief Executive Officer, Alcon: When you say stock, are you talking about the third quarter?

Dan Cravens, Investor Relations, Alcon3: Yes, exactly.

David Endicott, Chief Executive Officer, Alcon: Yes. No, not to my knowledge. I think the on the price premium, there’s a slight price premium. I think I don’t really know the answer to that one. There’s we’ve gone out, I think, with belief that we can do that.

Obviously, the customers will speak and we’ll find out. We’re kind of we’re still only maybe, what are we, six months into this thing. So we’ll see whether that pans out or not, so to speak.

Dan Cravens, Investor Relations, Alcon0: And

Conference Operator: this now concludes our question and answer session. I would like to turn the floor back over to Dan Cravens for closing comments.

Dan Cravens, Investor Relations, Alcon: All right. Well, you, everybody, again for joining us today. If you have any follow-up questions, feel free to reach out to Alan Trang or myself for investor questions or our corporate communications team for any media questions. Thanks again.

Conference Operator: And ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.

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