• Revenue: $2.4 billion, up 6% year-over-year.
• Core Diluted Earnings Per Share: $0.81, a 25% increase.
• Core Operating Margin: 20.6%.
• Free Cash Flow: $1.3 billion for the first nine months, a company record.
• Surgical Franchise Revenue: $1.3 billion, up 5% year-over-year.
• Implantable Sales: $422 million, up 5% year-over-year.
• Consumables Sales: $701 million, up 6% year-over-year.
• Equipment Sales: $215 million, up 1% year-over-year.
• Vision Care Sales: $1.1 billion, up 7% year-over-year.
• Contact Lens Sales: $664 million, up 8% year-over-year.
• Ocular Health Sales: $431 million, up 4% year-over-year.
• Core Gross Margin: 63.2%.
• Core Tax Rate: 12.8%, down from 17.2% in the prior year.
• 2024 Revenue Guidance: $9.8 billion to $9.9 billion.
• Core Diluted Earnings Guidance: $3 to $3.05 per share.

• Warning! GuruFocus has detected 1 Warning Sign with ACXP.

Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Alcon Inc (NYSE:ALC) reported a solid quarter with sales of $2.4 billion, reflecting a 6% growth.
• Core diluted earnings per share increased by 25% to $0.81, with a core operating margin of 20.6%.
• The company generated a record $1.3 billion in free cash flow in the first nine months of the year.
• Alcon Inc (NYSE:ALC) is preparing for a series of product launches, including Precision7 contact lenses and Systane Pro Preservative Free eye drops, which are expected to drive future growth.
• The international uptake of advanced technology intraocular lenses (AT-IOLs) is strong, with high single-digit or double-digit growth in most regions.

Negative Points

• Alcon Inc (NYSE:ALC) experienced slower market conditions in the United States, impacting implantable sales.
• The company had to adjust its full-year revenue guidance due to softness in the US surgical market.
• There is competitive pressure in the US market, with new products from competitors affecting sales.
• The company faces challenges in maintaining its market share in the US IOL market due to competitive sampling.
• Alcon Inc (NYSE:ALC) expects normal seasonal pressure on gross margins in the fourth quarter due to annual preventative maintenance at its plants.

Q & A Highlights

Q: As we look into next year, can you discuss the potential growth rate and margin expansion, considering the slower growth in Q4? A: (David Endicott, CEO) The slower growth in Q3 was partly due to competitive sampling in the US. We expect stabilization and continued international growth. New product launches will contribute more significantly in the second half of next year. (Timothy Stonesifer, CFO) We anticipate continued operating leverage next year, although margin expansion may be slightly less than previous years due to investments in new product launches.

Q: Can you elaborate on the demand for consumables and the potential benefits of the Voyager DSLT system? A: (David Endicott, CEO) We saw strong demand for vitret consumables and cataract consumables. The Voyager DSLT system is well-received, offering automated laser treatment for glaucoma, which simplifies the procedure and could become a first-line treatment. We plan to launch it in the US in early 2025.

Q: Regarding AR-512, how do adverse events like staining and burning impact its market potential, and what level of investment is needed for its launch? A: (David Endicott, CEO) Burning and stinging are common but manageable. The key is its rapid effectiveness compared to alternatives. We expect minimal revenue contribution next year due to a midyear launch, with full-scale promotion and revenue impact anticipated in 2026.

Q: Could you provide more details on the factors leading to the top-line guidance reduction? A: (Timothy Stonesifer, CFO) The guidance adjustment was primarily due to softness in the US surgical market observed since June. The $40 million divestiture of eye drop sales will impact the ocular health segment.

Q: What is driving the strong performance of the AT-IOL business outside the US, and how sustainable is it? A: (David Endicott, CEO) The growth is driven by increased penetration and share gains in international markets, where we started with a lower share. The adoption of advanced technology intraocular lenses continues to rise, supported by our product offerings like Vivity and PanOptix.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.