You remember back when you were young, so opinionated and so confident.
Amazing. Hi, everyone, Patrick on the U.S. MedTech team. There's disclaimers. I'm not gonna read them. You've heard them a thousand times, and you're not gonna go to the website anyway, but legally, they're here, so yay! Thrilled to have Al White, President and CEO of Cooper, to join us today for a fireside chat, which should be a lot of fun. Just to go through a lot happening in the business.
Yep.
So thank you for coming all the way from the West Coast over as well.
Absolutely. It's great to be here.
To the world's coldest room.
Right.
Yeah, it's all good. I guess, so maybe if we start kinda big picture, how are you feeling about the group overall? How do you balance the time between, you know, the vision side of the business and the surgical side of the business?
Yep, yep. Good question. I feel good. I'm sure we'll go through this in the questions, right? And as we think through vision, think through surgical. But both businesses are doing well right now. We have good tailwinds, and they're long tailwinds, right? When I look at the macro trends of myopia, and we talk about this, a third of people having myopia today, half of people having myopia in 2050. There's things that are sad to see, right? I see my kids, and I see their friends, and they're all staring at phones. Everybody's on a screen, but at the same time, that's a positive for the industry, right?
And if you look at fertility, where we're big on, on our CooperSurgical side, you know, a lot of trends of people delaying families, and anytime you're going down that road, you have positive trends for the fertility industry. So that's good stuff. We have Holly Sheffield runs Surgical, does an amazing job. I love working with Holly, and Jerry runs Vision. It's great. You know, we've been taking the opportunity to capitalize on some low-hanging fruit, I think. When you think at things at a high level, and you think about two separate businesses, well, we've been doing a better job here recently of thinking: How can we pull some leverage out of those businesses and drive a little bit more success to the bottom line?
So a lot of different moving parts right now, but, yeah, when you have nice growth in your businesses, it's easy to manage through that.
I mean, to your point on that, like, how do you... Again, two different businesses. How does it work in terms of determining, like, degree of investment and-
Mm-hmm
... like, stimulating growth and that, like, dollar time between the two? Is it just independent anyway of one another, or is there some, like, central allocation that kinda goes on?
Yeah, a lot of it's independent. I mean, one thing I would say is our best returns come from buying new manufacturing lines in CooperVision. So at the end of the day, especially now, where the demand is so high, any dollars that we can put in adding capacity within CooperVision provide a fantastic return for us. So first and foremost, I would kinda go there. You know, our fertility business is fantastic. We're investing in fertility across the board: R&D, geographic expansion, new product launches, so forth. That's a great return for us. And then, you know, we've done some acquisitions, and we look at those. If they make sense, and they're tuck-in deals that offer a high return, we'll look at some of that activity.
But, at the end of the day, I would say the one thing that we need to do a better job of, and we're very, very focused on today, is Free Cash Flow generation. That's a big thing for us right now. It's kind of moved towards the top of the list. And obviously, the more Free Cash Flow you have, the more flexibility you have for this investment activity, and so forth.
I think that dovetails nicely into the topic around production and CVI that, you know, you were talking about. It might be worth for people in the room who might be less in the weeds on the contact lens business-
Mm-hmm
... how that industry has changed, shifting to dailies, and specifically, to your point around manufacturing lines, the change of making 30 lenses every month versus the one-
Yep
... and how that's, from a capital and a investment time constraint, been involved.
Yeah, it's a great question, you know, and you're seeing that. I mean, as an industry, years ago, the industry started moving to daily lenses. Simple, right? Put a lens in at the beginning of the day, you take it, you throw it out at the end of the day. As we moved to silicone hydrogel lenses, and the comfort improved, the worth of that lens, so to speak, increased. And if you're someone like me, I wear multifocal lenses, right? It's not like the old days. Now, I put these in first thing in the morning, and I literally wear them the entire day, and I lay in bed at night, and that's when I take them out, right? If I remember. If I forget, I take them out the next morning. Right?
But you can do that with contact lenses now. So as you've seen the market shift over to dailies, and especially daily silicone hydrogel lenses, you're talking about, okay, well, I used to sell monthlies. I had to make for a patient 24 lenses a year. Now, I have to make seven hundred some lenses a year, depending upon their wearing regime, right? So if you're making that many more lenses, you need the production equipment to be able to produce those lenses. You need the manufacturing footprint to be able to do that. We jumped into that many years ago. We acquired Sauflon. We advanced. We created some great technology. We take some of the expertise that we have in the monthly space, where we're very strong, wide parameter sphere ranges and torics and so forth.
We've taken that technology and moved that into the daily space very successfully. I will say that this, the contact lens industry is a space that moves very slowly. You've got products out there. I mean, Biofinity grew 11%. We launched that somewhere around 20 years ago. I mean, there's competitive products that were launched in the 1990s that are still out there growing. It's just a slow-moving industry to get to the point where you produce it, you launch it, you get spheres in the market, you get torics, you get multifocals, you launch it all around the world. The cycles are relatively long. Having said that, as we started, right, you've got an industry where you're getting a growing wearer base. More and more people need visual correction.
So you combine these different trends, you get a situation where you have higher investment activity in order to meet those revenue growth targets.
I think you're still in a place, it's getting better, but where your demand is outstripping your capacity to supply it.
Mm-hmm.
When should we expect that to kinda normalize?
... Yeah, that's very much true within MyDay, which is our more premium daily silicone hydrogel lens. We have some areas there, like MyDay Energys, which is doing great in the U.S., that we haven't been able to launch internationally. We know it's gonna do well. We just have to get the production to be able to get it in the marketplace. I think we'll still have some capacity challenges there through fiscal 2025. My guess is you're probably into fiscal 2026 before we start feeling more freely unconstrained.
Is that just because it takes so long to get lines validated, running, batching, like that?
Yeah.
Yeah.
Yeah, these lines are huge, and that's one thing I think people underestimate or don't understand, right? 'Cause no one knows how big is a manufacturing line, but you know, we're sitting up here on stage. It could go all the way back to that door back there. I mean, these are big lines. They're heavily robotic, camera systems and so forth, highly regulated. It's all medical devices, so yeah, you're ordering a line. It can take well over a year to get that line in and fully qualified to produce product and so forth.
Maybe on the financial side of a more short-term Q3, you know, CVI had great growth, great quarter in that way, and also within that very strong modality mix-
Mm-hmm
... which is, has been true for a while.
Mm-hmm.
How are you feeling that going forward? How much further is that we can go in things like toric and that side of things? Like, is there still a lot of real estate to go up?
Yeah, I feel good about where we're at right now. Business obviously doing well. There's a lot of different reasons that we're doing well, for the industry and for us, right? It's not just one thing, it's a number of things, whether it's price increases, the shift to dailies, the growth in torics, growth in multifocals for us, growth in myopia control, and so forth. But I feel good because it's a very diversified growth profile, if you will, right? When I think about it over the coming years, I mean, I do believe if we go 10 years in the future and look back, you're gonna look at an industry that has a revenue CAGR of, like, 6%-7%. It's pretty fantastic, and that's just driven by underlying demand of more people needing visual correction.
I guess the other thing I should add is, right, a growing wearer base. When I think about areas like you mentioned, like torics, there's a greater percentage of people with torics in the U.S. than there are rest of the world. You're seeing that change, you're seeing that grow in places in Europe. You're seeing it grow in Asia. So those are, yeah, better products for us, higher priced products and so forth, specialty products, stickier products, the optometrists like those. So the trends are pretty good for quite a few years in the space.
Because kind of all the players to some pretty much, in some capacity, publicly listed, people love to do the cross comparison.
Right
... because you actually can, right?
Yep.
It's a classic sell and buy side thing. So how do you find the competitive environment? You've been taking share for a long time. For those less familiar, to what... If you had to pick, like, two things arbitrarily, what would you attribute the success that you've had in taking share from some of the other players as well?
Yeah, I mean, it's a competitive marketplace with, with strong competitors, right? I mean, three of us have about 90% global market share right now. Where it's, it's interesting when you look at, I talked about it on the earnings call, right? Like, we are the number one contact lens company in the world when it comes to wearers. I mean, there's more people wearing CooperVision contact lenses than any other company in the world. J&J would be number one in revenue dollars. That's that delta between daily wearers generating so much more revenue than a monthly wearer wears. You know, but yeah, I think that if you look at our business and you say, "Okay, why do we grow faster?" It comes down to a couple of different things, right? One is a broad portfolio that we have.
We do some customer brands that some of our competitors don't, and we have a really strong myopia control business. We're the only one that has FDA approval for a product for children to reduce the progression of myopia, and we talk about that. That product's finally gaining some traction here. It's getting a little bit bigger, so hopefully we keep making some progress there.
How do you think about, like, brand equity and that side? Because ophthalmology is interesting because you've got two customers in a way. You have the end user, but then you also have the optometrist and the practice. And, like, how do you think about how you spend competitively, your time and energy between those two?
Yeah, it's interesting. Like, over the years, every once in a while, we'll go a little bit into the consumer space-
Right
... but, not a lot. I mean, the vast majority of our energy is focused on the optometrist or the ophthalmologist, depending upon the market. We've seen that with MiSight, right? When we launched MiSight, we had Sarah Michelle Gellar as a spokesperson and so forth, and we were promoting that from a consumer perspective. It was okay, right? But at the end of the day, the value driver is through the eye care practitioner, who's explaining to mom or dad what myopia is, how it progresses, why your child needs this product. That's the key for us. The vast majority of our time and energy go into the medical professional.
How have you seen switching rates evolving of late? I mean, I guess there's kind of two components to that. There's existing users when they're younger, it doesn't do that a lot, but there's also the drop-off, as people sometimes drop off from spherical-
Mm-hmm
... and just go to glasses a lot of the time on that side.
Yep.
How do you retain those customers? I guess it's two separate questions, but-
Yep. Yeah, well, I would say I'm probably a perfect example of that. You know, you wear lenses or you don't need lenses, but all of us hit a certain point in life where all of a sudden, can't quite see the menu. It's a little too dark in the room, right? You need readers. Like, that happens to everybody, and it used to be harder. You put contact lenses in, but you can't really see well or you have an issue. Now, this technology that we have, like the ones I'm using, right? I mean, you can sit and read this and then look out in the distance, and, I mean, I can see the lady playing tennis there on the TV as clear as I can do this... like snapping your fingers.
I mean, that technology improvement is so much better, that the person who used to drop out when they were in their late forties, now they're moving over to the multifocals, and they're staying, and that's for the market. I mean, we have fantastic product. I think this is the best out of all multifocals I've ever tried. I could be a little biased, but some competitors have some good products also.
I have known management teams where they've been not using their own product, and they've been using the competitor product, not for competitive intelligence. They just admitted that they thought it was better.
It-
It's happened before, so-
Yeah.
It's good that you're using your own one.
One of our competitors should use ours and announce it.
It could work. It could work. I love that. You brought up, you know, the myopia management side of things, and, and I feel like that sometimes gets a little lost in the conversation. I guess there's two components to it. You know, there's MiSight and there's Sight Glass.
Mm-hmm.
Maybe for the audience, if you could explain the background to those progress in China, and then outside of China, how that's been growing.
Sure. Yeah. I mean, to kind of step back at a high level, you're talking about children, most of the time, mom and/or dad are wearing glasses or contact lenses, right? Child goes in, child's having a hard time seeing the board or whatever it is. They look at it, and the doctor says, "Okay, yep, you need... You have myopia, and it's going to progress, and it's currently here, and it's gonna go to here." That kind of thing, right? Historically, that's always been give the kid glasses, and out the door he goes, and maybe when they're teenagers, they switch to contact lenses, but that's it. In today's world, the technology that we have with MiSight is the child wears the contact lenses, and it reduces the progression of myopia.
A number of kids, it actually just stops the progression of myopia entirely. That's contact lenses, again, the only FDA-approved product for it. Glasses have also hit the market now. Now, not in the U.S., but outside of the US. Essilor has a great product they have in the market in China that's selling like crazy. We have Sight Glass, which is a completely different technology. It's a joint venture we have with Essilor. We've launched that in a number of markets. It's in China. It's doing fantastic over there right now. So we're seeing a lot of excitement there. I'm excited about that because I think at the end of the day, every child that comes into the optometrist's office worldwide has to be fit in a myopia control product. It's just crazy if they're not, right?
You have to make that a more prevalent product, and it's a multi-billion dollar industry, right? I mean, you just have to do it that way. When you go in and you get glasses now, and the doctor says, "Oh, here's your glasses, and here's your nine upgrades that you can choose from, and they cost whatever, you know, you're willing to pay," this will be one for children, and they'll say, "Hey, it costs whatever, $400, and you can add this myopia control treatment." Check the box. That's when you'll get insurance reimbursement. That's just gonna help the entire space. What are you gonna get for contact lenses as part of that? The child has to wear the glasses because compliance matters. This is a treatment, so if the myopia is progressing in the child, it's probably because they're not wearing their glasses.
You need to move them over into contact lenses. These are different than normal glasses. Your strategy is really to get the child to look through kind of a clear hole in the middle of the lens. And then, whether it's a circle around it or whether it's a dot technology, it's kind of fuzzy outside of that, which makes the eyeball go back to the middle lens. You do not want that when you're playing sports. So as you move to somebody playing soccer or whatever else they're doing, they're gonna move over to contact lenses. So, I think you're gonna see the market explode. I mean, you're seeing it do fantastic in China now. MiSight, Ortho- K, little bit of a back burner as everybody gets fit in glasses.
We're starting to see our MiSight fitting activity increase over in China because it's following some of that as kids come back in. Outside of China, we're doing really well. MiSight growth was driven by markets outside of China, right up 50%. It's not a huge product, but those, they're getting bigger.
Do you think Sight Glass is the sort of way to Trojan Horse MiSight in late... You've got the consumer used to the management. You're not gonna suddenly stop when they turn twelve or whatever. You know what I mean, like?
Yeah, I think, I think it's huge. I think once Sight Glass gets approved in the FDA, and it's out in the marketplace, and we've seen this in other countries, right? It becomes standard of care very quickly for any pediatric optometry that's going on, or ophthalmology, right? And then, if you're coming out of glasses, you're going on those contact lenses. And, and one of the things we obviously want is the child's gonna use those contact lenses for a while, and they age out. Your eyes essentially stop changing when you're in your late teens or 20 years old, and they kinda hold firm, if you will, until mid-thirties or something like that. We want that child to convert over from our MiSight into our regular contact lenses so that you're getting them for the full life cycle.
Yeah, makes sense. You alluded to it at the start, actually, about getting leverage in the business from that side of things, but obviously, very strong top line. Now, seeing a good chunk of the margin profile look like it's coming through, what's the sort of outlook over the next year or two for, you know, the operating leverage and the, I guess, the margin improvement we can see from the volumes?
Yeah, I'd break that into two. If I think about, or maybe even into three, but I would say from an SG&A perspective, we've been doing a lot of investment activity the last good three years or so. A lot of stuff around IT upgrades, distribution center improvements, a variety of different work falling in those segments. We're starting to see leverage out of that, right? And that's not a one-time thing. We saw it in Q2. We saw it in Q3. We're gonna continue to see leverage as those investments offer the return that we expect on them. I'd say specifically SG&A, because we are seeing R&D grow quite a bit faster than sales. A lot of dollars going to the myopia management side on pediatrics, and same with infertility, the investment areas you'd expect.
The other one I would say is, cost of goods, right? So we've been expanding capacity pretty significantly. We're finally getting at a point where some of that, some of those new lines that we put in over the last few years are now up and running at full speed. The cost per unit on the product being produced on those lines, because now they're operating so efficiently, is starting to work its way through the P&L. We capitalize that, rolls through six months later. So we're seeing that kind of improvement start to happen. We're also seeing some of the efficiency programs, the continuous improvement programs, starting to benefit us. So, I feel decent about where we're at from a gross margin perspective. Obviously, any price that you get is a margin enhancement.
We've seen price, I think we'll continue to see prices in the industry. Maybe the last thing I would add, is just, I mean, we've had currency as a headwind for us for years here. It's finally a tailwind. I'm not gonna get in front of myself, but, obviously that'll be an, a nice benefit.
Yeah, the dollar is always painful for quite a lot of companies.
A lot of times.
On the production line, actually, it kind of occurs to me now, how long does it typically take, in your mind, to reach that kind of, max- not maximum output, but like, real, like, flow through on the production line? Is that a one-month, two-month, three-month, four-month process? Like, what's the... How long does it take to really get the lines running?
So it would be highly dependent upon what type of line it is, any of the new stuff that we're doing, new upgrades and so forth, what's being produced on that. But it could certainly take you, from the time you order it to the time you get it in and have it fully qualified, it could be a year and a half, right? That's part of the long cycles. And then it could certainly take you many, many, many months to get to the point where you're really running that at full capacity.
It's a question that literally always comes up and literally always has the same answer, but I have to ask it, which is the consumer confidence one-
Yep
... And the medallion mix and pricing and rebates, I guess US and then other regions. I think you guys have been pretty emphatic about it, but maybe for the audience, to give them a sense of what you're seeing with the consumer by region-
Yep
and purchasing decisions on that side.
Yeah, from our perspective, the consumer has held up well. We're continuing to see more premium products being the products that are purchased. We're continuing to see, things like Toric, multifocals, and so forth, some of the more specialty products, be the products that are purchased. I think you see some consumer weakness in spots in, like, Asia. We've seen it, we talk about China as an example. But, generally speaking, the support has been pretty strong from a consumer perspective. I mean, I think that, people ask me this question sometimes: "Well, what happens if we really go into a recession?" You know, 2009 , the contact lens industry grew 3%, we grew 5%. So if the world fell apart, yeah, we'd probably grow mid-single digits or something like that.
I mean, but we also don't grow significantly faster than that. I mean, our industry is a pretty tight bell curve. As of today, though, we're not seeing a lot of that. We're continuing to see people listen to their optometrists and purchasing the best available product for them.
If we're going into 2009, the least of my worries is what will happen to pricing of the contact lens so selfishly, I have considerably-
That's fair
... bigger worries than contact lens pricing. But do you think people get too obsessed around trying to track rebates? I know you guys don't do a lot of work on that side, but there's a lot of sell-side ink spilled around rebate tracking. Is that something that resonates with you guys or not?
Somebody asked me earlier today, and I said, "The only time I look at U.S. consumer rebates is if one of you guys asks me a question." It's just such a small thing, and it-
Yeah
... it doesn't matter, right? Because it's U.S. only, it's consumer rebates. There's the whole game about, like, well, what's my rebate, and are people really going to mail that in or use it, and does it change patterns, and so forth? That's not really our thing. I mean, we're not a massive consumer company, so we don't play a lot of games with rebates. I mean, it is what it is. Yeah, as you said, I don't look at it very much.
No, it's totally understandable. Maybe if we shift a little bit to the surgical side of things-
Mm-hmm
... because I feel like it's a part of the business that gets less airtime than maybe it deserves.
Mm-hmm.
So for those who are less familiar, maybe, you know, fertility has done incredibly well, especially recently. Maybe give people a broad-based view of what your offering on fertility is and,
Sure
... what's driving it.
Yeah, fertility, great, global industry. We have a very broad, broad portfolio there. We're a clear market leader in that space, whether it's consumable products, capital equipment, donor activity, donor egg and sperm, genetic testing. But, yeah, our whole strategy there was to build up a good, strong business that was gonna provide a fertility clinic, all or almost all the products they're going to need to go through the fertility process, excluding pharma, right? There's a whole pharma piece to that, but ours is much more on the medical device side of things. Yeah, so it's taken us a number of years, but, we have quite a nice portfolio there and a lot of good relationships. We've grown double digit there, a lot of quarters here, posted double digits again this past quarter.
That's an industry that is, as people delay having families, women delay childbirth, it makes it more difficult to get pregnant. And it's not just the woman. I mean, it's a third of the time it's the man, a third of the time it's a female issue, a third of the time it's kinda unknown or a combination. So we've been doing a lot of work on that. I mean, that would be an area. Interestingly, like, people talk about AI, and they'll ask me about it, and I think the vast majority of people are like: "Oh, yeah, we use AI." And I'm like: "That's just the ERP that you use, right?" But that's an area where we actually do use AI, and it's pretty fascinating. I mean, so when we do the genetic testing on embryos...
Someone goes through the process, and they have, say, five embryos to choose from. We rank those embryos as to which one's the best embryo to be used, and then we study that and say, "Okay, well, is there any impact on the success from the age of the woman? Is there any impact from their nationality, from the date the embryo was placed," right? You look at everything, and you just learn, and you learn, and you learn, and every time you're going through that fertility process, you're learning and you're creating a better algorithm to understand things. We're a leader there, and we just continue to strengthen our position because we keep learning more, and more, and more, and get better, and better at that, right? Because, fertility process is tough. I mean, and it's, it's a painful process for someone to go through.
You want to make that one cycle, right? Woman goes in, goes through the fertility process, gets pregnant, has a baby, right? We work very hard to help make that happen.
Among my age group, there's an incredible amount of IVF that's-
Mm
... gone through, just because there's been so many fertility issues.
Yep.
The chart that jumps to mind is that age-adjusted male sperm count one.
Mm-hmm.
Seventies to now, it's just halved.
Right.
It's just like
Yeah, when you see those stats, it's amazing, some of those numbers.
Yeah, it's pretty rough. I guess, you know, for the US market, for fertility, there's also some changes happening, you know, regulatory at the corporate level as well. It could be argued to be a little dystopian, but-
Mm
... some companies are, paying their female employees to freeze their eggs.
Mm-hmm.
Complex topics.
Right.
How are you thinking about, like, some of the moving parts there? Are there any that have jumped out to you as meaningful for the industry?
Oh, yeah, you're right. I mean, from a political perspective, it swung one way, certainly with Alabama and some of the stuff that was going on. More recently, from a political standpoint of people saying, "Hey, we're gonna cover," whether it's the government covering it or ensuring insurance covers it, that is nothing but a positive for us. I mean, I hear that, and I, you know, I can do nothing but smile at that because, I mean, you look around the world, and you look at countries that cover fertility treatments, you just have a much higher rate of fertility usage, right? So that would be fantastic news for us. We haven't seen anything on that. All that's new, but I hope it- I hope we move in that direction.
When it comes to some of the other activity, I mean, we're not involved in a lot of that, right? A lot of the like, the freezing or storage and stuff, it's not our world. It's mostly working with a fertility clinic.
The other part of the surgical business that gets weirdly too much air time from my perspective, but I'll bring it up because people care, is Paragard.
Mm.
I guess there's probably two components to it. I mean, the main one being, got a little bit of competition coming in. How are you thinking about that?
Mm-hmm.
Any implications for next year? That whole topic.
Yeah, that did start getting a lot of news a little while ago out of nowhere. But yeah, I mean, we have the only non-hormonal IUD in the market, U.S. Paragard. It, frankly, at the end of the day, the units have been declining on that. ASP is moving higher. It's been a fairly flat product. This year, it'll be flat, up a little bit. There was a competitive product that came out. It's not a generic, but one where they came out and said, "Hey..." It was in December, I think. They said, "We're gonna get approval, and we're gonna launch this in a couple of months," and then that's when we got all the questions, but it has not been approved. They're not in the market, right? In the meantime, we've been able to strengthen a lot of our relationships.
We've worked with the FDA for the last couple of years to get a single hand inserter for Paragard so that it matches Mirena and the hormonal IUDs. We have that approved now. We have that being launched into the marketplace. So yeah, I mean, I don't know what's going on with these guys, if they'll get approval, when they'll get approval, what the conditions will be, but when it comes, like, we're certainly ready for it.
The other one that always comes up, that is just kind of worth discussing in general, is holistically at the group level, running a contact lens business, but also a surgical and fertility business on the side, and sort of women's health and business on that side. I guess, what's the vision for Cooper in totality? Because they feel disparate from one another.
Yeah.
But it could be, you can make the argument that you can leverage similar skill sets internally across them. So maybe help people understand-
Yep
... that vision.
Yeah. I mean, a lot of companies have grown over the years, they end up with products that... or product families, whatever, that are separated, almost like, seems like different businesses out there. I mean, we're no different than a number of the bigger conglomerates out there, I guess, that move in that direction. Our focus has always been looking at industries and investing in industries that have long, positive macro growth trends. Fertility, contact lenses, labor and delivery within the OB/GYN space, those kind of areas. The one thing that we hadn't done a lot of historically is to kind of take advantage of the fact we have all this expertise, and we've seen that a little bit more recently.
We've seen some CooperVision people or CooperSurgical people kind of move to the other side for promotions and bring some of that expertise. Some of the management of key accounts, moving from one to the other, has been really advantageous for us. Some of the life cycle management, strategic planning, moving from one side to the other has been advantageous. Some of the expertise in areas like IT, as an example, cybersecurity and so forth, rather than having that separate, pulling that into a consolidated basis has been a positive for us. So yeah, I think it ends up just being, "Hey, as long as they're good businesses and good growth markets," and interestingly enough, ours are somewhat similar, you know, why not?
The sort of surgical and fertility landscape's pretty fragmented.
Mm.
It's kind of all over the place in some ways. You're obviously one of the larger, more visible players. Is there still appetite to acquire some more-
Mm
... assets within that space and to scale up? Are there things that you feel like you're missing that would be interesting? I'm not just trying to help our bankers out, but-
Yeah, I don't know if I'd say there's anything we're missing necessarily. I mean, I look, we just did a couple small deals. Both deals are accretive to our consolidated top-line growth. They're accretive to our consolidated growth and operating margins. If we can do deals where we're going and buying essentially a product, you're buying a company, but you're really buying the product, and you're rolling that through your sales channel, your distribution network, those turn out to be really nice financial transactions for us. But you have to, you have to monitor that carefully. You have to say, "Hey, this makes strategic sense," right? We're not going down a different road. We're not going third leg. We're sticking with stuff that matters, that offers a very high return to us.
So we're looking at those opportunities, and if we find them, we'll do them. They're smaller, kind of tuck-in kind of things, and if they don't come up or they don't meet the financial requirements we have, then we won't do them.
I guess the same thing in vision, because you have these very good doc relationships that you've already got. Isn't there a temptation to just add a little something to the bag of the rep, you know?
Yeah. There's just nothing you can add-
Yeah
... interestingly, right? Because, I mean, you got ophthalmic surgery, but now you're going into an ophthalmologist in different areas. You've got eye drops and so forth, but that's consumer. It's sold through grocery stores or whatever else, right? You got contact lens solutions. We exited that business 'cause the whole industry is going over to dailies. There's not a natural adjacency within the vision space. And obviously, we can't acquire anything in the contact lens space. Yeah.
Of course not.
Yeah.
You know, you do all these calls, you do all these meetings, and you have a certain amount of your own time that's spent internally on stuff. What takes up a lot of air time and oxygen for you internally, but just doesn't come up externally?
Well, I think I would probably say high on the list to that would be execution, right? Like, people expect. We were talking a little bit earlier, people expect, like, "Why aren't you doing this?" Or, "Why does this company have this problem? Why does..." It's hard. I mean, we did $1 billion in revenues last quarter. That's not massive, but that's enough that there's a lot of moving parts. And when you're adding a lot of production, you're expanding facilities and so forth, you have to execute, right? Your team has to be bought into your strategy, bought into your culture, working together as a team, right? That level of execution is difficult. It's hard to manage, right? So I spend a lot of time on that, ensuring that we're continuing to produce really strong results.
We talk about that now, which is like, "Guys, we're in a great spot right now. We've done these investments. We're getting returns. We have to execute. We know how to do it. We've done it in the past. Let's keep doing it. Let's keep making sure it happens." I'd put that there. The other one I would put high on the list right now that we haven't talked much about for a couple of years, it seems like, but we are more now, is the Free Cash Flow side, right? Our CFO, if he was here, he would have already mentioned it a good 10 times. We have to deliver more Free Cash Flow. And you know, you go back a few years, we were at a point where Free Cash Flow would get up to 20% of revenues.
Now it's more mid-single digit. That's not our business model, and that's not who we are as a company. So we're very focused on driving up free cash flow and improving that. And I think you're gonna see that, right? We called for a pretty good fourth quarter here. We had a decent Q3, good free cash flow next year, and I think we've got a good opportunity to have free cash flow accelerate 2026.
Perfect timing. Look at that. Al, thank you so much. Thanks to everybody for listening.