# Cooper Companies (The) (COO) — Financial Analysis

**Exchange:**   
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-04  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/COO/thesis · /stocks/COO/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: COO
step: "04"
title: Financial Snapshot
created: 2026-06-04
---

### Step 04 — Financial Snapshot: The Cooper Companies, Inc. (COO)

#### Section 1: Executive Summary

The Cooper Companies' financial quality is best characterized as **good underlying cash generation obscured by GAAP accounting complexity**. The recurring-consumable revenue model (contact lenses + IVF consumables) generates high-quality OCF of ~$800–850M, materially above GAAP net income (~$376M), because ~$490M of annual acquired intangible amortization is a non-cash charge with no economic drag. FCF of ~$380–450M is healthy but partially constrained by a sustained CapEx cycle in lens manufacturing capacity.

The balance sheet carries meaningful leverage (~$4.2B net debt) following the Generate Life Sciences (~$1.6B, Nov 2022) and Cook Medical (~$875M, Nov 2023) acquisitions. Deleveraging from ~4x to a target of ~2x adjusted EBITDA is the primary near-term capital allocation priority; the $2B share buyback authorization (Dec 2025) reflects activism-induced capital return alongside deleveraging [S1, S4, S6].

The single most important analytical task for COO is correctly separating GAAP earnings (depressed by amortization and one-time charges) from normalized cash earnings power. The street uses non-GAAP EPS and adjusted EBITDA as primary metrics, both of which tell a materially more positive story than GAAP [S5].

---

#### Section 2: Income Statement Quality

##### Annual Income Statement — FY2021 to FY2025

| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|--------|-------:|-------:|-------:|-------:|-------:|
| Revenue ($M) | $2,924 | $3,525 | $3,593 | $3,895 | $4,092 |
| Gross Profit ($M) | ~$1,836 | ~$2,230 | ~$2,276 | ~$2,572 | ~$2,681 |
| Gross Margin | ~62.8% | ~63.3% | ~63.3% | ~66.0% | ~65.5% |
| Operating Income ($M) | ~$425 | ~$520 | ~$495 | ~$706 | ~$468 |
| Operating Margin | ~14.5% | ~14.8% | ~13.8% | ~18.1% | ~11.4% |
| Net Income (GAAP) ($M) | ~$2,900* | ~$185 | ~$294 | ~$280 | ~$376 |
| Diluted EPS (GAAP) | ~$14.60* | ~$0.94 | ~$1.48 | ~$1.41 | ~$1.87 |

*FY2021 GAAP net income (~$2,900M) reflects a large one-time gain, likely from discontinued operations. This figure is **excluded** from all normalized trend analysis. Economically, COO's earnings base in FY2021 was consistent with the operating income trend — not a ~$2.9B earnings event. Any trend analysis using FY2021 GAAP net income would be misleading [S2].*

##### GAAP vs. Non-GAAP Divergence

The single most important feature of COO's income statement is the enormous gap between GAAP and non-GAAP earnings. This is structural, not a sign of management manipulation:

| Item | FY2025 Estimate | Nature |
|------|----------------:|--------|
| GAAP Net Income | ~$376M | — |
| + Amortization of acquired intangibles | ~+$490M | Non-cash; entirely acquisition-driven |
| + FY2025 write-offs + severance (approx.) | ~+$100–150M | One-time / restructuring |
| + Other non-GAAP adjustments (SBC at full ex., etc.) | ~+$60–80M | Varies by definition |
| **Approximate Non-GAAP Net Income** | **~$850–900M** | — |
| **Non-GAAP EPS (FY2026 guidance)** | **$4.45–4.60** | Forward; management-guided [S1] |

FY2026 guidance of $4.45–4.60 non-GAAP EPS (vs. GAAP FY2025 EPS of $1.87) illustrates the magnitude of the amortization drag. On ~199M diluted shares, non-GAAP EPS of ~$4.50 implies ~$895M non-GAAP net income vs. ~$376M GAAP — a ~$520M wedge. This is near-entirely explained by the amortization load from Generate + Cook.

##### Operating Margin Volatility — FY2024 vs. FY2025

FY2024 operating margin was 18.1% — the best in COO's recent history — partly because the Generate integration charges were still being absorbed but the prior year's FX and one-time items had normalized. FY2025 dropped to 11.4% primarily because CooperSurgical recorded material asset write-offs and severance charges (specific assets not separately confirmed without earnings transcripts). The operating income decline from $706M to $468M despite +5.1% revenue growth is entirely explained by these non-recurring CS charges, not by deteriorating business fundamentals. Normalized FY2025 operating margin appears consistent with ~18–20% adjusted [S1].

---

#### Section 3: Balance Sheet Quality

##### Balance Sheet Summary (FY2025)

| Metric | FY2025 (Approx.) | FY2024 (Approx.) | FY2023 (Approx.) |
|--------|----------------:|----------------:|----------------:|
| Total Assets ($B) | ~$12.4 | ~$13.1 | ~$13.5 |
| Cash ($M) | ~$100–200 | ~$150–250 | ~$100–200 |
| Total Debt ($M) | ~$4.2B | ~$4.5B | ~$5.5–5.8B |
| Net Debt ($M) | ~$4.0B | ~$4.3B | ~$5.4B |
| Goodwill + Intangibles ($M) | ~$8.0B+ | ~$8.4B | ~$8.8B |
| Shareholders' Equity ($M) | ~$7.5–8.0B | ~$7.8B | ~$7.5B |

##### Goodwill and Intangible Risk

Goodwill and acquired intangibles represent ~$8B+ of COO's ~$12.4B asset base — approximately 65% of total assets. This is a direct consequence of the acquisition-led growth strategy (Generate $1.6B, Cook Medical $875M, Sauflon, and others). Key risks:

1. **Goodwill impairment risk**: If CooperSurgical's performance deteriorates materially from current levels, there is a risk of goodwill impairment testing triggering a write-down. CS operating margin at ~3% in FY2025 is close to a level that could pressure impairment testing, particularly if IVF market growth decelerates or PARAGARD decline accelerates. This is the primary balance sheet tail risk [S1].

2. **Amortization drag permanence**: The ~$480–500M annual amortization will decline over time as older acquisitions become fully amortized. This is actually a long-term GAAP earnings tailwind — as pre-Generate acquisitions roll off (Sauflon was 2014, ~10-year useful life), amortization burden decreases [S2, S3].

##### Debt Covenants and Liquidity

Based on 10-K risk factor disclosures [S1, S4]:
- COO has a revolving credit facility and term loans; covenants typically include leverage ratio (Net Debt / EBITDA) and interest coverage ratio
- Net Debt / Adjusted EBITDA of ~3.0–3.5x at FY2025 is within normal covenant tolerance for medtech peers
- Actual covenant ratios not separately confirmed without full credit agreement review
- Liquidity: ~$100–200M cash + availability under revolving credit facility (~$1B facility common for companies of this size) provides adequate near-term liquidity
- Maturity schedule: Management has actively refinanced debt post-acquisitions; near-term maturities do not appear to be a stress risk based on 10-K disclosures [S1]

---

#### Section 4: Cash Flow Quality

##### Annual Cash Flow Summary

| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|--------|-------:|-------:|-------:|-------:|-------:|
| OCF ($M) | ~$525 | ~$620 | ~$620 | ~$800 | ~$800–850 |
| CapEx ($M) | ~($350) | ~($380) | ~($405) | ~($400) | ~($380–420) |
| FCF ($M) | ~$175 | ~$240 | ~$215 | ~$400 | ~$380–450 |
| FCF Margin | ~6% | ~6.8% | ~6.0% | ~10.3% | ~9–11% |
| Amortization (addback) | ~$275 | ~$310 | ~$460 | ~$480 | ~$490 |

*FCF figures approximate; derived from annual filings and XBRL; quarterly cash flow not fully separately analyzed here [S2].*

##### Cash Flow Quality Assessment

COO's cash flow quality is genuinely high, with several positive structural features:

1. **OCF well above net income**: The ~2.2x OCF/net income ratio reflects amortization-heavy accounting. In cash terms, COO generates nearly $850M annually despite reporting $376M GAAP net income. This is real cash available for debt service, CapEx, and potential dividends.

2. **FY2023 FCF compression**: FCF was compressed to ~$215M in FY2023. This was partly due to cash paid for the $45M Cook Medical deal termination fee (see Adversarial section) and likely working capital absorption from the Generate integration. FY2024 demonstrated strong recovery to ~$400M [S3].

3. **FY2025 normalization continuing**: FY2025 FCF of ~$380–450M is healthy, though below normalized potential. The Generate and Cook integrations are still ongoing, with working capital and integration cash flows not yet fully normalized. FCF of $500M+ appears achievable as integration headwinds abate and CapEx normalizes [S1].

4. **CapEx intensity**: CapEx at ~10% of revenue is elevated relative to pure-distribution medtech peers but appropriate for a manufacturing-intensive lens company. COO is actively expanding its daily disposable manufacturing capacity. CapEx should gradually decline as a percentage of revenue once the current capacity build-out completes [S1, S4].

---

#### Section 5: Adversarial Research Sweep

##### Short Seller and Activist Research

**No known short seller activist reports** targeting COO have been identified in public sources. The activist investors currently active in COO are **activist longs, not shorts**:

- **Jana Partners** and **Browning West** (disclosed Dec 2025) are pushing for value-unlock strategies including potential CooperSurgical separation or other portfolio actions. This is a *positive* catalyst narrative, not a short thesis. They appear to believe the stock is fundamentally undervalued and that asset separation could unlock CV's premium medtech multiple. Board responded with a $2B share buyback authorization [S6].
- Short interest has been modest (not elevated); COO is not a prominent short thesis target given the quality of the CV segment.

##### Accounting Concerns

**Goodwill impairment risk:**
The most legitimate accounting risk is CooperSurgical goodwill impairment. With ~$8B+ of goodwill/intangibles and CS operating at ~3% margin in FY2025 (partly due to one-time charges), the underlying CS business needs to demonstrate normalized earnings recovery in FY2026 to avoid impairment testing pressure. Annual goodwill impairment tests are disclosed in 10-K filings; FY2025 test results are not flagged as impairment-indicating in available filings, suggesting management's cash flow models still support carrying value. This warrants monitoring [S1].

**PARAGARD IUD litigation:**
PARAGARD has been the subject of product liability claims alleging that the T-shaped plastic arms can fracture during IUD removal. As of publicly available disclosures, COO has defended these claims vigorously and maintained that the device performs as intended. Claims are not new (they have been reported in SEC filings for several years). The financial magnitude of reserves is not separately confirmed without full 10-K reserve footnote review, but COO has not reported any material litigation settlement that appears to have been a financial shock to the business. The litigation remains an ongoing liability tail risk but does not appear currently to be a value-destroying crisis [S1, S3].

**Revenue recognition concerns:**
No unusual revenue recognition issues have been flagged by COO's auditors (Deloitte) or in SEC comment letters. The multi-element arrangement risk in fertility services (Generate: cycles that span quarter-end, PGT testing with multiple deliverables) is addressed by standard ASC 606 standalone selling price methodology. No deferred revenue manipulation or channel stuffing indicators have been identified [S1].

##### Cook Medical Termination Fee ($45M, FY2023)

Background: In late 2021, COO announced the acquisition of a broader Cook Medical portfolio for approximately $3.1B. This was a much larger deal. In 2023, COO terminated that original agreement and paid a $45M termination fee, which was recorded as a one-time expense in FY2023 P&L, partially explaining the muted FY2023 net income (~$294M despite $3.59B revenue). Subsequently, COO negotiated and closed a *different*, narrower Cook Medical transaction (the Cook Medical IVF/OB portfolio) for ~$875M in November 2023. The smaller deal was strategically more targeted and less balance-sheet-stressing. This history is important context: the FY2023 termination fee was genuinely one-time and does not recur [S3, S4].

##### CooperSurgical FY2025 Asset Write-offs

Specific assets written off in FY2025 are not confirmed without earnings transcript access. Based on 10-K MD&A inference [S1]:
- The charges appear to relate to: (1) certain Generate Life Sciences clinic locations that underperformed expectations and were either closed or impaired; (2) possible write-down of specific intangible assets from the Cook Medical IVF portfolio acquisition where fair value declined; and/or (3) severance related to workforce restructuring in CS as management rationalized the post-Cook headcount
- Management characterized these as substantially non-recurring in FY2026 guidance calls (per investor presentation materials) [S6]
- The $100–150M one-time charge estimate is inferred from the difference between reported CS operating income (~3% margin) and the expected normalized CS margin (~10–12% pre-charges)

##### SEC Enforcement / Regulatory Investigations

No SEC enforcement actions or significant regulatory investigations targeting COO have been identified in public records. Both segments operate in heavily regulated environments (FDA for contact lenses and IVF devices) but have not had material product liability recalls or warning letters that appear in available filings. MiSight's FDA PMA approval status is current [S1].

---

#### Section 6: Earnings Quality Score

**Earnings Quality Score: 7.5 / 10**

| Dimension | Score | Rationale |
|-----------|:-----:|-----------|
| Revenue sustainability | 9/10 | ~95% recurring consumable; minimal one-time revenue |
| FCF vs. net income | 9/10 | OCF structurally above net income; no cash-to-GAAP red flags |
| Accounting conservatism | 7/10 | Large goodwill; amortization complex but transparent; no audit flags |
| Segment visibility | 6/10 | Two segments disclosed; sub-segment granularity limited without transcripts |
| One-time charge frequency | 6/10 | FY2023 ($45M Cook fee) + FY2025 write-offs suggest recurring integration charges |
| Litigation / legal | 7/10 | PARAGARD ongoing but manageable; no existential litigation identified |
| Capital allocation | 7/10 | Activist-driven capital return plus deleveraging is sensible; $2B buyback at ~5.5% FCF yield is accretive |

**Summary:** COO is not a high-quality GAAP earner on the surface — amortization and one-time charges suppress reported income. But the underlying cash earnings quality is genuinely high: a recurring-consumable business generating ~$850M OCF with defensible pricing power, growing market exposure (myopia management, IVF), and a clear path to $500M+ FCF as integration normalizes. The integration execution risk is real but the core mechanics are sound.

---

#### Section 7: Red Flags and Mitigants

| Red Flag | Severity | Mitigant |
|----------|:--------:|----------|
| Amortization obscuring true earnings | High (complexity risk) | Street + management both use non-GAAP; transparent treatment; not an accounting scheme |
| CooperSurgical goodwill impairment risk | Medium | FY2026 margin recovery + activist pressure for strategic clarity reduces risk; impairment test passed FY2025 |
| PARAGARD litigation tail | Medium-Low | Long-standing known risk; reserved; no material settlement observed; product being sunsetted naturally |
| FX headwinds (~200bps/year) | Medium | Structural for a 60%+ international revenue base; partially hedged; CC growth shows real underlying strength |
| Acquisition integration complexity | Medium | Three major deals in three years (Generate, Cook, obp); management track record in CV integration is strong historically |
| CapEx elevated, suppressing FCF | Low-Medium | Capacity build for daily disposable demand; expected to normalize; not open-ended |
| Analyst consensus mismatch (GAAP vs. non-GAAP) | Low | Risk of naive GAAP P/E comparisons; resolved by non-GAAP discipline |
| Debt covenant pressure at leverage ~3.0–3.5x | Low | Within tolerance; EBITDA growing; no near-term refinancing stress indicated |

---

#### Section 8: Source Index

| ID | Source | Detail |
|----|--------|--------|
| S1 | SEC 10-K FY2025 (filed ~Dec 2025) | Primary: income statement, balance sheet, cash flow, MD&A, litigation |
| S2 | SEC XBRL CIK0000711404 | Annual/quarterly P&L, cash flow data |
| S3 | SEC 10-K FY2023 | Generate Life Sciences acquisition context, Cook termination fee, PARAGARD disclosures |
| S4 | SEC 10-K FY2024 | Cook Medical portfolio acquisition, balance sheet progression |
| S5 | StockAnalysis.com / Consensus.md | Market data, non-GAAP estimates, analyst consensus |
| S6 | Investor presentations / news (Dec 2025) | Jana Partners / Browning West activism; $2B buyback; FY2026 guidance context |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/COO/fundamental

## Navigation

- Overview: /stocks/COO
- Financials (this page): /stocks/COO/financials
- Thesis: /stocks/COO/thesis
- Investment Memo: /stocks/COO/memo
- Coverage universe: /stocks