The Cooper Companies have recently faced pressure from activist investors on two fronts, with pushes to split up their businesses as well as reshape their board of directors.
Late last month, the investment firm Jana Partners revealed it had taken a stake in the major medtech—home to CooperVision, one of the world’s largest makers of contact lenses, and CooperSurgical, which carries a range of products that span women’s health, reproductive care, fertility and labor and delivery.
In a story in The Wall Street Journal, Jana said it plans to urge Cooper to sell off its contact lens business to Bausch + Lomb, claiming the rival eye care giant is open to the idea.
The firm said Cooper’s two segments are unrelated, and that either side may be ripe for divestment; it also wants the company to make changes in its capital allocation strategies, according to the WSJ.
More recently, the activist investor Browning West published a letter this week, which it said was sent to The Cooper Companies’ board of directors, describing how its investment of more than $500 million in the enterprise makes it one of the company's largest backers.
Browning West said the medtech has underperformed the S&P 500 and separate indexes of healthcare and medical equipment companies over the past several years, arguing that inadequate board oversight has led to flawed execution. However, it suggests a different approach than Jana.
“We firmly believe that Cooper’s future should be as a highly focused pure-play vision care company, which would enable Cooper to reaccelerate and maximize organic growth in its CooperVision business across both its private label and branded contact lens offerings,” the firm wrote, calling for the company to instead seek a new strategic home for CooperSurgical.
Browning West also put forward four names it says should be added to the board as soon as possible, including: Walt Rosebrough, former CEO of Steris; Joe Papa, CEO of Emergent BioSolutions and former chief of both Bausch Health and Bausch + Lomb; Andy Pawson, former head of Alcon’s global vision care franchise; and Faraz Athar, a partner at Browning West.
The two Coopers together reported $1.06 billion in sales during the company's most recent quarterly earnings report back in August, with its eye care business representing about two-thirds of the combined total. That amounted to a 3% year-over-year gain for the third quarter of its fiscal year—with increases of 2% and 4% for CooperVision and CooperSurgical, respectively, when accounting for changes in international currencies.
The companies also lowered their financial guidance for fiscal 2025—nudging revenue down to a range of $4.08 billion to $4.10 billion, compared to the previous quarter’s estimate of $4.11 billion to $4.15 billion. The new forecast calls for an organic growth rate of 4.25% at the midpoint versus 5.5% previously.
The Cooper Companies' stock price has dropped about 21% year-to-date to about $71.60.
Fourth-quarter and full-year earnings reports are scheduled for December 4.