Q2 2024 Alcon Inc Earnings Call
Greetings and welcome to the Alcon second quarter 2024 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Greetings, and welcome to the Alcon Second Quarter 2024 Earnings Call.
Greetings and welcome to the Alcon second quarter 2024 earnings call.
At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
At this time, all participants are in a listen-only mode.
A question-and-answer session will follow the formal presentation.
If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Thank you for your participation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
As a reminder, this conference is being recorded.
A reminder, this conference is being recorded.
Dan Cravens: I would now like to turn the call over to your host, Mr. Dan Cravens, Vice President Investor Relations for Alcon.
Dan Cravens: I would now like to turn the call over to your host, Mr. Dan Cravens, Vice President, Investment Relations for Alcon.
Dan Cravens: I'd now like to turn the call over to your host Mr. Dan Cravens, Vice President Investor Relations for Alcon.
Dan Cravens: Thank you.
Dan Cravens: Thank you.
Speaker Change: Thank you you may begin.
Dan Cravens: Welcome to Alcon second quarter 2024 earnings conference call today, we issued a press release and interim financial report. We also posted a supplemental slide presentation on our website to enhance today's call you can find all these documents in the Investor Relations section of our website at Investor thought out.
Dan Cravens: Welcome to Alcon's second quarter 2024 earnings conference.
Dan Cravens: Today we issued a press release and interim financial, We also posted a supplemental slide presentation on our website to enhance today's call. You can find all these documents in the Investor Relations section of our website at investor.alcon.com.
Speaker Change: Cotton dotcom.
Speaker Change: Joining me on today's call are David Endicott, our Chief Executive Officer, and Tim Stonesifer, our Chief Financial Officer.
Speaker Change: Joining me on today's call are David Endicott, Our Chief Executive Officer, and Tim Stonesifer, Our Chief Financial Officer, Our press release presentation and discussion will include forward looking statements. We expressly disclaim any obligation to update forward looking statements as a result of new information or future developments, except as required.
Speaker Change: Our press release, presentation, and discussion will include forward-looking statements, We expressly disclaim any obligation to update forward-looking statements as a result of new information or future developments, except as required by law.
Speaker Change: By law.
Speaker Change: Our actual results may differ materially from those expressed or implied in our forward looking statements and as such you should not place undue reliance on any forward looking statements.
Speaker Change: Our actual results may differ materially from those expressed or implied in our forward-looking statements, and as such, you should not place undue reliance on any forward-looking statement. 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 Exchange Commission and available on their website at sec.gov.
Speaker Change: 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 Exchange Commission and available on their website at SEC Gov.
Speaker Change: 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 public filing.
Speaker Change: Non ifr S financial measures used by the company, maybe calculated differently from and may not be comparable to similar measures used at other company. These non ifr S met financial measures should be considered along with but not as alternatives to the operating performance measures as prescribed per I F. R. S.
David Endicott: Please see a reconciliation between our non I FRS measures with directly comparable measures presented in accordance with I F. R. S and our public filings for discussion purposes. Our comments on growth are expressed in constant currency in a moment David will begin by recapping highlights from the second quarter. After his remarks Tim.
David Endicott: For discussion purposes, our comments on growth are expressed in constant currency.
David Endicott: In a moment, David will begin by recapping highlights from the second quarter.
David Endicott: We'll discuss our performance and outlook for the remainder of 2024, then David will wrap up and we will open the call for Q&A with that I'd now like to turn the call over to our CEO David Endicott.
David Endicott: You may begin.
David Endicott: After his remarks, Tim will discuss our performance and outlook for the remainder of 2024.
David Endicott: Thanks, Dan and thank you all for joining today's call.
David Endicott: Then David will wrap up and we will open the call for Q&A.
David Endicott: Welcome to Alcon second quarter 2024 earnings conference call.
David Endicott: Today, we issued a press release and interim financial report.
David Endicott: With that, I'd now like to turn the call over to our CEO, David Endicott.
David Endicott: I'm pleased to report another solid quarter, we grew sales by 6% to $2 $5 billion. We grew core diluted earnings by 15% to 74 cents per share.
David Endicott: Thanks, Dan, and thank you all for joining today's call.
David Endicott: We also posted a supplemental slide presentation on our website to enhance today's call.
David Endicott: You can find all these documents in the investor relations section of our website at investor.alcon.com.
David Endicott: Please report another solid quarter. We grew sales by 6% to $2.5 billion, would record diluted earnings by 15% to $0.74 per share. We delivered a core operating margin of 19.8%.
David Endicott: Joining me on today's call are David Endicott, our Chief Executive Officer, and Tim Stonecipher, our Chief Financial Officer.
We delivered a core operating margin of 19, 8%.
David Endicott: These results are a testament to the durability of our end market, geographically balanced.
David Endicott: Our press release, presentation, and discussion will include forward looking statements.
David Endicott: These results are a testament to the durability of our end markets the success and breath of our innovative portfolio of products and our geographically balanced footprint.
David Endicott: We expressly disclaim any 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, you 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 Exchange Commission and available on their website at sec.gov.
David Endicott: 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 public filings.
David Endicott: For discussion purposes, our comments on growth are expressed in constant currency.
David Endicott: In a moment, David will begin by recapping highlights from the second quarter.
David Endicott: During the quarter, we continued our focus on preparing for product launches that will position us well for future growth and we achieved some significant regulatory and clinical milestones towards these goals.
David Endicott: During the quarter, we continued our focus on preparing for product launches that will position us well for future growth, and we achieved some significant regulatory and clinical milestones towards, We'll start with surgical, where we recently received clearance from the U.S. Food and Drug Administration for our next generation Unity FACO platform, which includes the combined VITRET cataract device and the stand-alone cataract device.
Speaker Change: I'll start with surgical where we recently received clearance from the U S food and drug administration for our next generation Unity FICO platform, which includes the combined cataract device and the Standalone cataract device.
Speaker Change: As I've said on previous calls unity is designed to create near physiological conditions during surgery.
Speaker Change: As I've said on previous calls, Unity is designed to create near-physiological conditions during surgery. This should allow Unity to drive significant efficiencies over current systems in the market, including our own Centurion and Constellation.
Speaker Change: This should allow us to drive significant efficiencies over current systems in the market, including our own Centurion and sat constellation devices.
Speaker Change: By some estimates there'll be 31 million cataract surgeries in 2024 would that number rising to $37 million by 2029.
Speaker Change: By some estimates, there'll be 31 million cataract surgeries in 2024, with that number rising to 37 million by 2029.
Speaker Change: Given these numbers, case efficiency is going to be crucial to allow surgeons to keep up with demand. If Unity can add even one additional surgery per day, that would be a meaningful improvement and an important value creator for surgeons.
Given these numbers case efficiency is going to be crucial to allow surgeons to keep up with demand.
Speaker Change: Unity can add even one additional surgery per day that would be a meaningful improvement and an important value creator for surgeons and payors.
Speaker Change: Additionally, Unity brings first-to-market technologies and consumables that are designed to deliver meaningful benefits for the surgeon, staff, and patient.
Speaker Change: Additionally, unity brings first to market technologies and consumables that are designed to deliver meaningful benefits for the surgeon staff and patients.
Greetings and welcome to the Alcon, 2nd quarter, 2024 earnings call.
Speaker Change: These include FACO that is twice as fast as Centurion, as well as cut speeds that are 50% faster on VITRAT than Constellation.
Speaker Change: These include fake or that is twice as fast as <unk> as well as cut speeds that are 50% faster than <unk> and constellation glue.
Speaker Change: At this time, all participants are in a listen only mode.
Speaker Change: Globally, there's approximately 28,000 Centurion and Constellation devices in the market that we will target for upgrading over the next decade.
Speaker Change: Globally, there's approximately 28000 centurion and constellation devices in the market that we will target for upgrading over the next decade.
Speaker Change: We've begun user experience testing unity in the U S with select doctors and over the coming months. We will continue this work in order to capture real world data and feedback ahead of a broader commercial launch during the second quarter of 2025.
Speaker Change: We've begun user experience testing Unity in the U.S. with select doctors, and over the coming months, we'll continue this work in order to capture real-world data and feedback ahead of a broader commercial launch during the second quarter.
Speaker Change: A question and answer session will follow the formal presentation.
Before I moved to Implantables I'm pleased to announce that we recently closed our acquisition with Belkin with this transaction, we plan to accelerate the global expansion of direct selective laser trabeculoplasty.
Speaker Change: Before I move to implantables, I'm pleased to announce that we recently closed our acquisition with Belk.
Speaker Change: After his remarks, Tim will discuss our performance and outlook for the remainder of 2024.
Speaker Change: If anyone should require appropriate assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: Then David will wrap up, and we will open the call for Q&A.
Speaker Change: With this transaction, we plan to accelerate the global expansion of direct selective laser trabecula. We see an emerging consensus among leaders in glaucoma that SLT is an effective first-line treatment to reduce intraocular pressure. It also reduces reliance on eyedrops, mitigates the cost of medication.
Speaker Change: With that, I'd now like to turn the call over to our CEO, David Endicott.
Speaker Change: Thanks, Dan, and thank you all for joining today's call.
Speaker Change: I'm pleased to report another solid quarter. We grew sales by 6% to $2.5 billion. We grew core diluted earnings by 15% to $0.74 per share. We delivered a core operating margin of 19.8%. These results are a testament to the durability of our end markets, the success and breadth of our innovative portfolio of products, and our geographically balanced footprint.
Speaker Change: We see an emerging consensus among leaders in glaucoma that S. L. T isn't effective first line treatment to reduce intraocular pressure.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: It also reduces reliance on eyedrops mitigates the cost of medication and improves patient throughput.
Speaker Change: Cruz patients.
Speaker Change: This acquisition broadens, our existing glaucoma portfolio, which also includes eye drops and the hydro microstat.
Speaker Change: This acquisition broadens our existing glaucoma portfolio, which also includes eye drops and the hydrous monoclonal acid.
Speaker Change: Now I'll discuss Implantables, where I continue to be extremely impressed with our performance in international markets. In particular, we're seeing strong uptake of both Penn optics and devotee in many regions around the globe.
Speaker Change: Now I'll discuss implantables, where I continue to be extremely impressed with our performance in international... In particular, we're seeing strong uptake of both Panoptix and Vividi in many regions around the globe.
Speaker Change: During the quarter, we continued our focus on preparing for product launches that will position us well for future growth, and we achieved some significant regulatory and clinical milestones towards these goals. I'll start with surgical, where we recently received clearance from the U.S. Food and Drug Administration for our next generation Unity FACO platform, which includes the combined VITRET cataract device and the standalone cataract device.
Speaker Change: As I've said on previous calls, Unity is designed to create near-physiological conditions during, surgery. This should allow Unity to drive significant efficiencies over current systems in the market, including our own Centurion and Constellation devices.
Speaker Change: By some estimates, there'll be 31 million cataract surgeries in 2024, with that number, rising to 37 million by 2029.
Speaker Change: Given these numbers, case efficiency is going to be crucial to allow surgeons to keep up, with demand. If Unity can add even one additional surgery per day, that would be a meaningful improvement, and an important value creator for surgeons and payers.
Speaker Change: During the second quarter, we also saw inventory build related to China VBP. As we have articulated in the past, we continue to expect this to be a gradual ramp implemented province by province.
Speaker Change: During the second quarter. We also saw inventory build related to China V. BP as we have articulated in the past we continue to expect this to be a gradual ramp implemented province by province.
Speaker Change: In the U.S., we continue to collect surgeon experience and patient outcomes with our next generation.
Speaker Change: In the U S. We continue to collect surgeon experience and patient outcomes with our next generation Pan optics, we expect to make a decision on launch timing in the coming months.
Speaker Change: We expect to make a decision on launch timing in the coming, Now I'll turn to contact lenses where our innovation continues to win in the market.
Speaker Change: Now I'll turn to contact lenses, where our innovation continues to win in the market.
Speaker Change: And daily lenses, we saw another quarter of share gains across the category driven by our product innovation, including the precision one family and the dailies total one for astigmatism.
Speaker Change: In Daily Lenses, we saw another quarter of share gains across the category driven by our product innovation, including the Precision One family and the Daly's Total One for astigmatism. Precision One continues to be an important growth driver for us, and even after more than four years in the market, the Precision One family grew approximately 30% in the second quarter.
Speaker Change: Precision one continues to be an important growth driver for us and even after more than four years in the market. The precision one family grew approximately 30% in the second quarter.
Speaker Change: This is a testament to how successful contract-lens innovation drives long-term, durable business.
Speaker Change: This is a testament to how successful contract lens innovation drives long term durable growth.
Speaker Change: Now I'll discuss reusable lenses, where the category remains strategically important as it drives more than half of the new fad.
Speaker Change: Now I'll discuss reusable lenses, where the category remains strategically important as it drives more than half of the new fits.
Speaker Change: Our flagship reusable lens is Total 30, which continues to gain traction in markets around the world.
Speaker Change: Our flagship reusable lenses totaled 30, which continues to gain traction in markets around the world. So.
Speaker Change: The first and only reusable lens to leverage water gradient technology. Additionally, our proprietary Seligent technology creates a protective layer that mimics the eye's natural surface in order to help resist deposits and bacteria for a clean, comfortable, The total 30 family currently includes sphere, toric, and multifocal modality.
Speaker Change: So first it only reusable lens to leverage water gradient technology. Additionally, our proprietary <unk> technology creates a protective layer that mimics the eyes natural surface in order to help resist deposits and bacteria for a clean comfortable lens.
Speaker Change: Additionally, Unity brings first-to-market technologies and consumables that are designed, to deliver meaningful benefits for the surgeon, staff, and patients.
Speaker Change: These include FACO that is twice as fast as Centurion, as well as cut speeds that are, 50 percent faster on VITREP than Constellation.
Speaker Change: Globally, there's approximately 28,000 Centurion and Constellation devices in the market that, we will target for upgrading over the next decade.
Speaker Change: I would now like to turn the call over to your host, Mr. Dan Cravens, Vice President and Investor Relations for Alcon.
Speaker Change: Thank you.
Speaker Change: The total 30 family currently includes sphere, toric and multifocal modalities I continue to be especially pleased by the uptake of total 30 multifocal.
Dan Cravens: You may begin.
Dan Cravens: Welcome to Alcon, 2nd quarter, 2024 earnings conference call.
Speaker Change: I continue to be especially pleased by the uptake of Total 30 Multifocal.
Speaker Change: Today, we issue to press release an interim financial report.
Speaker Change: Multifocals are an important category as where a dropout steps up meaningfully beyond the age of 40.
Speaker Change: Multifocal is an important category is where dropout steps up meaningfully beyond the age of 45.
Speaker Change: We also posted a supplemental slide presentation on our website to enhance today's call.
Speaker Change: You can find all these documents in the Investor Relations section of our website at investor.alcon.com.
Speaker Change: For patients totaled 30, multifocal leverages, our precision profile lens design, which delivers a smooth progress with power gradients for clear uninterrupted vision and works with the eyes natural people Larry function.
Speaker Change: Patients, Total 30 Multifocal leverages our Precision Profile Lend, which delivers a smooth progress of power gradients for clear, uninterrupted vision and works with the eye's natural pupillary function. And for ECPs, this technology delivers an excellent fit success rate, reducing chair time and improving...
Speaker Change: Joining me on today's call, David Endicott, our chief executive officer and Tim Stonecipher, our chief financial officer.
Speaker Change: And for Ecp's. This technology delivers an excellent fit success rate, reducing chair time and improving patient flow.
Speaker Change: Our press release presentation and discussion will include forward-looking statements.
Speaker Change: In addition, we will further expand our reusable portfolio with the upcoming launch of Precision 7.
Speaker Change: In addition, we will further expand our reusable portfolio with the upcoming launch of precision seven.
Speaker Change: We expressly display any obligation to update forward-looking statements as a result of new information or future developments, except as required by law.
Speaker Change: Preceding seven is a new contact lens, specifically designed for one week replacement schedule, it's based on a unique proprietary technology.
Speaker Change: Precision 7 is a new contact lens specifically designed for a one-week replacement schedule that's based on a unique proprietary technology.
Speaker Change: Our actual results may differ materially from those expressed or implied in our forward-looking statements.
Speaker Change: In assets, you 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 20F, earnings press release and interim financial report, which are all on file with the Securities Exchange Commission and available on their website at SEC.gov.
Speaker Change: We expect Precision7 to help drive continued share gains in the reusable category where we have historically been under, As a reminder, one point of share gain in the global reusables category corresponds to approximately $40 million of revenue.
Speaker Change: We expect precision Assembly helped drive continued share gains in the reusable category, where we have historically been under indexed.
Speaker Change: As a reminder, one point of share gain in the global reusable category corresponds to approximately $40 million of revenue for outcome.
Speaker Change: We're working with a handful of eye care professionals in the U.S. who have started fitting Precision7, and early feedback... We will continue to collect this feedback with select customers through 2024, ahead of a broader commercial.
Speaker Change: We're working with a handful of eyecare professionals in the U S who have started fitting precision seven and early feedback has been excellent.
Speaker Change: We've begun user experience testing Unity in the U.S. with select doctors, and over, the coming months, we'll continue this work in order to capture real-world data and feedback ahead of a broader commercial launch during the second quarter of 2025.
Speaker Change: We will continue to collect the feedback with select customers through 2024 ahead of a broader commercial launch in 2025.
Speaker Change: Before I move to implantables, I'm pleased to announce that we recently closed our acquisition, with Belkin.
Speaker Change: Before I discuss ocular health I want to briefly comment on the inventory provisions we referenced in our press release.
Speaker Change: Before I discuss ocular health, I want to briefly comment on the inventory provisions we referenced in our, In the second quarter, we booked an inventory provision related to a quality issue with a raw material supplied by a third party. This raw material was used in the production of select contact lenses in a single manufacturing, We've initiated a limited voluntary recall with the appropriate health authorities. To date, we've received no reports of serious...
Speaker Change: In the second quarter, we booked an inventory provision related to a quality issue with the raw material supplied by a third party.
This raw material was used in the production of select contact lenses in a single manufacturing site.
We've initiated a limited voluntary recall with the appropriate health authorities and to date, we have received no reports of serious adverse events.
Speaker Change: And moving to ocular health, our over-the-counter portfolio of eye drops continues to perform exceptionally well. I'm particularly pleased with Sustain where we had our fourth consecutive quarter of double-digit growth driven by our multi-dose preservative-free formulation.
Speaker Change: And moving to ocular health our over the counter portfolio of Eyedrops continues to perform exceptionally well.
Speaker Change: I'm, particularly pleased with sustained where we had our fourth consecutive quarter of double digit growth driven by our multi dose preservative free formulations.
Speaker Change: In the coming months, we're going to refresh and simplify Sustane's brand around these three products, Sustane Ultra.
Speaker Change: In the coming months, we're going to refresh and simplify sustained brand around these three products sustained ultra sustained hydration and sustained complete.
Speaker Change: Shane Hydration.
Speaker Change: Mathias Warnecke.
Speaker Change: Thank you very much.
Speaker Change: In order to better reach the appropriate customers for each formula.
Speaker Change: In order to better reach the appropriate customers for each formulation.
Speaker Change: With this transaction, we plan to accelerate the global expansion of direct, selective, laser trabeculoplasty. We see an emerging consensus among leaders in glaucoma that SLP is an effective, first-line, treatment to reduce intraocular pressure. It also reduces reliance on eye drops, mitigates the cost of medication, and improves patient, throughput.
Speaker Change: And finally, in our pharmaceutical portfolio, total prescription growth for Roquitan in the second quarter was in the mid-teens, well ahead of the broader glycolysis.
Speaker Change: This acquisition broadens our existing glaucoma portfolio, which also includes eye drops and, the hydrous microstem.
Speaker Change: And finally in our pharmaceutical portfolio total prescription growth for Rockwell town in the second quarter was in the mid teens well ahead of the broader glaucoma market.
Speaker Change: Lastly, I'm pleased to confirm that we submitted the new drug application for AR15512 to the FDA during the second quarter. In addition, we received our NDA acceptance and PDUFA date.
Speaker Change: Lastly, I'm pleased to confirm that we submitted the new drug application for a 15512 to the FDA during the second quarter. In addition, we received our NDA acceptance in Paducah date, which is May 32025.
Speaker Change: May 30, 2020.
Speaker Change: Now I'll discuss implantables, where I continue to be extremely impressed with our performance, in international markets. In particular, we're seeing strong uptake of both Panoptix and Vividi in many regions, around the globe.
Speaker Change: Next I'll briefly discuss market dynamics for the second quarter.
Speaker Change: Next, I'll briefly discuss market dynamics for the second...
Speaker Change: Cataract, we estimate the global procedures were up approximately low single digits. Additionally, global hei well penetration was up approximately 190 basis points year over year, mainly driven by international markets.
Speaker Change: The Cataract, we estimate the global procedures were up approximately low sigle digits.
Speaker Change: Additionally, global ATI well penetration was up approximately 190 basis points year over year mainly driven by international, In contact lenses, we estimate that the retail market was up approximately mid-single-digit.
Speaker Change: In contact lenses, we estimate that the retail market was up approximately mid single digits. This growth was driven by pricing and continued steady where trade up.
Speaker Change: This growth was driven by pricing and continued steady where...
Speaker Change: Now I'll briefly comment on our eyedrop strategy.
Speaker Change: Now I'll briefly comment on our eye drops strategy in China.
Speaker Change: Earlier this month, we entered into a long-term strategic relationship with OccuMention to commercialize and develop select identities, including sustain... AR 15512, Aki Menchin is an established leader in the local ophthalmic pharmaceutical industry with strong commercial, R&D, and manufacturing capabilities.
Speaker Change: Earlier this month, we entered into a long term strategic relationship with Aki mentioned to commercialize and develop select eye drops in this market, including sustained ultra and <unk> among others.
Mark You: Mark You mentioned is an established leader in the local ophthalmic pharmaceutical industry with strong commercial R&D and manufacturing capabilities.
Mark You: We believe this transaction will maximize the long-term potential opportunity in China.
Mark You: We believe this transaction will maximize the long term potential opportunity in China, we expect the transaction to close later this year in.
Mark You: We expect the transaction to close later this year.
Mark You: Surgical, and Contact Lenses.
Mark You: In surgical in contact lenses, we remain committed to our direct presence in China and we're excited to grow these businesses in this important market.
Mark You: We remain committed to our direct presence in China and we're excited to grow these businesses in this important, With that, I'll pass it to Tim, who will take you through our financial results and provide more color.
Mark You: With that I'll pass it to Tim who will take you through our financial results and provide more color on our outlook.
Tim Stonesifer: Thanks, David.
Tim Stonesifer: During the second quarter, we also saw inventory build related to China VBP. As we have articulated in the past, we continue to expect this to be a gradual ramp, implemented, province by province.
Tim Stonesifer: Thanks, David We're pleased to report second quarter sales of $2 5 billion.
Tim Stonesifer: Up 6% versus prior year.
Tim Stonesifer: We're pleased to report second quarter sales of $2.5 billion, up 6% versus prior year. This growth is primarily driven by strength in our innovative contact lens portfolio and implantable. Our second quarter U.S. dollar sales growth included approximately 300 basis points of pressure from foreign exchange.
Tim Stonesifer: This growth was primarily driven by strength in our innovative contact lens portfolio in implantables.
Speaker Change: Our second quarter U S. Dollar sales growth included approximately 300 basis points of pressure from foreign exchange.
Speaker Change: In our surgical franchise, revenue was up 6% year-over-year to $1.4 billion.
Speaker Change: In our surgical franchise revenue was up 6% year over year to $1 4 billion.
And <unk> sales were $464 million in the quarter up 9% year over year, mainly driven by our advanced technology, intraocular lenses, including devotee Pan optics, and our mono focal talks and international markets.
Speaker Change: And plannable sales were $464 million in the quarter, up 9% year-over-year, mainly driven by our advanced technology intraocular lenses, including Vividi, Panoptix, and our monofocal Torx in international markets.
Speaker Change: In the U.S., we continue to collect surgeon experience and patient outcomes with our next, generation, Panoptix.
Speaker Change: We expect to make a decision on launch timing in the coming months.
Speaker Change: In consumables, our second quarter sales were up 5% to $736 million, driven by Cataract and VitRet consumables, particularly in international markets, as well as price. And equipment sales of $223 million were down 1% year over year, in line with our expectations.
Speaker Change: And consumables are second quarter sales were up 5% to $736 million, driven by cataract and <unk> consumables, particularly in international markets as well as price and.
Speaker Change: In equipment sales of $223 million were down 1% year over year in line with our expectations. We continue to expect equipment sales to be broadly in line with last year ahead of the commercial launch of unity Vcs.
Speaker Change: We continue to expect equipment sales to be broadly in line with last year ahead of the commercial launch of Unity VCS.
Speaker Change: Turning division second quarter sales of $1 $1 billion were up 6%.
Speaker Change: Turning to Vision Care, second quarter sales of $1.1 billion were up 6%. Contact line sales were up 9% to $636 million in the quarter.
Speaker Change: Now I'll turn to contact lenses, where our innovation continues to win in the market. In daily lenses, we saw another quarter of share gains across the category, driven by, our product innovation, including the Precision One family and the Daily's Total One for astigmatism. Precision One continues to be an important growth driver for us, and even after more, than four years in the market, the Precision One family grew approximately 30% in the second quarter.
Speaker Change: Contact lens sales were up 9% to $636 million in the quarter.
Speaker Change: Our innovation, including TORC and multifocal modalities, continues to win in the market.
Speaker Change: This is a testament to how successful contract lens innovation drives long-term, durable, growth.
Our innovation, including Toric and multifocal modalities continues to win in the market.
Speaker Change: Now I'll discuss reusable lenses, where the category remains strategically important as, it drives more than half of the new fits. Our flagship reusable lens is Total 30, which continues to gain traction in markets around, the world.
Speaker Change: It's the first and only reusable lens to leverage water gradient technology.
Speaker Change: Additionally, our proprietary Seligent technology creates a protective layer that mimics the, eye's natural surface in order to help resist deposits and bacteria for a clean, comfortable lens.
Speaker Change: The Total 30 family currently includes sphere, toric, and multifocal modalities.
Speaker Change: I continue to be especially pleased by the uptake of Total 30 multifocal.
Speaker Change: Additionally, we saw strong contribution from Price in the quarter.
Speaker Change: Multifocals are an important category as where a dropout steps up meaningfully beyond the, age of 45.
Speaker Change: Additionally, we saw strong contribution from price in the quarter.
Speaker Change: Inocular Health, second quarter sales of $423 million were up 2% year over year.
Speaker Change: And ocular health second quarter sales of $423 million were up 2% year over year, we saw strong performance in our portfolio of eyedrops, including another strong quarter of sustained.
Speaker Change: 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 and our public fileings.
Speaker Change: We saw strong performance in our portfolio of eyedrops, including another strong quarter of sustained. This was partially offset by four points of headwind from contact lens care, primarily driven by a tough comparison due to the recovery of supply in the second quarter of last year.
Speaker Change: For patients, TOTAL30 Multifocal leverages our precision profile lens design, which delivers, a smooth progress of power gradients for clear, uninterrupted vision and works with the eye's natural pupillary function.
Speaker Change: And for ECPs, this technology delivers an excellent fit success rate, reducing chair, time and improving patient flow.
Speaker Change: In addition, we will further expand our reusable portfolio with the upcoming launch of Precision7. Precision7 is a new contact lens specifically designed for a one-week replacement schedule, that's based on a unique proprietary technology. We expect Precision7 to help drive continued share gains in the reusable category where, we have historically been under-indexed. As a reminder, one point of share gain in the global reusables category corresponds, to approximately $40 million of revenue for Alcon. We're working with a handful of eye care professionals in the U.S. who have started fitting Precision7, and early feedback has been excellent.
Speaker Change: We will continue to collect this feedback with select customers through 2024 ahead of, a broader commercial launch in 2025.
Speaker Change: This was partially offset by four points of headwind from contact lens care, primarily driven by a tough comparison due to the recovery of supply in the second quarter of last year.
Speaker Change: Now moving down the income statement.
Speaker Change: Now moving down the income statement.
Speaker Change: Second quarter core gross margin was 62 percent down year over year. This was due to two factors. First, as David mentioned, the second quarter included significantly higher inventory provisions that resulted in a negative impact of $30 million, or 1.2 percentage points to margin.
Speaker Change: Second quarter core gross margin was 62% down year over year. This is due to two factors first as David mentioned, the second quarter included significantly higher inventory provisions that resulted in a negative impact of $30 million or one two percentage points to margin.
Speaker Change: Before I discuss ocular health, I want to briefly comment on the inventory provisions, we referenced in our press release. In the second quarter, we booked an inventory provision related to a quality issue with, a raw material supplied by a third party. This raw material was used in the production of select contact lenses in a single manufacturing, site. We've initiated a limited voluntary recall with the appropriate health authorities, and, to date we've received no reports of serious adverse events.
Speaker Change: And moving to ocular health, our over-the-counter portfolio of eye drops continues to perform, exceptionally well.
David Endicott: Second, as we communicated previously, we saw the impact of higher cost inventory flowing through the income statement, particularly in the surgical franchise.
David Endicott: Second as we communicated previously we saw the impact of higher cost inventory flowing through the income statement, particularly in the surgical franchise.
David Endicott: Given the unusual items we saw this quarter, we now expect full year core gross margin to be slightly below 2023. Core operating margin was 19.8%, up 70 basis points year over year, driven by operating leverage from higher sales. This is partially offset by the factors I mentioned earlier, including 120 basis points of pressure from inventory provisions.
Given the unusual items, we saw this quarter, we now expect full year core gross margin to be slightly below 2023.
David Endicott: Core operating margin was 19, 8% up 70 basis points year over year, driven by operating leverage from higher sales. This was partially offset by the factors I mentioned earlier, including 120 basis points of pressure from inventory provisions.
David Endicott: I'm particularly pleased with Sustain where we had our fourth consecutive quarter of double-digit, growth driven by our multi-dose preservative-free formulations.
David Endicott: In the coming months, we're going to refresh and simplify Sustain's brand around these, three products, Sustain Ultra, Sustain Hydration, and Sustain Complete, in order to better reach the appropriate customers for each formulation.
David Endicott: Second quarter interest expense was $50 million, broadly in line with last year. Other financial income and expense was a net benefit of $12 million compared to a net expense of $9 million in the second quarter of last year. This improvement was primarily driven by higher interest income and lower foreign currency losses.
David Endicott: Second quarter interest expense was $50 million broadly in line with last year.
David Endicott: Other financial income and expense was a net benefit of $12 million compared to a net expense of $9 million in the second quarter of last year.
David Endicott: This improvement was primarily driven by higher interest income and lower foreign currency losses.
David Endicott: The second quarter average core tax rate was 19%, broadly in line with last year. Looking forward, we expect the tax rate in the second half of the year to be lower than the first half due to a number of discrete benefits we expect to materialize in the second half of the year. Core diluted earnings were $0.74 per share in the quarter, up 15% from last year.
David Endicott: The second quarter average core tax rate was 19% broadly in line with last year.
David Endicott: Looking forward, we expect the tax rate in the second half of the year to be lower than the first half due to a number of discrete benefits, we expect to materialize in the second half of the year.
David Endicott: Core diluted earnings were <unk> 74 per share in the quarter up 15% from last year.
David Endicott: And finally, in our pharmaceutical portfolio, total prescription growth for Roclatan in, the second quarter was in the mid-teens well ahead of the broader glaucoma market.
David Endicott: Now before I touch on our outlook for 2024, I'll discuss a few cash flow and other related items. On a year-to-date basis, free cash flow was $667 million, compared to $189 million in 2023. This improvement was mainly driven from higher cash from operations.
David Endicott: Now before I touch on our outlook for 2024, I'll discuss a few cash flow and other related items.
David Endicott: Lastly, I'm pleased to confirm that we submitted the new drug application for AR15512 to the, FDA during the second quarter.
David Endicott: In addition, we received our NDA acceptance and PDUFA date, which is May 30th, 2025.
David Endicott: On a year to date basis free cash flow was $667 million compared to $189 million in 2023.
This improvement was mainly driven from higher cash from operations.
David Endicott: For the full year, we continue to expect a meaningful step up in free cash flow versus 2023.
David Endicott: For the full year, we continue to expect a meaningful step up in free cash flow versus 2023.
David Endicott: Next, I'll briefly discuss market dynamics for the second quarter.
David Endicott: In Cataract, we estimate the global procedures were up approximately low signal digits.
David Endicott: Now moving to 2024 guidance. Our current outlook assumes that markets will grow in line with historical averages of mid-single digits and exchange rates as of the end of July hold through year-end.
David Endicott: Now moving to 2024 guidance, our current outlook assumes that markets will grow in line with historical averages of mid single digits and exchange rates as of the end of July hold through year end.
David Endicott: Additionally, global ATI well penetration was up approximately 190 basis points year, over year, mainly driven by international markets.
David Endicott: In Contact Lenses, we estimate that the retail market was up approximately mid-single digits. This growth was driven by pricing and continued steady trade-up.
David Endicott: Now I'll briefly comment on our eyedrop strategy in China. Earlier this month, we entered into a long-term strategic relationship with OccuMention to, commercialize and develop select eyedrops in this market, including SustainUltra and, AR15512, among others. OccuMention is an established leader in the local ophthalmic pharmaceutical industry with, strong commercial, R&D, and manufacturing capabilities.
David Endicott: Starting with sales we are maintaining our full year revenue guidance of $9 90 to $10 1 billion and our constant currency sales growth rate guidance of 7% to 9%.
David Endicott: Starting with sales, we are maintaining our full-year revenue guidance of $9.9 to $10.1 billion and our constant currency sales growth rate guidance of 7 to 9 percent. If FX rates at the end of July persist through the remainder of the year, we will likely trend toward the low end of our top line guidance.
David Endicott: We believe this transaction will maximize the long-term potential opportunity in China, and we expect the transaction to close later this year.
David Endicott: In surgical and in contact lenses, we remain committed to our direct presence in China, and we're excited to grow these businesses in this important market.
Speaker Change: For discussion purposes, our comments on growth are expressed in constant currency.
David Endicott: If FX rates at the end of July persist through the remainder of the year, we will likely trend towards the low end of our topline guidance range.
Speaker Change: In a moment, David will begin by recapping highlights from the second quarter.
David Endicott: Moving to operating expenses, we continue to expect full year core R&D expense to be toward the high end of the range of 7-9% of sales.
David Endicott: Moving to operating expenses, we continue to expect full year core R&D expense to be toward the high end of the range of 7% to 9% of sales.
Speaker Change: After his remarks, Tim will discuss our performance and outlook for the remainder of 2024.
David Endicott: Turning to profitability, although we will see some additional pressure to core operating margin given the unusual inventory provision, we expect to continue to invest behind new product launches and are maintaining our full year core operating margin outlook of 20.5 to 21.5%.
David Endicott: Turning to profitability, although we will see some additional pressure to core operating margin given the unusual inventory provision we expect to continue to invest behind new product launches and are maintaining our full year core operating margin outlook of $25 to 21, 5%.
Speaker Change: Then David will wrap up and we will open the call for Q&A.
David Endicott: Moving down the income statement, we now expect interest and other financial expense to be between $160 million to $180 million. This improvement is primarily due to higher interest income as a real a higher cash balance and higher interest rates.
David Endicott: Moving down the income statement, we now expect interest and other financial expense to be between $160 and $180 million.
Speaker Change: With that, I'd now like to turn the call over to our CEO, David and Icaf.
David Endicott: This improvement is primarily due to higher interest income as a result of higher cash balance and higher interest rates.
David Endicott: Thanks, Dan, and thank you all for joining today's call.
David Endicott: We continue to expect our full year core effective tax rate to be approximately $20 billion.
David Endicott: We continue to expect our full year core effective tax rate to be approximately 20%.
David Endicott: Based on all of these factors, we're maintaining our core diluted earnings guidance range of $3 to $3 10 per share, which corresponds to 15% to 18% constant currency growth over 2023.
David Endicott: Based on all these factors, we're maintaining our core diluted earnings guidance range of $3 to $3.10 per share, which corresponds to 15 to 18% constant currency growth over 2023. And given the recent depreciation of the U.S. dollar, we are absorbing approximately 8 cents of FX headwind versus the guidance we issued in February.
David Endicott: I'm pleased to report another solid quarter. We grew sales at by 6% to $2.5 billion. We grew core diluted earnings by 15% to 74 cents per share. We delivered a core operating margin of 19.8%. These results are a testament to the durability of our end markets, the success and breadth of our innovative portfolio of products, and our geographically balanced footprint.
David Endicott: During the quarter, we continued our focus on preparing for product launches that will position us well for future growth and we achieved some significant regulatory and critical milestones towards these goals.
Speaker Change: I'll start with Surgeable, where we recently received clearance from the U.S. Food and Drug Administration for our next-generation Unity FACO platform, which includes the combined VITRET Cataract Device and the standalone Cataract Device.
David Endicott: And given the recent depreciation of the U S. Dollar we are absorbing approximately <unk> <unk> of FX headwind versus the guidance, we issued in February and finally I'd like to thank the entire alcon team for another great quarter with that I'll turn it back to David.
Speaker Change: Davis.
Speaker Change: As I've said, our previous calls, unity is designed to create near physiological conditions during surgery. This should allow unity to drive significant efficiencies over current systems in the market, including our own Centurion and Constellation devices.
David Endicott: And finally, I'd like to thank the entire Alcon team for another great quarter.
David Endicott: With that, I'll turn it back to David.
David Endicott: Thanks, Tim to wrap up we're pleased with the strong results for the second quarter and first half of the year.
David Endicott: Thanks, Tim.
David Endicott: With that, I'll pass it to Tim who will take you through our financial results and provide, more color on our outlook.
David Endicott: Thanks, David.
David Endicott: To wrap up, we're pleased with the strong results for the second quarter and first half of the year.
David Endicott: To thank our team of more than 25000 associates for their hard work and determination.
Speaker Change: I'd like to thank our team of more than 25,000 associates for their hard work and determination.
Speaker Change: We're pleased to report second quarter sales of $2.5 billion, up 6% versus prior year. This growth is primarily driven by strength in our innovative contact lens portfolio, and implantables. Our second quarter U.S. dollar sales growth included approximately 300 basis points of, pressure from foreign exchange.
Speaker Change: And we're specialist company that competes and wins on the basis of our teams deep expertise in eyecare. It's.
Speaker Change: In our surgical franchise, revenue was up 6% year over year to $1.4 billion. Implantable sales were $464 million in the quarter, up 9% year over year, mainly driven, by our advanced technology intraocular lenses, including Vividi, Panoptix, and our monofocal torques in international markets.
Speaker Change: In consumables, our second quarter sales were up 5% to $736 million, driven by Cataract, and Vitret consumables, particularly in international markets, as well as price.
Speaker Change: In equipment, sales of $223 million were down 1% year over year, in line with our expectations. We continue to expect equipment sales to be broadly in line with last year, ahead of the, commercial launch of Unity VCS.
Speaker Change: We're a specialist company that competes and wins on the basis of our team's deep expertise in eye care.
Speaker Change: Xenoguis, Ed McWilliams, Taylor Gillibond, Brett Feldman, Garrett Weston-Williams, Don Taylor-Theodore Levine, Nathannies Sthal, Tom Greene Yokoldsen Steele, Orton Salinszer, Oswald Storme, Alexei Delaranc, Jonathan Crcommun, Peter D遊戲music, Peter Wrac frequency, Ted Stirling, Jacob Simpson Coyle, Cristina Lange as Rosiland Caveney.
Speaker Change: <unk> technologies and its end markets.
Speaker Change: While we still have a lot of work to do, our operating model, our human capital, and our culture are what differentiates Alcon.
Speaker Change: Turning to vision care, second quarter sales of $1.1 billion were up 6%. Contact lens sales were up 9% to $636 million in the quarter.
Speaker Change: While we still have a lot of work to do our operating model, our human capital and our culture are what differentiates outcome.
Speaker Change: Our innovation, including torque and multifocal modalities, continues to win in the market.
Speaker Change: Additionally, we saw strong contribution from price in the quarter.
Speaker Change: For health, second quarter sales of $423 million were up 2% year over year.
Speaker Change: We saw strong performance in our portfolio of eye drops, including another strong quarter, of sustain. This was partially offset by four points of headwind from contact lens care, primarily, driven by a tough comparison due to the recovery of supply in the second quarter of last year.
Speaker Change: Now moving down the income statement, second quarter core gross margin was 62% down year, over year. This was due to two factors. First, as David mentioned, the second quarter included significantly higher inventory provisions, that resulted in a negative impact of $30 million, or 1.2 percentage points to margin. Second, as we communicated previously, we saw the impact of higher cost inventory flowing, through the income statement, particularly in the surgical franchise.
Speaker Change: As we look to the future, we will continue to focus our efforts on delivering world-class innovation to our customers and their patients. Delivering value.
Speaker Change: As we look to the future we will continue to focus our efforts on delivering world class innovation to our customers and their patients and delivering value for our shareholders.
Speaker Change: Given the unusual items we saw this quarter, we now expect full year core gross margin, to be slightly below 2023. Core operating margin was 19.8%, up 70 basis points year over year, driven by operating, leverage from higher sales. This was partially offset by the factors I mentioned earlier, including 120 basis points, of pressure from inventory provisions.
Speaker Change: Second quarter interest expense was $50 million, broadly in line with last year. Other financial income expense was a net benefit of $12 million, compared to a net, expense of $9 million in the second quarter of last year. This improvement was primarily driven by higher interest income and lower foreign currency, losses.
Speaker Change: The second quarter average core tax rate was 19%, broadly in line with last year. Looking forward, we expect the tax rate in the second half of the year to be lower than, the first half due to a number of discrete benefits we expect to materialize in the second half of the year.
Speaker Change: With that, let's open up the line.
Speaker Change: With that let's open up the line for Q&A.
Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Thank you.
Speaker Change: Core diluted earnings were 74 cents per share in the quarter, up 15% from last year.
Speaker Change: <unk> tone will indicate your line is in the question queue you.
Speaker Change: At this time we will be conducting a question and answer session.
Speaker Change: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys to allow for as many questions as possible. We ask that you each keep to one question and one follow up thank you.
Speaker Change: If you'd like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: Our first question comes from the line of Jeff Johnson with Baird. Please proceed with your question.
Jeff Johnson: You may press star two if you'd like to remove your question from the, For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start, To allow for as many questions as possible, we ask that you each keep to one question and one follow-up.
Jeff Johnson: Now, before I touch on our outlook for 2024, I'll discuss a few cash flow and other related, items.
Jeff Johnson: On a year-to-date basis, free cash flow was $667 million compared to $189 million in 2023. This improvement was mainly driven from higher cash from operations.
Jeff Johnson: For the full year, we continue to expect a meaningful step up in free cash flow versus, 2023.
Jeff Johnson: Thank you.
Jeff Johnson: Thank you good morning, guys, David I wanted to ask a question on the contact lens business. The 9% obviously it seems like it's a couple of points probably above market at this point it did come down a little bit versus last quarter, just maybe talk about pricing dynamics in the quarter I think you anniversaried a pretty sizable price increase that you took.
Jeff Johnson: Now, moving to 2024 guidance. Our current outlook assumes that markets will grow in line with historical averages of mid-single, digits and exchange rates as of the end of July hold through year-end.
Jeff Johnson: Starting with sales, we are maintaining our full-year revenue guidance of $9.9 to $10.1, billion and our constant currency sales growth rate guidance of 7% to 9%.
Jeff Johnson: If FX rates at the end of July persist through the remainder of the year, we will likely, trend toward the low end of our top-line guidance range.
Jeff Johnson: Moving to operating expenses, we continue to expect full-year core R&D expense to be, toward the high end of the range of 7% to 9% of sales.
Jeff Johnson: Turning to profitability, although we will see some additional pressure to core operating, margin given the unusual inventory provision, we expect to continue to invest behind new product launches and are maintaining our full-year core operating margin outlook of 20.5 to 21.5%.
Jeff Johnson: Moving down the income statement, we now expect interest and other financial expense to be, between $160 and $180 million.
Jeff Johnson: This improvement is primarily due to higher interest income as a result of higher cash, balance and higher interest rates.
Jeff Johnson: We continue to expect our full-year core effective tax rate to be approximately 20%. Based on all these factors, we are maintaining our core diluted earnings guidance range of, $3 to $3.10 per share, which corresponds to 15% to 18% constant currency growth over 2023. Given the recent depreciation of the U.S. dollar, we are absorbing approximately 8 cents, of FX headwind versus the guidance we issued in February.
Jeff Johnson: And finally, I'd like to thank the entire Alcon team for another great quarter.
Speaker Change: Second quarter of last year, if memory serves correctly, so has pricing come down even though it was still strong in the quarter relative to maybe the last couple of quarters and what are you seeing just on rebate activity. Our analysis of your rebates would suggest that they've been pretty consistent here over the last number of quarters, but there's been some noise out there in the channel about maybe taking some rebate active.
Jeff Johnson: With that, I'll turn it back to David.
Speaker Change: Up here recently with love to get your input there.
Jeff Johnson: Thanks, Tim.
Speaker Change: Yes, Jeff Thanks for the question the market in total was was up 6% retail and we were at nine obviously.
Speaker Change: Our first question comes from the line of Jeff Johnson with Baird.
Speaker Change: To wrap up, we're pleased with the strong results for the second quarter and first half, of the year.
Speaker Change: I'd like to thank our team of more than 25,000 associates for their hard work and determination.
Speaker Change: We're a specialist company that competes and wins on the basis of our team's deep expertise, in iCare, its technologies, and its end markets.
Speaker Change: While we still have a lot of work to do, our operating model, our human capital, and, our culture are what differentiates Alcon.
Speaker Change: As we look to the future, we will continue to focus our efforts on delivering world-class, innovation to our customers and their patients and delivering value.
Speaker Change: Thank you.
Speaker Change: Again, we're coming around its tough comp from last year at 11%. So not surprisingly, we look pretty good relative to that price was a part of it was maybe half of that one.
Speaker Change: At this time, we'll be conducting a question-and-answer session.
Speaker Change: If you'd like, to ask a question, please press star 1 on your telephone keypad.
Speaker Change: The price mix volume for US was really important so again, we're getting trade up to new products from old products, we're getting good motion on.
Speaker Change: By some estimates, there'll be 31 million cataract surgeries in 2024 with that number rising to 37 million by 2029.
Speaker Change: The mix element of this so I think directionally, we felt pretty good about about that particular quarter.
Speaker Change: Given these numbers, case efficiency is going to be crucial to allow surgeons to keep up with demand.
Speaker Change: And I would just say that rebating.
We've been very consistent and I think we continue to be consistent on rebates, which is a part of our promotion mix, but not the major part and we have seen some increase in competitive promotion.
Speaker Change: If unity can add even one additional surgery per day, that would be a meaningful improvement and an important value creator for surgeons and payers.
Speaker Change: Alright fair enough. Thank you and then just a follow up question on your Implantables business.
Speaker Change: Oftentimes you can provide some color on your share of the <unk> market or at least the PCI market.
Speaker Change: Additionally, unity brings first-to-market technologies and consumables that are designed to deliver meaningful benefits for the surgeon, staff, and patients.
Speaker Change: Based on that and just as we think about competitive launches here upcoming from a couple of your competitors I would assume that very high 80% PCI I'll share trend.
Speaker Change: These include FACO that is twice as fast as Centurion, as well as cut speeds that are 50% faster on vit rent than Constellation.
Speaker Change: Trend lower just kind of your outlook for maybe share with MPC Io is we'd probably start to see some sampling here of some of those other products over the next few quarters. Thanks.
Speaker Change: Globally, there's approximately 28,000 Centurion and Constellation devices in the market that we will target for upgrading over the next decade.
Speaker Change: Yes, most of the competitive stuff in the PCI well share element is really pretty consistent with what we've said in the past you know theres going to be a lot of folks coming into the market, but the majority of the action is in <unk> and so I think at this point, we're still holding better than 80 share of the PCI market, but the toric again pretty competitive market and.
Speaker Change: We've begun user experience testing unity in the U.S, with select doctors, and over the coming months, we'll continue to do this work in order to capture real-world data and feedback ahead of a broader commercial launch during the second quarter of 2025.
Speaker Change: Before I move to the planables, I'm pleased to announce that we recently closed our acquisition with Belkin.
Speaker Change: With this transaction, we plan to accelerate the global expansion of direct selective laser-tribecular plastic.
Speaker Change: We see continued.
Speaker Change: Erosion, there I think the big thing is the.
Speaker Change: Penetration of Hei wells was very positive this quarter and so both the geographic distribution of what we have which is important to think about because we had very good quarters in Europe and in Japan.
Speaker Change: In China, but we had even the U S penetration was up I think $19 two so back to kind of where it's been historically and again on a trend, which we kind of think is really this historical trend, which again I, usually say, it's about 50 basis points a year of improvements so that keeps moving the main discussion really is about penetration.
Speaker Change: Because the share losses, nothing unusual for us pretty much as we've seen it and actually internationally. We gained share. So we're feeling pretty good about where we are in <unk>.
Speaker Change: We see an emerging consensus among leaders in glaucoma that SLP is an effective first-line treatment to reduce interocular pressure. It also reduces reliance on eye drops, mitigates the cost of medication, and improves patient throughput.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: Thank you.
Speaker Change: You may press star 2 if you'd like to remove your question from the queue.
Speaker Change: Thank you. Our next question comes from the line of Graham Doyle with UBS. Please proceed with your question.
Speaker Change: Please proceed with your question.
Speaker Change: This acquisition broadens our existing glaucoma portfolio, which also includes eye drops and the hydrostent.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: To allow for as many questions as possible, we ask that you each keep to one question and one follow-up.
Speaker Change: Now I'll discuss in planables where I continue to be extremely impressed with our performance in international markets.
Graham Doyle: Thank you.
Graham Doyle: Hi, Good morning, guys. Thanks for the question just one it's actually around the comments you made David in the press release in terms of the.
Graham Doyle: The next phase of growth in 2025 and beyond.
Speaker Change: You've been a pretty good year, so far in 2024 on the top line, despite some headwinds, particularly the equipment.
Speaker Change: I know, it's early but if we look at the economics for next year, given the launched and contacts in terms of once weekly the equipment launch <unk> two point I'll try I.
Speaker Change: Would you be comfortable at this stage.
Speaker Change: With the same Donaldson same type of growth at least being supported into 2025.
Just a quick follow up on that as well. Thank you.
Graham Doyle: Thank you.
Graham Doyle: Our first question comes from the line of Jeff Johnson with Baird.
Speaker Change: Yes, I mean, I think the way we're thinking about the world as we have a lot of product flow coming through on an innovation basis and so.
Graham Doyle: Please proceed with your question.
Graham Doyle: Thank you.
I wouldn't want to comment necessarily on growth quite yet give us another quarter to get to a place where we're really staring at next year.
Speaker Change: In particular, we're seeing strong uptake of both panoptics and vividly in many regions around the globe.
Speaker Change: As we finish up this year, we're really thinking about what happens with product flow next year, which we've invested a lot of time and so unity Vcs is a big deal unit ECS Big deal 501, too we should get approved next year precision seven is a big opportunity Penn optics Pro if we get that out next year I think that's a great idea belkin.
Speaker Change: During the second quarter, we also saw inventory build related to China VBP, as we have articulated the past, we continue to expect this to be a gradual ramp implemented province by province.
Speaker Change: As a new product flow for us and we've got another.
I drop in the <unk>.
Speaker Change: Hopper here too so we've got a whole whack of stuff that wed like to invest in that we think grows this market and grows our position quite substantially in the coming years. So this year was a little thin that way you'll notice that.
Speaker Change: In the U.S., we continue to collect surge and experience and patient outcomes with our next-generation panoptics.
Speaker Change: We expect to make a decision on launch timing in the coming months.
Speaker Change: We've made a lot out of what we've got but next year, we get a lot of product flow behind us.
Speaker Change: Now I'll turn to contact lenses where our innovation continues to win in the market. In daily lenses, we saw another quarter of share gains across the category driven by our product innovation, including the precision one family and the daily total one for astigmatism. Precision one continues to be an important growth driver for us, and even after more than four years in the market, the precision one family grew approximately 30% in the second quarter.
Speaker Change: Yes.
Speaker Change: Okay, Great and then maybe just a quick follow up on power vision.
Speaker Change: This is a testament to how successful contract lens innovation drives long-term, durable growth.
Speaker Change: Are you able to share any more information about potential timing of data.
Speaker Change: Now discuss reusable lenses where the category remains strategically important as it drives more than half of the new fits. Our flagship reusable lens is Total30, which continues to gain traction in markets around the world. It's the first and only reusable lens to leverage water gradient technology. Additionally, our proprietary cellulgent technology creates a protective layer that mimics the eyes natural surface in order to help resist deposits and bacteria for a clean, comfortable lens. The Total30 family currently includes sphere, toric, and multifocal modalities.
Speaker Change: I continue to be especially pleased by the uptake of Total30 multifocal.
Speaker Change: Russell.
Speaker Change: Is this data that you have is it blinded or have you had it in house for a while thank you.
Speaker Change: Multi-focals are an important category as where a dropout steps up meaningfully beyond the age of 45.
Speaker Change: Yes, it's still we're still finishing the phase one that fits the first in human trial, we should have that data available to us shortly in the next several months. We will we'll have a look at it and we will obviously come on at once we once we have a full understanding of it.
Speaker Change: For patients, total 30 multi-focal leverages are precision profile lens design, which delivers a smooth progress of power gradients for clear uninterrupted vision and works with the eyes natural pupillary function.
Speaker Change: For ECPs, this technology delivers an excellent fit success rate, reducing chair time and improving patient flow.
Speaker Change: In addition, we will further expand our reusable portfolio with the upcoming launch of Precision 7.
Speaker Change: Awesome. Thanks, a lot guys.
Speaker Change: Thank you. Our next question comes from the line of Veronica do with Java with Citi. Please proceed with your question.
Speaker Change: Precision 7 is a new contact lens specifically designed for a one-week replacement schedule that's based on a unique proprietary technology.
Graham Doyle: Good morning, guys.
Speaker Change: Good morning, guys.
Speaker Change: Hi, guys. Good afternoon, and thank you for taking my question, sorry, I forgot you on mute before I started talking.
Speaker Change: David, I wanted to ask a question on the contact lens business.
That would be the correct two for me. Please the first one is just looking at the full year guide.
Speaker Change: It's mostly organic sales growth, obviously very much trending towards the very bottom of the seven to nine.
Speaker Change: The 9% obviously seems like it's a couple points probably above market at this point. It did come down a little bit versus last quarter.
Speaker Change: Constant currency, just curious David Tim what gives you guys. The confidence that there is scope for an acceleration in the back half of the year or is there a specific.
Speaker Change: Just maybe talk about pricing dynamics in the quarter. I think you anniversaried a pretty sizable price increase that you took middle of second quarter of last year, if memory serves correctly.
Speaker Change: Has pricing come down even though it was still strong in the quarter relative to maybe the last couple quarters?
Speaker Change: Reagent product category that you're focused on.
Speaker Change: What are you seeing just on rebate activity? Our analysis of your rebates would suggest that they've been pretty consistent here over the last number of quarters, but there's been some noise out there in the channel about maybe taking some rebate activity up here recently.
Speaker Change: So if you could talk us through that.
Speaker Change: Your degree of confidence that we're going to end up towards seven versus towards nine.
Speaker Change: David, I wanted to ask a question on the contact lens business.
Speaker Change: That would be my first question, then I have a follow up after that and I'll, let you answer that first.
Speaker Change: We'd love to get your input there.
Ron: The nine percent obviously seems like it's a couple points probably above market at this point.
Hey, Ron how are you doing so.
Ron: Yeah, Jeff.
Ron: So I think the difference between the 7% to nine is really how the markets perform if we get a little bit more market growth or recovery than we have.
Ron: Expected that would bring that number up I think it's also how effect of our pricing actions are how does the pvp during China, we're not quite sure how that's going to roll that might come in better than we have so yeah listen there's still five or six five months left in the year and there are a lot of variables out there, but given what we're seeing right now thats why we were trending towards the low end and that's why we called that out.
Ron: It did come down a little bit versus last quarter. Just maybe talk about pricing dynamics in the quarter. I think you anniversaried a pretty sizable price increase that you took middle of second quarter last year, if memory serves correctly.
Speaker Change: That's great and actually that was a great segue to my second question, which is.
Speaker Change: So has pricing come down even though it was still strong in the quarter relative to maybe the last couple quarters?
Speaker Change: Are you able to break out for us what the contribution from stocking Watson animals from China of Edp and.
Speaker Change: And I guess, what are you seeing on the ground in terms of as you look at July and August how much traction are you seeing so far that BBB flat.
Speaker Change: Yes, we're just starting Veronica I mean, I think it's hard to tell from a distance how.
Speaker Change: And what do you see in just on rebate activity?
Speaker Change: We expect Precision 7 to help drive continued share gains in the reusable category where we have historically been under indexed. As a reminder, one point of share gain in the global reusable category corresponds to approximately 40 million of revenue for Alcon.
Speaker Change: How much was stocking and how much was demand this goes province by province, which is a little bit tricky. So we sell into a variety of distributors, who then supply to hospitals.
I think even if you took out in China, we had a very good growth and we read that as penetration was up because as Youll remember we kind of.
Speaker Change: Focus for a long time on how does penetration move and Thats important globally penetration was up in Europe penetration was up in China. It was up in most of the countries, including the United States. So that helped US overall, so I would say the VIP contribution relatively small to the total.
Speaker Change: That's great. Thank you guys so much.
Thank you. Our next question comes from the line of Ryan Zimmerman with BTG. Please proceed with your question.
Speaker Change: Our analysis of your rebates would suggest that they've been pretty consistent here over the last number of quarters, but there's been some noise out there in the channel about maybe taking some rebate activity up here recently.
Speaker Change: Thanks for the question.
Ryan Zimmerman: Would love to get your input there.
Ryan Zimmerman: Good morning, and thanks for thanks for taking my questions I wanted to ask one on dry eye and one on unity Vcs I'll start with unity Vcs are a little bit actually so just as you're thinking about the upgrade cycle of unity Vcs I mean, how are customers or how are you thinking about approaching if customers are buying say one constellation on one centurion.
Ryan Zimmerman: Yeah, Jeff, thanks for the question.
Ryan Zimmerman: The market in total was up 6% retail and we were at 9%, obviously.
Ryan Zimmerman: You know, the market in total was was up 6% retail, and we were at nine, obviously.
Speaker Change: We're working with a handful of I care professionals in the US who have started fitting Precision 7 and early feedback has been excellent.
Speaker Change: We will continue to collect this feedback with select customers through 2024 ahead of a broader commercial launch in 2025.
Speaker Change: The economics to you guys and.
Speaker Change: And, you know, again, we're coming around as a tough comp from last year at 11%.
Speaker Change: So not surprisingly, you know, we look pretty good.
Speaker Change: As a separate.
Speaker Change: Relative to that price was was a part of it, it was maybe half of that one.
Speaker Change: Follow up to that what's the margin impact from new cassettes on the entity of Acs how should we think about those are contributing as you launched that and then I have a question on dry.
Speaker Change: The price mix volume for us was really important.
Speaker Change: Again, we're coming, around as a tough comp from last year at 11%.
Speaker Change: Not surprisingly, we look pretty good relative to that.
Speaker Change: Yes, well I mean, I think the way to think about.
Speaker Change: Price was a part of it.
Speaker Change: It was maybe half of that one.
Speaker Change: The price mix volume for us was really important.
Speaker Change: Vcs, particularly as we sell.
Speaker Change: Joint machines.
Speaker Change: Again, we're getting trade up to new products from old products.
Speaker Change: We're getting good motion on the mix element of this.
Speaker Change: Combo machine of <unk>.
Speaker Change: And a cataract machine internationally that is a very popular setup, principally because ours are shared amongst the zip and cataract surgeons and so it's particularly efficient setup in the use is obviously more efficient and we expect to kind of make a premium on those so again I would think about it as put the two together.
Speaker Change: Before I discuss ocular health, I want to briefly comment on the inventory provisions we referenced in our press release. In a second quarter, we booked an inventory provision related to a quality issue with a raw material supplied by a third party. This raw material was used in the production of select contact lenses in a single manufacturing site. We've initiated a limited voluntary recall with the appropriate health authorities and to date we've received no reports of serious adverse events.
Speaker Change: Now moving to ocular health, our over-the-counter portfolio of eye drops continues to perform exceptionally well. I'm particularly pleased with sustain where we had our fourth consecutive quarter of double-digit growth driven by our multi-dose preservative free formulations.
Speaker Change: In the coming months, we're going to refresh and simplify sustainable brand around these three products, sustain ultra, sustain hydration and sustain complete in order to better reach the appropriate customers for each formulation.
Speaker Change: The current Asps and think about a premium and that's really where we are with that particular idea because set element is part of the discussion, but I do think there's more to it than that the Pax broadly youre going to get launched with new instrumentation. So things that are that may not seem really important but are to the surgeons like moved.
Speaker Change: Finally, in our pharmaceutical portfolio, total prescription growth for Rockletan in the second quarter was in the mid teens well ahead of the broader Rockoma market.
Speaker Change: From 'twenty three gauge or 25 gauge instruments to 27 gauge instruments. This creates less trauma and then we've got a new entry system that is the trop cars on our on our retina piece I mean, there's a lot of stuff that we're bringing in that will make this procedure safer faster and we think that that really matters a lot. So.
Speaker Change: Lastly, I'm pleased to confirm that we submitted the new drug application for AR-1551-2 to the FDA during the second quarter.
Speaker Change: In addition, we received our NDA acceptance and pedophidate, which is May 30th, 2025.
Speaker Change: Next, I'll briefly discuss market dynamics for the second quarter.
Speaker Change: In Cataract, we estimate the global procedures were up approximately low-cycle digits.
Speaker Change: Directionally, we felt pretty good, about that particular quarter.
Speaker Change: I would just say that rebating, we've been very consistent.
Speaker Change: The consumables element again, we'll be looking for a premium on it from our current project, but remember that we have a fairly sizable share of the markets right. Now. So directionally. This isn't really a share play as much as it is a an upgrade and replacement play and the only way we're going to get that done as if we can generate real efficiencies that <unk>.
Speaker Change: I think we continue to be consistent on rebates, which is a part of our promotion mix, but, not the major part.
Speaker Change: We have seen some increase in competitive promotion.
Speaker Change: All right.
Speaker Change: So again, we're getting trade up to new products from old products, we're getting good motion on the mix element of this.
Speaker Change: Generate real economics for both payers and surgeons.
Speaker Change: Okay. That's helpful. David and then turning to dry eye for a second.
Speaker Change: So I think, you know, directionally, we felt pretty good about about that particular quarter.
Speaker Change: And I would just say that rebating, you know, as we've been very consistent, I think we continue to be consistent on rebates, which is, you know, a part of our promotion mix, but not the major part.
Speaker Change: And we have seen some increasing competitive promotion.
Speaker Change: 155, one too congrats on the <unk> date is I think about that relative to other prescription pharmaceuticals and the dry market.
Speaker Change: All right.
Speaker Change: Would you have us thinking about that product launch I mean, we've tracked zebra restasis. Meanwhile, now we've seen how those have launched in your mind.
Speaker Change: Fair enough.
Speaker Change: Asleep mirrors kind of what you expect for <unk> 501 too.
Speaker Change: We'll launch that next year.
Speaker Change: Well, it's tough right now because the market has changed quite a lot since restasis or <unk>.
Speaker Change: And probably youre going to have to look at the more recent launches to really get a feel for the trajectory. The payer dynamics is a big part of what happens now and of course Medicare is probably 50% of the prescription. So you need to think about the cycle of when Medicare brings formulary products on you can think about this.
Speaker Change: Michael for which payers begin to pay and we will obviously manage all of that we're still working our way through it and so it'd be a little it's a little premature for me to give you a lot of detail around it for us, but I think in the next I would say.
Speaker Change: Four to six months, we will have a pretty good read on what we're going to do and how to think about this one but I think it's look what we're excited about what this product is in the market. There is a real need for faster acting products that treat successfully more patients and I think those two elements will be will feature in the way we think about this product.
Speaker Change: Additionally, global ATI well penetration was up approximately 190 basis points year over year, mainly driven by international markets.
Speaker Change: In contact lenses, we estimate that the retail market was up approximately mid-single digits. This growth was driven by pricing and continued steady wear or trade-up.
Speaker Change: Thank you.
Speaker Change: Fair enough.
Speaker Change: Now briefly comment on our Idrop strategy in China. Earlier this month, we entered into a long-term strategic relationship with OccupyMetion to commercialize and develop select Idrops in this market, including sustain ultra and AR-1551-2 among others.
Speaker Change: Thank you. Our next question comes from the line of David Adlington with Jpmorgan. Please proceed with your question.
Speaker Change: Thank you.
Speaker Change: OccupyMetion is an established leader in the local authentic pharmaceutical industry with strong commercial R&D and manufacturing capability.
David Kennedy: Kennedy, David We believe this transaction will maximize the long-term potential opportunity in China we expect the transaction to close later this year.
Speaker Change: Thank you.
Speaker Change: Then just a follow-up question on your implantables, business.
David Adlington: And then just a follow-up question on your implantables business.
David Adlington: Hey, guys just thanks for questions first one just in terms of your supply chain issues in contact lens care I'm. Just wondering why you have to take a provision.
David Adlington: Oftentimes, you provide some US color on your share of the ATIOL market, or at least the PCIOL market.
David Adlington: Any updates on that?
Speaker Change: We're able to go back and get some compensation from your supplier.
David Adlington: As we think about competitive launches here upcoming from a couple of your competitors, I would assume that very high 80% PCIOL share starts to trend lower.
David Adlington: Just your outlook for maybe share within PCIOL as we probably start to see some sampling here of some of those other products over the next few quarters.
David Adlington: And then secondly, just on the equipment growth I'm, just wondering if you give us a feel for what percentage of units you sold this quarter actually have an upgrade option to a unit here at some point later down the line. Thanks.
Speaker Change: In surgical and in contact lenses we remain committed to our direct presence in China and we're excited to grow these businesses in this important market.
Speaker Change: With that I'll pass it to Tim who'll take you through our financial results and provide more color on our outlook.
Tim Stonecipher: Thanks David.
David Adlington: Thanks.
David Adlington: Yeah.
Speaker Change: You know, oftentimes you provide some U.S. color on your share of the ATIOL market or at least the PCIOL market.
Speaker Change: Okay.
Speaker Change: Most of the competitive stuff in the PCIOL share element is really pretty consistent with, what we've said in the past.
Speaker Change: On the on the provision.
Speaker Change: We're pleased to report second quarter sales of $2.5 billion, up 6% versus prior year. This growth is primarily driven by strength in our innovative contact lens portfolio and implantables. Our second quarter US dollar sales growth included approximately 300 basis points of pressure from foreign exchange.
Speaker Change: There's going to be a lot of folks coming into the market, but the majority of the action is in Torex.
Speaker Change: I think at this point, we're still holding better than 80 share of the PCIL market, but the Torex, again, pretty competitive market.
Speaker Change: In our surgical franchise revenue was up 6% year over year to $1.4 billion.
Speaker Change: We see continued erosion there.
We took it because obviously we had a lot of product in hand that had been made with something that wasn't going to contribute.
Speaker Change: I think the big thing is the penetration of ATIOLs was very positive this quarter.
Speaker Change: Impliable sales were $464 million in the quarter, up 9% year over year, mainly driven by our advanced technology intra-opiole lenses including vividly panoptics and our monopocal torques in international markets.
Speaker Change: Both the geographic distribution of what we have, which is important to think about because we have very good quarters in Europe and in Japan and in China, but even the US penetration was up, I think 19.2.
Speaker Change: Contribute.
Speaker Change: In consumables our second quarter sales were up 5% to $736 million driven by cataract and vit-ret consumables, particularly in international markets as well as price.
Speaker Change: <unk>.
A final product correctly.
Speaker Change: We are obviously going to talk to our supplier about that situation and we will be careful.
Speaker Change: In equipment sales of $223 million were down 1% year over year in line with our expectations.
To comment on that one right now, but I think directionally.
Speaker Change: We continue to expect equipment sales to be broadly in line with last year ahead of the commercial launch of Unity VCS.
Speaker Change: We feel like that is under control and we are pursuing all the proper avenues to get that product safely secured and we're moving down that path on the equipment growth.
Speaker Change: We are really prepared to talk about the units sold in upgrading I think directionally. We so we have as I said.
Speaker Change: Something on the order of 30000 units out there those are generally done on a upgrade cycle of about 10 years.
Speaker Change: Think of the World is kind of roughly 2500 to 3000 units every year kind of roughly it comes in and out of the market.
Speaker Change: Any updates on that?
Speaker Change: Back to where it's been historically.
Speaker Change: There'll probably be an enthusiasm in the beginning for the product. That's usually what has happened historically and then it slows down a little bit, but we'll try and meter that carefully so that you have both.
Speaker Change: Again, on a trend which we think is really the historical trend, which again, I usually say it's about 50 basis points a year of improvement.
Speaker Change: An upgrade element of it but also kind of people, who really want additional units and we are excited about the combo unit, particularly in the international markets. So that's about what I can help you with now.
Speaker Change: Great. Thank you.
Speaker Change: Thank you. Our next question comes from the line of Patrick Lin with Morgan Stanley. Please proceed with your question.
Speaker Change: And just as we think about competitive launches here upcoming from a couple of your competitors, I would assume that very high 80% PCIOL share starts to trend lower.
Speaker Change: If that keeps moving, the main discussion really is about penetration because the share loss is nothing unusual for us, pretty much as we've seen it.
Speaker Change: Actually, internationally, we gain share.
Speaker Change: We're feeling pretty good about where we are in IOLs.
Speaker Change: Thank you.
Patrick Lin: Just kind of your outlook for maybe share within PCIOL as we probably start to see some sampling here of some of those other products over the next few quarters.
Patrick Lin: Brilliant thank you for taking the questions.
Patrick Lin: Thank you.
Patrick Lin: Just to think about all the new product launches that are coming through I'm, just curious how you're thinking about incremental investment behind them sales and marketing you obviously have a massive distribution network.
Patrick Lin: Our next question comes from the line of Graham Doyle with UBS.
Speaker Change: Trial, and it takes a bit of dollars to sometimes get walking, but then unity. You also you already have.
Speaker Change: Rolodex of customers that how you're thinking about the interplay between incremental investment behind pushing the products as we move into next year is that kind of top line opportunity.
Speaker Change: Yes, I mean look we're really trying to struggle with that question Patrick It's a great question and I think as we come into the fourth quarter and we really get our budget set for next year, we will have an opportunity to describe that to you next quarter I think with some degree of detail I do think that we are going to want to put.
Speaker Change: Thanks.
Speaker Change: Additional investment behind major project launches like unity Vcs like 501, two and.
Speaker Change: And so I think that's what's been in our plan. So I don't think there's anything new there necessarily but.
Speaker Change: It does matter how many products, we have got right now and how many opportunities we have and we want to make sure. We maximize all of those to try and really drive revenue at its maximum value. So my sense of it is we'll have a better more clear picture as we as we guide for next year.
Speaker Change: And certainly we'll begin to work that process next quarter.
Speaker Change: And then just as a quick follow up the Ark, you mentioned agreement excuse my ignorance Im just curious like the difference that you saw in the end markets in China.
Speaker Change: Can I help side relative to surgical and contacts and white direct makes more sense for one relative to the distributor level.
Speaker Change: Well the simplest answer honestly is that we don't necessarily have the capabilities in house today to do what they have already made so we'd have been in a build mode for China and we frankly the portfolio was relatively small with a fairly sizable investment on our 501 two so what we were looking at was.
Speaker Change: Where do we want to prioritize resource more than anything else in.
Speaker Change: What we saw was a very skilled partner who has good regulatory experience good marketing experience good manufacturing and R&D.
Speaker Change: Turning division care, second quarter sales of $1.1 billion were up 6%.
Speaker Change: And it really seemed to make a lot of sense for us to let them.
Speaker Change: On the eye drops business for us instead of us trying to build all of that capacity, while we do all these other products, while we do as many things as we've got going on so it was really more of a.
Speaker Change: Contact on sales were up 9% to $636 million in the quarter.
Speaker Change: What's the most efficient way to maximize profit.
Speaker Change: Got it thanks for the questions.
Speaker Change: Yeah, most of the competitive stuff in the PCI well share element is really pretty consistent with what we've said in the past, you know, there's going to be a lot of folks coming into the market, but the majority of the action is in Torex.
Thank you. Our next question comes from the line of Jack Ronald Clark with RBC Capital markets. Please proceed with your question.
Speaker Change: And so I think at this point, we're still holding better than 80 share of the PCI well market, but the Torex, again, pretty competitive market.
Speaker Change: And you know, we see continued erosion there.
Speaker Change: Please proceed, with your question.
Speaker Change: Morning, guys.
Speaker Change: I think the big thing is the penetration of HCI wells was very positive this quarter.
Speaker Change: Hi, there. Thank you for taking the questions.
Speaker Change: Thanks for the question.
Speaker Change: And so both the geographic distribution of what we have, which is important to think about because we have very good quarters in Europe and in Japan, and in China, but we had even the US penetration was up, I think 19.2.
Speaker Change: So back to kind of where it's been historically, and again, on a trend, which we kind of think is really the historical trend, which again, I usually say it's about 50 basis points a year of improvement.
Speaker Change: So if that keeps moving, you know, the main discussion really is about penetration, because you know, the share loss is nothing unusual for us, pretty much as we've seen it.
Speaker Change: Just on unity Vcs or you can say, yes, I'm wondering if you could share any initial feedback you're getting from surgeons.
Speaker Change: Any kind of additional data around potential efficiency improvements.
Speaker Change: The systems can provide until hostile in that case may be.
Speaker Change: And actually, internationally, we gain share.
Speaker Change: Then the second one was just on equipment.
Speaker Change: Could you just kind of give any color around kind of how much.
Speaker Change: Comps effect here.
Speaker Change: If there's any kind of underlying weakness.
Speaker Change: In demand.
Speaker Change: Or if you could kind of holding off ahead of ahead of the <unk> launch.
Speaker Change: Or anything like that thanks.
Jack: So we're feeling pretty good about where we are in IOLs.
Jack: Yes, the second one Jack is pretty easy we kind of expected as you remember from the beginning of the year that we'd see a little bit of a stall in and console growth, particularly about this time.
Speaker Change: And what I am excited about what the equipment is underlying that is actually pretty solid demand for biometry for scopes for other equipment, which we've done quite well with while we have kind of seen the console business kind of slowdown. So directionally I think you should feel pretty good about equipment right now because we.
Speaker Change: Most everybody knows that we've got a bunch of product out there in the market with some key customers, making sure we get it all kind of perfect before we launch it but directionally I think equipment looks pretty good to us.
Speaker Change: Our innovation including torque and multifocal modalities continues to win in the market.
Speaker Change: On the on the unity piece, we are very excited from the feedback that we've gotten from from surgeons on this and we've had it with some of the best folks in the world in Japan, and the United States and Europe and consistently what we're hearing is.
Speaker Change: Additionally, we saw strong contribution from price in the quarter.
Speaker Change: In our regular health, second quarter sales of $423 million were up 2% year over year.
Speaker Change: We saw strong performance in our portfolio of eye drops including another strong quarter of sustain.
Speaker Change: This is partially offset by 4 points of headwind from contact lens care, primarily driven by a tough comparison due to the recovery of supply in the second quarter of last year.
Speaker Change: Moving down the income statement, second quarter core gross margin was 62% down year over year. This was due to two factors. First, as David mentioned, the second quarter included significantly higher inventory provisions that resulted in a negative impact of $30 million or 1.2 percentage points to margin.
Speaker Change: Very very safe people operating at.
Speaker Change: Copies that are considerably lower than where they had been in the past during the twenties.
Speaker Change: Second, as we communicated previously, we saw the impact of higher cost inventory flowing through the income statement, particularly in the surgical franchise.
Speaker Change: There are people now operating at physiological IOP, which we think is the endgame for this product and when you do that basically everything kind of.
Speaker Change: Given the unusual items we saw this quarter, we now expect full year core gross margin to be slightly below 2023. Core operating margin was 19.8% up 70 basis points year over year driven by operating leverage from higher sales. This was partially offset by the factors I mentioned earlier, including 120 basis points of pressure from inventory provisions.
Speaker Change: It looks safer and more stable and you can move a little bit faster and Thats really the key to this thing is to get the safety into a level, where you really can't speed up a little bit to cut speeds under the machine or half or sorry twice as fast as.
Speaker Change: Second quarter interest expense was $50 million, brought the in line with last year.
Speaker Change: Other financial income expense was a net benefit of $12 million, compared to a net expense of $9 million in the second quarter of last year.
Speaker Change: Andrew.
Speaker Change: Constellation and our.
Speaker Change: Our observation of the cataract machine is again, we will see some efficiency improvements there as well. So we're very excited about what happens here both in the everything from the setup to the teardown to the the time in surgery. It just looks like it's a more efficient machine on both cataract and retina. So we're optimistic.
Speaker Change: This improvement was primarily driven by higher interest income and lower foreign currency losses.
Speaker Change: The second quarter average core tax rate was 19%, broadly in line with last year. Looking forward, we expect the tax rate in the second half of the year to be lower than the first half due to a number of discrete benefits we expect to materialize in the second half of the year.
Speaker Change: Core diluted earnings were 74 cents per share in the quarter, up 15% from last year.
Speaker Change: Now before I touch on our outlook for 2024, I'll discuss a few cash flow and other related items. On a year-to-date basis, free cash flow was $667 million, compared to $189 million in 2023. This improvement was mainly driven from higher cash from operations.
Speaker Change: The feedback has been very positive.
Speaker Change: For the full year, we continue to expect a meaningful step up in free cash flow versus 2023.
Speaker Change: Great. Thanks very much.
Speaker Change: Thank you.
Speaker Change: Now moving to 2024 guidance, our current outlook assumes that markets will grow in line with historical averages of mid-single digits and exchange rates as of the end of July hold through year-end.
Speaker Change: Starting with sales, we are maintaining our full year revenue guidance of $9.9 to $10.1 billion and our constant currency sales growth rate guidance of 7 to 9%.
Speaker Change: Thank you. Our next question comes from the line of David Saxon with Needham <unk> Company. Please proceed with your question.
Speaker Change: Thank you.
Speaker Change: Just one, it's actually around the comment you, made, David, in the press release in terms of the phrase, the next phase of growth in 2025 and beyond.
Speaker Change: If FFX rates at the end of July persist through the remainder of the year, we will likely turn toward the low end of our top line guidance range.
Speaker Change: It's obviously been a pretty good year so far in 2024 on the top line, despite some headwinds, particularly in equipment.
Speaker Change: Great. Thanks good.
David Saxon: Our next question comes from the line of Graham Doyle with UBS.
David Saxon: I know it's early, but if we look at the dynamics for next year, given the launches and contacts in terms of once weekly, the equipment launch, Panoptix 2.0, TriEye, would you be comfortable at this stage with the same dynamics and same, type of growth at least being supported in 2025?
David Saxon: Thanks for taking my questions, maybe I'll start on the glaucoma portfolio.
David Saxon: Just a quick follow-up on that as well.
David Saxon: Please proceed with your question.
David Saxon: Thank you.
David Saxon: Morning guys.
Hydrus is a smaller product for you, but can you talk about how thats been trending and the attachment rate youre seeing with your iOS and then.
Speaker Change: Moving to operating expenses, we continue to expect full year core R&D expense to be toward the high end of the range of 7 to 9% of sales.
Speaker Change: On bulk envision DSL.
Speaker Change: Turning to profitability, although we will see some additional pressure to core operating margin given the unusual inventory provision, we expect to continue to invest behind new product launches and our maintaining our full year core operating margin outlook of 20.5 to 21.5%.
David: Timing to launching that in the U S. And then lastly on glaucoma, David I think you mentioned a new drop in the pipeline is that in glaucoma or is that in a different part of the portfolio.
Speaker Change: Moving down the income statement, we now expect interest in other financial expense to be between $160 and $180 million.
Speaker Change: This improvement is primarily due to higher interest income as a role of higher cash balance and higher interest rates.
Speaker Change: Thanks for the question.
Speaker Change: Yeah.
Speaker Change: Yes, let me let.
Speaker Change: Let me start with hydrus, the hydrogen business is going well I mean, its double digit growth, which is ahead of the market.
Speaker Change: I mean, Graham, I think the way we're thinking about the world is we have a lot, of product flow coming through on an innovation basis.
Speaker Change: And so I wouldn't want to comment necessarily on growth quite yet.
Speaker Change: We continue to expect our full year core effective tax rate to be approximately 20%. Based on all these factors, we are maintaining our core diluted earnings guidance range of $3 to $3.10 per share, which corresponds to 15 to 18% constant currency growth over 2023. Given the recent appreciation of the US dollar, we are absorbing approximately 8 cents of FFX headwind versus the guidance we issued in February.
Speaker Change: Give us another quarter to get to a place where we are really staring at next year. As we finish up this year, we're really thinking about what happens with product flow next year, which we've invested a lot of time in.
Speaker Change: Kind of as we expected so we're doing well with that product and we really don't think about attachment rate very much with the with the iOS thats really kind of indifferent to us it's really specific about how we handle the glaucoma patients needs.
Speaker Change: And finally, I'd like to thank the entire Alcon team for another great quarter.
Speaker Change: So UnityVCS is a big deal.
Speaker Change: So relative to hydrous, we think adding belk and makes a ton of sense, because if you start with <unk>.
Speaker Change: UnityCS, big deal.
Speaker Change: 5.1.2 should get approved next year.
Speaker Change: Precision 7 is a big opportunity.
Speaker Change: Panoptix Pro, if we get that out next year, I think that's a great idea.
Speaker Change: With that, I'll turn it back to David.
Speaker Change: Thanks, Tim.
Speaker Change: And we think this is a much.
Speaker Change: Just one, it's actually around the comment you made, David, in the press release, in terms of the phrase, the next phase of growth in 2025 and beyond.
Speaker Change: Faster easier way to do SLT.
Speaker Change: It's obviously been a pretty good year so far in 2024 on the top line, despite some headwinds, particularly in equipment.
Speaker Change: I know it's early, but if we look at the dynamics for next year, given the launches and contacts in terms of once weekly, the equipment launch, Panoptix 2.0, TriEye, and would you be comfortable at this stage?
Speaker Change: With the same dynamics and same type of growth, at least being supported in 2025.
Speaker Change: That's going to make a ton of sense and then youll move into whatever's next whether that's drops or hydrus or whatever depending on the patient need but I think the launch timing on belkin will be likely first quarter next year and I think we're working through some of the final.
Speaker Change: To wrap up, we're pleased with the strong results for the second quarter and first half of the year.
Speaker Change: I'd like to thank our team of more than 25,000 associates for their hard work and determination.
Speaker Change: We're a specialist company that competes and wins on the basis of our team's deep expertise in eye care, its technologies and its end markets.
Speaker Change: Belkin is a new product, flow for us.
Speaker Change: While we still have a lot of work to do, our operating model, our human capital and our culture are what differentiates Alcon.
Speaker Change: As we look to the future, we will continue to focus our efforts on delivering world-class innovation to our customers and their patients to deliver value, for our shareholders.
Speaker Change: With that, let's open up the line for Q&A.
Speaker Change: Thank you.
Speaker Change: Details of that launch, but we've got manufacturing to take care of and we are building inventory on that product now on the new drop I'm, not 100% sure which.
Speaker Change: And we've got another eyedrop in the hopper here, too.
Speaker Change: On the pharmaceutical, which one youre talking about we have a number of things going on in the pharmaceutical space, but in glaucoma I think one of the things that was mentioned earlier was a.
Speaker Change: So we've got a whole whack of stuff that we'd like to invest in that we think grows this market and grows our position quite substantially in the coming years.
Speaker Change: And just a quick follow up on that as well.
Speaker Change: So this year is a little thin that way.
Speaker Change: You'll notice that we made a lot out of what we've got.
Speaker Change: At this time, we'll be conducting a question and answer session.
Speaker Change: But next year, we get a lot of product flow behind us.
Speaker Change: If you'd like to ask a question, please press star 1 on your telephone keypad.
Was a follow on to Rocco 10, which again, we have put in a clinical trial that is a re formulation to try and improve the efficacy or the safety of that brand. So there's one of those out there, but there's also several other things that we're working on in the pharmaceutical space.
Speaker Change: A confirmation tone will indicate your line is in the question Q.
Speaker Change: Okay, brilliant.
Speaker Change: You may press star 2 if you'd like to remove your question from the queue.
Speaker Change: Maybe just a quick follow-up on ParaVision.
Speaker Change: Okay, Great. That's super helpful. Thanks for that and then just on the cataract procedure volumes low single digits. This quarter I think it was like 2% last quarter. So.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Are you able to share any more, information about potential timings of data?
Speaker Change: And is this data that you have, is it blinded or have you had it in-house for a while?
Speaker Change: To allow for as many questions as possible, we ask that you each keep to one question and one follow up.
Speaker Change #100: I think that's a slowdown from what we've seen in the past and what's driving that anything specific to you from a geographical perspective or is it kind of global.
Speaker Change #101: Thanks, so much for taking the question.
Speaker Change #102: Yes, the counteract weakness in the second quarter was real in the U S and it was pretty stable I would say solid in the international market. So if you think about the difference it really has been the U S. That's been a little bit slower recently.
Speaker Change: Thank you.
Speaker Change: Our first question comes from the line of Jeff Johnson with Beard.
Speaker Change #103: I can't tell you why exactly I can give you a nine thesis on what it might be but I don't think we know I do think that over time. These things tend to be idiosyncratic, you'll have one quarter that will do really well you'll have a slowdown and then you'll have another quarter that does really well so.
Speaker Change: Please proceed with your question.
Speaker Change: Thank you.
Speaker Change #103: Our view is is that the normal.
Speaker Change #103: Rate of cataract growth around the world is in the mid single digits kind of the low end of mid single digits call that 445.
Speaker Change: Good morning, guys.
Speaker Change #103: Higher in international lower than in the U S. But directionally, we have got a lot more surgeons coming into the international markets I think China I think Asia in General and then we've got a lot of efficiency gains coming through in the United States, which is driving basically the volumes up over time.
Speaker Change #103: I think thats the best I can give you in terms of dynamics.
Speaker Change #103: Generally we think this thing evens out over time, and we expect to see solid quarters coming up.
Speaker Change: Thank you.
Speaker Change #104: Great. Thanks, so much.
Speaker Change #104: Thank you. Our next question comes from the line of Anthony Petrone with Mizuho Group. Please proceed with your question.
Speaker Change: Yeah, we're still finishing the phase one, the first in-human trial.
Speaker Change: We should have that, data available to us shortly.
Anthony Petrone: Thanks, and good morning, maybe one on margins and one on capital allocation, Tim just on margin you called out the supplier quality issue was 120 basis points.
Speaker Change: In the next several months, we'll have a look at it.
Speaker Change: We'll obviously comment on it once we have a full understanding of it.
Speaker Change: Awesome.
Speaker Change: Thanks a lot, guys.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Veronica Dubajova with Citi.
Speaker Change #106: Back that out you're at 21%.
Speaker Change #107: We're leaving the guidance unchanged, but if I heard you correctly.
Speaker Change: David, I wanted to ask a question on the contact lens business.
Speaker Change #108: They'll be a margin impact from the quality supplier quality issue.
Speaker Change: The 90% obviously seems like it's a couple points probably above market at this point.
Speaker Change: It did come down a little bit versus last quarter. Just maybe talk about pricing dynamics in the quarter.
Speaker Change: I think you, Anniversary, are pretty sizable price increase that you took in the middle of second quarter last year, and then reserves correctly.
Speaker Change: So has pricing come down even though it was still strong in the quarter relative to maybe the last couple quarters?
Speaker Change #109: At least in some portion of the second half. So it suggests the underlying margin is actually a little bit better.
Speaker Change: And what do you see in just on rebate activity?
Speaker Change: Our analysis of your rebates would suggest that they've been pretty consistent here over the last number of quarters, but there's been some noise out there in the channel about maybe taking some rebate activity up here recently, would love to get your input there.
Speaker Change: Yeah, Jeff, thanks for the question.
Speaker Change #110: Are we thinking about that correctly and if there is underlying momentum.
Speaker Change #111: What are the sources there and then I'll have one quick follow up.
Speaker Change #112: Yes, Great question, Anthony listen the way, we're thinking about it is obviously, we werent expecting the impact of the inventory provision and $30 million is call it 30 or 40 basis points, but.
Speaker Change #112: Yeah, I mean, Graham, I think the way we're thinking about the world is we have a lot of product flow coming through on an innovation basis.
Speaker Change #112: And so, you know, I wouldn't want to comment necessarily on growth quite yet, give us another quarter to get to a place where we are really staring at next year.
Speaker Change #112: As we finish up this year, we're really thinking about what, you know, happens with product flow next year, which we've invested a lot of time in.
Speaker Change #112: The other thing to think about is at the same time, we have quite a few investments in the second half related to new product launches that we're committed to making because obviously revenue growth is key to the financial thesis. So that's really why we give a range. So given the assumptions we've laid out we're comfortable that we can hit that range.
Speaker Change: The market in total was up 6% retail and we were at nine, obviously.
Speaker Change: And again, we're coming around as a tough comp from last year at 11%.
Speaker Change: So not surprisingly, we look pretty good relative to that.
Speaker Change: A price was a part of it.
Speaker Change: It was maybe half of that one.
Speaker Change #112: And the other thing to think about is if you look at our R&D spend in the first half of the year, we're coming in at about eight 2% again, we'd like to be at the high end of that because we think innovation is super important.
Speaker Change: The price mix volume for us was really important.
Speaker Change: So again, we're getting trade up to new products from old products.
Speaker Change #112: And given the pipeline that we have right now I'd expect the R&D spend to be a little bit heavier in the back half as well.
Speaker Change: We're getting good motion on the mix element of this.
Speaker Change #113: That's helpful and just capital allocation there was speculation out there during the quarter that perhaps outcome was looking at a larger transaction than than we've historically seen at pursue so maybe just your latest thoughts on the M&A market.
Speaker Change: So I think, you know, directionally, we felt pretty good about that particular quarter.
Speaker Change: And I would just say that rebating, you know, as we've been very consistent, I think we continue to be consistent on rebates, which is, you know, a part of our promotion mix, but not the major part.
Speaker Change: And we have seen some increasing competitive promotion.
Speaker Change #114: Is the priority still for some of the therapeutic assets that are out there.
Speaker Change: All right.
Speaker Change #115: What are you looking at Med Tech these days and maybe just some high level thoughts there. Thanks.
Speaker Change #116: Got it.
Speaker Change: Sarah, now, thank you.
Speaker Change #116: Anthony we're always looking at stuff in ophthalmology and eye care, you can count on us being somehow involved in looking at it and.
Speaker Change: And then just follow a question on your implantable business.
So directionally, we still like the kind of technology oriented bolt on ideas that kind of range and at $50 to 500, obviously with the strength of our balance sheet. We can do any number of things, but I think really what we're trying to do is fill out white spaces, and so think glaucoma think refractive think.
Speaker Change: You know, oftentimes you provide some US color on your share of the ATILL marketer, at least the PCILL market, any updates on that.
Speaker Change: And just as we think about competitive launches here, upcoming from a couple of your competitors, I would assume that very high 80% PCILL share starts to trend lower, just kind of your outlook for maybe share within PCILL as we probably start to piece and family in here, some of those other products over the next few quarters.
Speaker Change: Thanks.
Speaker Change: Yeah, most of the competitive stuff in the PCILL share element is really pretty consistent with what we've said in the past.
Speaker Change: You know, there's going to be a lot of folks coming into the market, but the majority of the action is in Torrix.
Speaker Change #116: Contact lens technology think pharmaceuticals, those are areas, where we have big growth opportunities and relatively low share. So thats kind of the generally speaking thats what were looking at in that zone, Tim you want to add.
Speaker Change: And so I think at this point, we're still holding better than 80 share of the PCILL market, but the Torrix, again, pretty competitive market.
Speaker Change: And, you know, we see continued erosion there.
Tim Stonesifer: All right.
Tim Stonesifer: Thanks.
Speaker Change: I think the big thing is the penetration of ATILLs was very positive this quarter.
Speaker Change #112: Please, proceed with your question.
Speaker Change #117: Thank you. Our next question comes from the line of Larry Nicholson with Wells Fargo. Please proceed with your question.
Speaker Change #112: Oh, hi, guys.
Speaker Change: And so both the geographic distribution of what we have, which is important to think about because we have very good quarters in Europe and in Japan and in China, but we had even the US penetration was up, I think 19.2.
Speaker Change #112: Good afternoon, and thanks for taking my question.
Larry Nicholson: Alright, thanks for taking the question good morning.
Larry Nicholson: One quick one on timing and I had one follow up.
Speaker Change: So back to kind of where it's been historically. And again, on a trend, which we kind of think is really the historical trend, which again, I usually say it's about 50 basis points a year of improvement.
Larry Nicholson: The EUR 155 data publication, when will we see that and how far behind at the CES unit ECS from.
Speaker Change: So if that keeps moving, you know, the main discussion really is about penetration because, you know, the share loss is nothing unusual for us pretty much as we've seen it.
Speaker Change #119: From Acs.
Speaker Change #112: Sorry, I forgot to unmute, before I started talking.
Speaker Change #120: Yeah, Larry Thanks for the question two data.
Speaker Change #121: Likely be available at the American Academy of Ophthalmology coming up in I think October November it's somewhere in that zone.
Speaker Change: And actually internationally, we gain share.
Speaker Change #112: That will do the trick.
Speaker Change #112: Two for me, please.
Speaker Change #122: I think it's late October ish, and then on the <unk> Dcs and CS Dcs will come pretty close I think probably six months behind Vcs.
Speaker Change: So we're feeling pretty good about where we are in IOLs.
Speaker Change #122: But plus or minus a bit on that let's just say because I'm not 100% sure.
Speaker Change: Thank you.
David: David just one follow up.
David: What what have you guys said publicly just FICO <unk> in general.
Speaker Change #123: Alcon had an internal program call it 20 years ago.
David: Over.
I don't think it obviously wasn't launch but what is your high level view of just the basic Iowa market in general Thank you.
Speaker Change #124: I think Directionally, we think it's a good idea I think.
Speaker Change: Our next question comes from the line of Graham Doyle with UBS.
Speaker Change #125: The projects that have been out there before we were in it historically with cachet and.
Speaker Change: Please proceed with your question.
Speaker Change: Morning, guys.
Speaker Change: Thanks for the question.
Speaker Change #125: We had some challenges with that but I think directionally, we like the progress that's being made there.
Speaker Change: It's actually around the comment you made, David, in the press release in terms of the next phase of growth in 2025 and beyond.
Speaker Change #125: Again, Lasik is really a very very good procedure and I think directionally, we still sell.
Speaker Change: It's obviously been a pretty good year so far in 2024 on the top line despite some headwinds, particularly the equipment.
Speaker Change: I know it's early, but if we look at the dynamics for next year, given the launch and contacts during the once-weekly, the equipment launch, Patrick's 2.0 Tri-i, would you be comfortable this stage with the same dynamics and same type of growth at least being supported in 2025?
Speaker Change #125: A lot of fake sorry, a lot of lasers for that procedure. So I think for high myopia. This is a really inappropriate kind of project and I think for anybody who is kind of minus six in under I think you'd be hard pressed to go away from lasik. So our view is that that market doesn't really impact our refractive market.
Speaker Change: Just a quick follow-up on that as well.
Speaker Change: Thank you.
Speaker Change #125: Our lasik business still really solid.
Speaker Change #125: And what's really going on is I think the consumer is driving most of these decisions at this point so strength of the consumer drives the strength of the refractive market.
Speaker Change: Yeah, I mean, Graham, I think the way we're thinking about the world is we have a lot of product flow coming through on an innovation basis.
Speaker Change: And so, you know, I wouldn't want to comment necessarily on growth quite yet.
Speaker Change #126: There's a lot of up and down in that but directionally I'm still an important market.
Speaker Change: Give us another quarter to get to a place where we are really staring at next year. As we finish up this year, we're really thinking about what happens with product flow next year, which we've invested a lot of time in.
Speaker Change #127: Thank you.
Thank you. Our next question comes from the line of Michael Sarcone with Jefferies. Please proceed with your question.
Speaker Change: So Unity VCS is a big deal.
Good morning, and thanks for taking the questions. Just first you talked about a broader unity launch in the second quarter of 2025 can you maybe just elaborate on what the goalposts are things you're looking to accomplish prior to them broader launch or.
Speaker Change: Unity CS, big deal.
Speaker Change: 512 should get approved next year.
Speaker Change: Precision 7 is a big opportunity.
Speaker Change #127: Okay.
Speaker Change #128: Yes, Michael one of the things that we have really been careful about with the unity launches to make sure that.
Speaker Change: Panoptics Pro.
Speaker Change #128: We really understand it we understand all the corner cases that could come up that we have.
Speaker Change: If we get that out next year, I think that's a great idea.
Speaker Change: Belkin is a new product flow for us.
Speaker Change: And we've got another, you know, I drop in the hopper here, too.
Speaker Change #128: We've looked at the preferences for software.
Speaker Change #128: Way in which it looks and feels the way it gets set up there's a lot of detail that is important to kind of fine tune I would say once the products approved.
Speaker Change: So we've got a whole whack of stuff that we'd like to invest in that we think grows this market and grows our position quite substantially in the coming years.
Speaker Change #128: We have the good fortune of having two tremendously successful products out there with with Centurion and constellation and so when you go in and you say, hey, I'd like to get a premium for this product or this is a better product and you know it really has to be and that's really what we're after right now is making sure that we know how to describe that knowhow.
Speaker Change: So this year was a little thin that way.
Speaker Change: You'll notice that we, you know, we made a lot out of what we've got.
Speaker Change: But next year, we get a lot of product flow behind us.
Speaker Change: OK, brilliant.
Speaker Change #128: We have the data to actually prove that.
Speaker Change: Maybe just a quick follow up on on power vision.
Speaker Change #128: The things that we're working on and so we're being patient with this for sure.
Speaker Change #128: We recognize that it was approved some time ago, but directionally. This is the way really great products get launched I think.
Speaker Change: Are you able to share any more information about potential timings of data?
Speaker Change: And is this data that you have?
Speaker Change #129: Understood. That's helpful and then just.
Speaker Change: Is it blinded or have you had it in place for a while?
Speaker Change #130: Last question for me on the Nextgen Panoptic. Thank you mentioned you are still deciding on on launch timing over the next few months.
Speaker Change #131: Can you just elaborate on the factors that you're thinking about as you decide on the launch timing and then any color on economics, and if you may be able to take incremental pricing there.
Speaker Change: Thank you.
Speaker Change: Yeah, it's still, we're still finishing the phase one, the first in human trial.
Speaker Change #132: Yes, I mean, I think what we're trying to do right now is we have two different ideas.
Speaker Change: We should have that data available to us, you know, shortly.
Speaker Change: And the next several months, we'll, we'll have a look at it and we'll obviously come on it once we have a full understanding of it.
Speaker Change #132: We're working on a product that already has kind of the gold standard in.
Speaker Change: Awesome.
Speaker Change: Thanks, Lucas.
Speaker Change #132: And Tri focal lenses that has a patented set point its optical design is particularly unique.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Veronica Duba Jova with city.
And this is a really important product for us. So we're being very careful about how we work at improving it and as we kind of get there. We're looking at enhanced distance vision through improved contrast, we're looking at different ways to improve acuity at all range is using different light.
Speaker Change: Please proceed with your question.
Speaker Change: Oh, hi guys.
Speaker Change: Good afternoon.
Speaker Change: And thank you for taking my question.
Speaker Change #132: Distributions and so the optical designs, we're getting feedback on now we'll see which one really has the best chance of improving this and when we get that information again as we do that through our our testing work right now will decide which product we want to launch and when that would be so I would expect that in the front half of next year, but again, we will.
Speaker Change: Sorry, I forgot to unmute before I started talking.
Speaker Change: That will do the drink too for me, please.
Speaker Change: The first one is just looking at the full year guide.
Speaker Change: You know, I'm thinking mostly organic sales growth.
Speaker Change: I'm super very much trending towards the very bottom of the seventh to nine.
Speaker Change #132: See as we kind of go forward.
Speaker Change #133: Got it thank you and any color on that.
Speaker Change #134: Potential economics, there versus current sham.
Speaker Change #135: Not yet I mean, I think I think we really need to see kind of what this looks like.
Speaker Change #136: Okay. Thank you.
Speaker Change #137: Thank you. Our next question comes from the line FSC Kirby with Redburn Atlantic. Please proceed with your question.
Speaker Change #138: Hi, guys. Thanks for taking my question Firstly on the unity ramp I guess, if we left some.
FSC Kirby: Cherry and when it first launched is that any reason why.
Speaker Change #140: Uniti Ram shed savvy in terms of how quickly it penetrates your installed base versus Centurion and also any comments you have on the health and I guess the.
Speaker Change #140: And Pat just said the unit T systems from a financial perspective, and then I have a follow up on impacts.
Speaker Change #141: Yes, I mean, I think directionally, that's not a bad way to.
Speaker Change #142: You kind of model it I would think about since you're in and the constellation launches and really kind of think about the installed base in one of the reasons. We gave you the installed base and in the opening remarks was really to give you some sense of how big the market is in and I think the other.
Speaker Change #142: So Unity VCS is a big deal, Unity CS, big deal.
Speaker Change #142: The first one is just looking at the full year guide, I'm thinking mostly organic sales growth.
Speaker Change #142: I'm seeing very much trending towards the very bottom of the seven to nine on constant currency.
Speaker Change #142: Just curious, kind of, David, what gives you guys the confidence that there's scope for acceleration in the back half of the year?
Speaker Change #142: Is there a specific region, product category that you're focused on?
Speaker Change #142: So if you could talk through that and kind of your degree of confidence that we're going to end up towards seven versus towards nine, that would be my first question.
Factor to think about is that these are generally eight to 10 years of of cycle time. So.
Speaker Change #142: Then, I have a follow-up after that, but I'll let you answer that first.
Speaker Change #142: Hey Veronika, how are you doing?
Speaker Change #142: Taking some division against the installed base and then some.
Some portion of additional market is probably the right way to think about it the rate will be probably a little bit more enthusiastic in the beginning because it usually is when.
Speaker Change #142: Yeah, so I think, you know, the difference between the 7 and the 9 is really how the, markets perform.
Speaker Change #142: You know, if we get a little bit more market growth or recovery than we have expected, that would bring that number up.
Speaker Change #142: I think it's also how effective our pricing actions are, how does the VVP do in China, we're not quite sure how that's going to roll out, that might come in better than we have.
Speaker Change #142: So, you know, listen, there's still 5 or 6, 5 months left in the year and there are a, lot of variables out there, but, you know, given what we're seeing right now, that's why we're trending towards the low end and that's why we called that out.
Speaker Change: I'm constantly currently just curious kind of David Tim what gives you guys the confidence that there's scope for acceleration in the back half of the air is there a specific region product category that you're focused on.
Speaker Change #142: And you can see that in probably the original Centurion launch.
Speaker Change #100: So if you could talk through that and kind of, you know, your degree of confidence that we're going to end up towards seven versus towards nine.
Speaker Change #142: And then again it will slow down as you get a little bit more into a natural replacement cycle.
Speaker Change #100: That would be my first question.
Speaker Change #142: So directionally, that's kind of the way to think about it and on the health of the of the purchaser again I think there is.
Speaker Change #100: Then I have a follow up after that.
Speaker Change #142: Room for these kind of capital choices, particularly if they create value and so I think what we're really focused on is trying to establish in some of these preference testing what is the actual duration and turnover of the ore so that.
Speaker Change #142: If the health authority wants to do more surgery and wants to shorten lines or wants to.
Speaker Change #101: I'll let you answer that first.
Speaker Change #142: Really benefit the time in the or for somebody else the utilization of that or is much more efficient. So that's what we're trying to figure out as we get to that that'll help.
Speaker Change #142: 512 should get approved next year.
Speaker Change #142: I think drive a real interest in moving these products forward.
Speaker Change #102: Hey, Veronika, how you doing?
Speaker Change #142: That's great and actually that's a great segue to my second question, which is, are you able, to break out for us what the contribution from stocking was to implantables from China, VVP?
Speaker Change #142: And I guess, what are you seeing on the ground in terms of as you, you know, look at July, and August, how much traction are you seeing so far on that VVP front?
Speaker Change #143: That's great. Thank you and then just on the Implantables business.
Speaker Change #143: Precision 7 is a big opportunity.
Speaker Change #143: Panoptix Pro, if we get that out next year, I think that's a great idea.
Speaker Change #144: Belkin is a new product flow for us.
Speaker Change #144: And we've got another, you know, eyedrop in the hopper here too.
Speaker Change #103: Yeah, so I think, you know, the difference between the seven and nine is really how the markets perform. You know, if we get a little bit more market growth or recovery, then we have expected that would bring that number up.
Speaker Change #144: <unk> penetration has reached in some of your other markets like Japan and some of these developed European markets I guess could you comment on Wap premium <unk> penetration has reached an if youll seeing perhaps any of these markets reach a bit of a sale.
Speaker Change #145: Perhaps we have in the U S. Thanks.
Speaker Change #144: Yeah, we're just starting Veronika.
Speaker Change #146: So we've got a whole whack of stuff that we'd like to invest in that we think grows this market and grows our position quite substantially in the coming years.
Speaker Change #144: Yes.
Speaker Change #146: So this year is a little thin that way, you'll notice that we, you know, we've made a lot out of what we've got.
Speaker Change #146: I'm unconvinced that there is a ceiling in the U S. And then I think there's a ceiling, but it's considerably higher than where we are I mean, I think historically we've talked about.
Speaker Change #146: But next year, we get a lot of product flow behind us.
Speaker Change #146: I mean, I think, you know, it's hard to tell from a distance how much was stocking and, how much was demand.
Speaker Change #103: I think it's also how effective our pricing actions are.
Speaker Change #147: Willingness to pay we've done every year I think we do work with the consumer that if they really understand this choice.
Speaker Change #146: You know, this goes province by province, which is a little bit tricky, so, you know, we sell into a variety of distributors who then supply the hospitals.
Speaker Change #146: You know, I think even if you took out China, we had a very good growth and we read that, as penetration was up because, as you'll remember, you know, we kind of have focused for a long time on how does penetration move and that's important globally.
Speaker Change #147: They are willing to pay and it's about kind of usually in the mid <unk> plus or minus a little bit of the market that will do that so I think there is plenty of room for us to grow from what was a 19, 2% in the second quarter.
Speaker Change #103: How does the VVP doing China?
If you look around the world for ATI OLS, the penetration globally as 15, but obviously, that's a blend of the U S and the international markets. So international markets on penetration Directionally are a good bit lower than that somewhere in the.
Speaker Change #147: Okay, brilliant.
Speaker Change #147: Maybe just a quick follow-up on PowerVision.
Speaker Change #103: We're not quite sure how that's going to roll.
Speaker Change #103: That might come in better than we have.
Speaker Change #104: So, you know, listen, there's still five or six, five months left in the year and there are a lot of variables out there, but, you know, given what we're seeing right now, that's why we were turning towards the low end and that's why we called that out.
Speaker Change #104: That that's great.
Speaker Change #148: 14, $14 three is what Ive got internationally so.
Speaker Change #147: So, you know, penetration was up in Europe, penetration was up in China, it was up in, most of the countries, including the United States, so that helped us overall.
Speaker Change #147: So, I would say the VVP contribution, relatively small to the total.
Speaker Change #148: I think what Youll see is continued steady growth of penetration internationally in particular, because Europe had a good quarter and moved quite a little bit China is helping a lot as it kind of moves Japan has been solid career has been solid so theres a lot of opportunity still out there to move penetration.
Speaker Change #148: Are you able to share any more information about potential timings of data, and is this data that you have, is it blinded, or have you had it in-house for a while?
Speaker Change #148: Most of those markets, we have growing share not declining share in any way and so if you get penetration and share moving that helps us a lot.
Speaker Change #148: That's great.
Speaker Change #148: Thank you guys so much.
Speaker Change #149: Thank you.
Speaker Change #149: Alright. Thanks.
Speaker Change #149: Thank you.
Speaker Change #105: And actually that that's the great summary to my second question, which is, are you able to break out for us what the contribution from stocking was to landables from China VVP?
Speaker Change #149: Thank you. Our next question comes from the line of Richard Felton with Goldman Sachs. Please proceed with your question.
Speaker Change #149: Yeah, it's still, we're still finishing the phase one, the fits the first in human trial.
Speaker Change #149: We should have that data available to us, you know, shortly, in the next several months, we'll, we'll have a look at it.
Speaker Change #149: And we'll obviously come on it once we once we have a full understanding of it.
Speaker Change #105: And I guess, what are you seeing on the ground in terms of as you, you know, look at July and August, how much traction are you seeing so far on that VVP front?
Speaker Change #149: Our next question comes from the line of Ryan Zimmerman with BTIG.
Speaker Change #106: Yeah, we're just starting Veronica.
Richard Felton: Great. Thank you.
Richard Felton: Awesome, thanks a lot guys.
Richard Felton: Question is on the deceleration in ocular health I know you called out the impact from contact lens care and of course, but even adjusting for that it seems like the rest of the business slowed a little bit in Q2. So is there any additional color you can share for that division and specifically were there any changes to the strong trends that you've seen for sustained.
Richard Felton: Please proceed with your question.
Richard Felton: Good morning.
Richard Felton: Thank you.
Richard Felton: Thanks for taking our questions.
Speaker Change #151: Now, let's sustain is doing great I mean, it was another quarter of double digit growth for sustained sustained brand the multi dose preservative free all around the world is doing quite well and I do think that it will continue to.
Speaker Change #151: Our next question comes from the line of Veronika Dubajova with Citi.
Speaker Change #151: I want to ask one on dry eye and one on Unity VCS.
Speaker Change #151: I'll start with Unity VCS a little bit, actually.
Speaker Change #151: Please proceed with your question.
Speaker Change #151: So just, you know, as you think about the upgrade cycle at Unity VCS, I mean, how are, customers or how are you thinking about approaching it if customers are buying, say, one Constellation and one Centurion, you know, what are the economics to you guys?
Speaker Change #151: And, you know, as a separate follow-up to that, what's the margin impact from new cassettes, on Unity VCS?
Speaker Change #151: How should we think about those contributing as you launch that?
Speaker Change #151: Yeah, well, I mean, I think the way to think about VCS, particularly as we sell joint machines, you know, a combo machine of a VIT-RET and a cataract machine, internationally, that is a very popular setup, principally because the ORs are shared amongst the VIT and cataract surgeons, and so it's a particularly efficient setup, and the use is obviously more efficient.
Speaker Change #151: And then I have a question on dry eye.
Speaker Change #151: We expect to kind of make a premium on those, so, again, I would think about it as put the, two together at the current ASPs and think about a premium, and that's really where we are with that particular idea.
Speaker Change #151: The cassette element is part of the discussion, but I do think there's more to it than that.
Speaker Change #151: You know, the packs broadly are going to get launched with new instrumentation, so, you, know, things that may not seem really important but are to the surgeons, like moving from 23-gauge or 25-gauge instruments to 27-gauge instruments, this creates less trauma in the, eye.
Speaker Change #151: We've got a new entry system that is, you know, the trocars, you know, on our retina, piece, and there's a lot of stuff that we're bringing in that will make this procedure safer faster, and, you know, we think that that really matters a lot.
Speaker Change #151: Okay, that's helpful, David.
Speaker Change #151: So, the consumables element, again, we'll be looking for a premium on it from our current, project, but remember that, you know, we have a fairly sizable, you know, share of the markets right now, so, directionally, this isn't really a share play as much as it is a, you know, an upgrade and replacement play, and the only way we're going to get that done is if we can generate real efficiencies that generate real economics for both payers and surgeons.
Speaker Change #152: I think the quarter is pretty normal I think it was somewhere in the five kind of mid single digit range for the market and as we kind of calculate out the CLC element of the contact lens care element of it and I think that way, we would probably moving around 6%, so a little bit faster than the market as we saw it but I.
Speaker Change #107: I mean, I think, you know, it's hard to tell from a distance how much was stocking and how much was demand.
Speaker Change #108: You know, it just goes province by province, which is a little bit tricky.
Speaker Change #109: So, you know, we sell into a variety of distributors who then supply the hospitals.
I think you should just think about it as another normal quarter.
Speaker Change #152: Great. Thank you and then maybe one for Tim on free cash flow and a strong improvement in cash generation in each one.
Speaker Change #152: Oh, hi guys, good afternoon, and thank you for taking my questions.
Speaker Change #153: Is this the new normal level of cash conversion that we should expect from alpha moving forward. Thank you.
Speaker Change #152: And then, you know, turning to dry eye for a second, AR15512, congrats on the PDUFA date.
Speaker Change #152: You know, as I think about that relative to other prescription pharmaceuticals in the, dry eye market, how would you have us think about that product launch?
Tim Stonesifer: Yes, great question listen, we're very pleased with our free cash flow performance in the first half and as we said we would expect to see a significant.
Tim Stonesifer: Sorry, I forgot to unmute before I started talking.
Tim Stonesifer: I mean, we've tracked Zydra, Restasis, Mevo now, you know, we've seen how those have launched.
Tim Stonesifer: In your mind, you know, what closely mirrors kind of what you expect for AR15512 as you, launch that next year?
Tim Stonesifer: Well, you know, it's tough right now because, you know, the market has changed quite a lot, you know, since, you know, Restasis or Zydra, and probably you're going to have to look at the more recent launches to really get a feel for the trajectory.
Tim Stonesifer: The payer dynamics is a big part of what happens now, and, of course, Medicare is probably, 50% of the prescriptions, so, you know, you need to think about the cycle of when Medicare brings formulary products on, you need to think about the cycle for which payers begin to pay, and we'll obviously manage all of that.
Speaker Change #154: The increase year over year. So the one thing I would remind you of is we did have some unusual items that pressured free cash flow last year. So if you think about the legal settlement. We had if you think about the transformation costs.
Speaker Change #154: And some of the higher level of inventory that we purchased so.
I think youre going to see the step up this year and then next year and beyond Youre going to see more of a normalized free cash free cash flow progression thats sort of in line with our operating income that's a good proxy for free cash flow, but we're pleased with our performance so far.
Speaker Change #154: That will do the trick.
Speaker Change #154: Thank you.
Speaker Change #155: Thank you. Our next question comes from the line of Tom Stephan with Stifel. Please proceed with your question.
Speaker Change #155: Two for me, please.
Speaker Change #155: We're still working our way through it, and so I'd be a little – it's a little premature, for me to give you a lot of detail around it for us, but I think in the next, I would say, you know, four to six months, we'll have a pretty good read on what we're going to do and how to think about this one.
Speaker Change #155: But I think it's – look, what we're excited about with this product is in the market, there is a real need for faster-acting products that treat, you know, successfully more patients, and I think, you know, those two elements will be a – will feature in the way we think about this product.
Speaker Change #155: Thank you.
Tom Stephan: Great Hey, guys. Thanks for the questions I think just one for me David I believe in the past you've talked about the tunable accommodative offering potentially not requiring an incremental system for the post op adjustments and then maybe those can be done with a laser that I guess surgeons already having their clinic.
Tom Stephan: The first one is just looking at the full year guide, I'm thinking mostly organic sales growth.
Tom Stephan: Our next question comes from the line of David Adlington with J.P. Morgan.
Speaker Change #157: Obviously, we're very much trending towards the very bottom of the 7 to 9 on constant currency.
Speaker Change #157: Is that still the thought or the strategy.
Speaker Change #158: It comes to your future tunable offering thanks.
Speaker Change #158: Just curious, kind of, David, what gives you guys the confidence that there's scope for acceleration in the back half of the year?
Speaker Change #158: Yes interesting question, Tom and I think we've got a lot of projects.
Speaker Change #158: And what I would loosely called tunable and adjustable areas. We probably we have several projects one of them I showed I think at capital markets Day last last time, we did it which was a laser adjustment, which we think is probably a better long term idea then.
Speaker Change #110: We, you know, I think even if you took out China, we had a very good growth.
Speaker Change #111: And we read that as penetration was up because as you'll remember, you know, we kind of have focused for a long time on how does penetration move.
Speaker Change #158: Kind of adjusting material with UV light, which again stray UV light.
Speaker Change #158: Locking that in it's still a little bit tricky. So I think directionally. My view is that there'll be better ideas going forward for tuning and adjusting.
Speaker Change #111: And that's important globally penetration was up in Europe, penetration was up in China.
Speaker Change #158: Is there a specific region, product category that you're focused on?
Speaker Change #158: Thats accommodation again, which we have a number of ideas around or tuning itself.
Speaker Change #111: It was up in most of the countries, including the United States.
Speaker Change #158: We're working on several.
Speaker Change #159: Got it thanks.
Speaker Change #159: So, if you could talk through that and kind of.
Speaker Change #111: So that helped us overall.
Speaker Change #160: Thank you. Our next question comes from the line of Steve Lichtman with Oppenheimer <unk> Company. Please proceed with your question.
Speaker Change #160: You know, zero degree of confidence that we're going to end up towards seven versus towards nine.
Speaker Change #160: Please proceed with your question.
Speaker Change #111: So I would say that the VVP contribution relatively small to the total.
Steve Lichtman: Thank you good morning, guys.
Steve Lichtman: That would be my first question.
Steve Lichtman: Hey, guys, just – thanks for the questions.
Steve Lichtman: First one, just in terms of your supply chain issues in contact lens care, I just wondered, why you had to take provision and why – and were you not able to go back and get some compensation from your supplier?
Steve Lichtman: And then secondly, just on the equipment growth, I just wanted to give you the feel of what, percentage of units you sold this quarter actually have an upgrade option to a unity at some point later down the line.
Steve Lichtman: David is it geared toward precision seven launch any color you can provide on how you think youll.
Steve Lichtman: Youll position at relative to total 30, and how it can help you expand your share and reusable so what.
Speaker Change #111: That's great.
Speaker Change #111: Thank you guys so much.
Speaker Change #111: Thank you.
Speaker Change #162: What is your market assessment say on the type of patient that you can target with <unk> seven.
Steve Lichtman: Thanks.
Steve Lichtman: You know, on the provision, you know, we took it because, obviously, we had a lot of product, in hand that had been made with something that wasn't going to contribute, you know, to the final product correctly.
Speaker Change #163: Then I have a follow-up after that, but I'll let you answer that first.
Speaker Change #163: Yes, <unk> has been a really interesting product for us because we were unclear a little bit when we started down this path how big this market might be so I think youre asking an interesting question that we have spent some time on.
Speaker Change #163: You know, we are obviously going to talk to our supplier about, you know, that situation, and we'll be careful to comment on that one right now.
Speaker Change #163: Hey Veronika, how you doing?
Speaker Change #163: The precision seven is unique in that we've created a technology that allows water to move from the lens material to the surface for seven consecutive days that keeps a fresh lens nearly every day in that experience and that regimen of kind of every Sunday, our every Monday or whatever you want to choose a.
Speaker Change #163: Yeah, so I think, you know, the difference between the seven and nine is really how the markets perform, you know, if we get a little bit more market growth or recovery than we have expected, that would bring that number up.
Speaker Change #111: Our next question comes from the line of Ryan Zimmerman with BTIG.
Speaker Change #163: I think it's also how effective our pricing actions are, how does the VVP do in China, we're not quite sure how that's going to roll out, that might come in better than we have.
Speaker Change #163: So, you know, listen, there's still five or six, five months left in the year.
Speaker Change #163: And there are a lot of variables out there.
Speaker Change #112: Please proceed with your question.
Speaker Change #113: Good morning.
Speaker Change #114: Thanks for thanks for taking our questions.
Speaker Change #115: I want to ask one on dry eye and one on unity VCS.
Speaker Change #163: But you know, given what we're seeing right now, that's why we're trending towards the low end.
Speaker Change #116: I'm going to start with unity VCS a little bit, actually.
Speaker Change #116: So just as you think about the upgrade cycle unity VCS.
Speaker Change #163: Leasing it for the fresh lens seems to be very attractive to both patients and to the optometrists that we've talked to and right now we've got a select group of key opinion leaders using this product.
Speaker Change #163: And that's why we called that out.
Speaker Change #116: I mean, how are customers?
Speaker Change #116: How are you thinking about approaching it?
Speaker Change #164: That's great.
Speaker Change #164: <unk> had it for I guess, a couple of months, while we were building inventory on it and it seems to be.
Speaker Change #164: And actually, that's a great segue to my second question, which is, are you able to break out for us what the contribution from stocking was to implantables from China VBP?
Speaker Change #116: If customers are buying say one constellation and one centaurion, you know, what are the economics to you guys?
Speaker Change #164: You know quite quite pleasing to them and so I think they like the intuitive nature of the replacement schedule and they like the fact that there they're moving down to a fresh lens a little more frequently that just I think appeals to everybody and then again the price point on this will fit in nicely between a daily <unk> lens in a reusable lens. So what we're trying to do.
Speaker Change #116: And, you know, as a separate thought that what's the margin impact from new cassettes on unity VCS?
Speaker Change #164: And I guess, what are you seeing on the ground in terms of as you look at July and August?
Speaker Change #116: How should we think about those?
Speaker Change #164: How much traction are you seeing so far on that VBP front?
Speaker Change #164: Yeah, we're just starting, Veronika.
Speaker Change #164: I mean, I think, you know, it's hard to tell from a distance, how much was stocking and how much was demand, you know, this goes province by province, which is a little bit tricky.
Speaker Change #116: Contributing as you want that.
Speaker Change #164: So, you know, we sell into a variety of distributors, who then supply the hospitals.
Speaker Change #164: We, you know, I think even if you took out China, we had a very good growth.
Speaker Change #164: Is squeezed a little bit of room in here and I think there's a pretty good place for it so well.
Speaker Change #164: And we read that as penetration was up, because, as you'll remember, you know, we kind of focused for a long time on how does penetration move, and that's important, globally. Penetration was up in Europe, penetration was up in China, it was up in most of the countries, including the United States.
Speaker Change #164: But I think directionally, you know, we feel like that's under control, and we're pursuing, all the proper avenues to get that product safely secured, and we're moving down that path.
Speaker Change #164: On the equipment growth, you know, we aren't – you know, we aren't really prepared to, talk about the units sold and, you know, upgrading.
Speaker Change #164: We'll see how it plays but I think directionally the feedback early on has been very positive.
Speaker Change #116: And then I have a question on dry.
Speaker Change #117: Yeah, well, I mean, I think the way to think about VCS, particularly as we sell joint machines, you know, a combo machine of of a vet and a cataract machine.
Speaker Change #164: I think directionally, you know, we sell – you know, we have, as I said, you know, something, on the order of 30,000 units out there.
Speaker Change #165: Great and then just a follow up you mentioned earlier in the call. It strategic deal in China with ocular mentioned it seems like an interesting new opportunity.
Speaker Change #165: So that helped us overall.
Speaker Change #165: Those are generally done on an upgrade cycle of about 10 years.
Speaker Change #165: So, you know, think of the world as kind of roughly 2,500 to 3,000 units every year kind, of roughly comes in and out of the market.
Speaker Change #165: There'll probably be an enthusiasm in the beginning for the product.
Speaker Change #165: That's usually what has happened historically.
Speaker Change #165: And then it slows down a little bit, but we'll try and meter that carefully so that you have, both an upgrade element of it, but also kind of people who really want additional units.
Give a little more color on how you view that opportunity long term.
Speaker Change #165: And, you know, we are excited about the combo unit, particularly in the international market.
Speaker Change #165: So that's about what I can help you with now.
Speaker Change #166: Well, we like the team that they've got there they've built.
Speaker Change #166: So I would say the VVP contribution, relatively small to the total.
Speaker Change #166: That's great.
Speaker Change #166: Great, thank you.
Speaker Change #167: A business that has local manufacturing local R&D regulatory folks that really understand that market.
Speaker Change #166: Thank you.
Speaker Change #166: Our next question comes from the line of Patrick Wood with Morgan Stanley.
Speaker Change #167: For us to get in there our assessment was it was going to take us a while to do that and to build the capabilities that are really effective is expensive and we really thought through carefully how we wanted to think about China and I think really we decided that we had a lot of opportunity in surgical a good bit of opportunity in vision care and the eye drops business we could.
Speaker Change #167: Find a partner for a very efficient way and so this is.
Speaker Change #167: This is a move for efficiency for profitability and I think capability really is the way to think about it.
Dave: Got it thanks, Dave.
Speaker Change #166: Please proceed with your question.
Speaker Change #166: Brilliant.
Dave: Okay.
Speaker Change #166: Thank you for taking the questions.
Speaker Change #169: Thank you. Our final question comes from the line of Brett Fishman with Keybanc capital markets. Please proceed with your question.
Speaker Change #117: Internationally, that is a very popular setup, principally because the ORs are shared amongst the VCS and cataract surgeons.
Brett Fishman: Thank you guys so much.
Brett Fishman: Hey, guys. Thank you so much for squeezing me in I think we hit on pretty much every business area media, except for consumables. So I'll ask about that one didn't really come up much on the call.
Brett Fishman: Thank you.
Speaker Change #117: And so it's a particularly efficient setup and the use is obviously more efficient.
Brett Fishman: Our next question comes from the line of Ryan Zimmerman with BTIG.
Speaker Change #171: Good morning.
Speaker Change #171: So kind of down the middle of this quarter, but a little bit lower than some of the recent high single digit or double digit quarters that you've put up over the past couple of years. So just curious if youre looking at this theres a bit of a one off quarter.
Speaker Change #117: We expect to kind of make a premium on those.
Speaker Change #171: Thanks for taking our questions.
Speaker Change #171: I want to ask one on dry eye and one on Unity VCS.
Speaker Change #117: So again, I would think about it as put the two together at the current ESPs and think about a premium.
Speaker Change #117: And that's that's really where we are with with that particular idea.
Speaker Change #117: Because set element is part of the discussion, but I do think there's more to it than that.
Speaker Change #172: I've been flow or if there was any type of headwinds that you could call out there.
Speaker Change #171: Just to think about all the new product launches that are coming through, I'm just curious, how you're thinking about incremental investment behind them, sales and marketing.
Speaker Change #171: You obviously have a massive distribution network, but, you know, dry eye takes a bit, of dollars to sometimes get working, but then, you know, Unity, you also, you already have a Rolodex of customers there.
Speaker Change #117: You know, the packs broadly are going to get launched with new instrumentation.
Speaker Change #172: Yes. Good question, Brad I mean look I mean, I would think about it as we generally think about the market and consumables is quite correlated. So I think we always get a little bit of share in a little bit of price as we've kind of trade people up into the newer consumables newer disposables.
Speaker Change #118: So, you know, things that are that may not seem really important, but are to the surgeons like moving from 23 gauge or 25 gauge instruments to 27 gauge instruments. This creates less trauma in the eye.
Speaker Change #171: How are you thinking about the interplay between incremental investment behind pushing the, products as we move into next year versus that kind of top line opportunity?
Speaker Change #171: Yeah, I mean, look, we're really trying to struggle with that question, Patrick.
Speaker Change #172: So think about the market overall is kind of three 8% low single digits kind of number and we grew.
Speaker Change #118: We've got a new entry system that is, you know, the trocars, you know, on our on our retina piece.
Speaker Change #172: 5% consumables so I.
Speaker Change #172: I think thats the right way to think about it it was just a little bit softer quarter around the world.
Speaker Change #172: For procedural growth.
Speaker Change #173: I think that's all there was to it early in the year. The first quarter, we had a really good <unk>.
Speaker Change #118: And there's a lot of stuff that we're bringing in that will make this procedure safer faster.
Speaker Change #173: Usual growth numbers. So again I think <unk> got the you kind of got the gist of it.
Speaker Change #118: And, you know, we think that that really matters a lot.
Speaker Change #174: Alright, and then just last follow up question on contact lenses, you guys keep calling out strength in <unk> and multifocal is as one of the key drivers, which is great to see just I think it's interesting the number of new launches in the daily Si Hy <unk> category with another one pretty recently.
Speaker Change #119: So the consumables element, again, we'll be looking for a premium on it from our current project.
Speaker Change #120: But remember that we're, you know, we have a fairly sizable share of the markets right now. So, directionally, this isn't really a share play as much as it is an upgrade and replacement play.
Speaker Change #175: Just on how youre viewing competitive dynamics, there and whether you expect any change to the level of growth you've seen in some of your daily cortex for the rest of the year. Thank you.
Speaker Change #176: Yes. Good question the specialty lenses really are.
Speaker Change #177: Where the action is right now and I think that's.
Speaker Change #177: That's good because again I think they are underdeveloped in terms of categories. So I think people see correctly that the multifocal designs today are they are acceptable there pretty good but they aren't perfect. There's a lot of work we're doing right now to kind of improve those multifocal designs multifocal parks very difficult to make very expensive to make and I think there is.
Speaker Change #177: Still some launches going on in that space Thats relatively small market.
Speaker Change #178: Spent a lot of time thinking about our toric design and I spoke to it in the prepared remarks, but I think directionally, we're very pleased with the uptake of our toric lenses and how the toric lenses Halo the rest of the brand family. So we've had a nice run with dailies, particularly with the <unk>.
Speaker Change #178: And so people want toric duty one for astigmatism those are our terrific lens movements for us and I do think there'll be more competitive dynamic around it but I think we may be in a very.
Speaker Change #178: Strong position given the design that we have for our toric, which is which is really unique.
Mr. <unk>: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. <unk> for any final comments.
Speaker Change #171: It's a great question.
Speaker Change #171: And I think, you know, as we come into the fourth quarter and we really get our budget, set for next year, we'll have an opportunity to describe that to you next quarter, I think, with some degree of detail.
Speaker Change #171: I do think that we are going to want to put additional investment behind major project, launches like Unity VCS, like 512.
Speaker Change #171: And so I think, you know, that's what's been in our plan.
Mr. <unk>: Alright, well, thanks, everybody again for joining us this morning.
Mr. <unk>: I'll start with Unity VCS a little bit actually.
Mr. <unk>: So I don't think there's anything new there necessarily, but it does matter how many products, we've got right now and how many opportunities we have, and we want to make sure we maximize all those to try and, you know, really drive revenue at its maximum value.
Mr. <unk>: So just as you think about the upgrade cycle at Unity VCS, I mean, how are customers or how are you thinking about approaching it if customers are buying, say, one Constellation and one Centurion, you know, what are the economics to you guys?
Mr. <unk>: So, you know, my sense of it is we'll have a better, more clear picture as we guide for, next year, and certainly we'll begin to work that process, you know, next quarter.
Speaker Change #180: And, you know, as a separate follow-up to that, what's the margin impact from new cassettes on Unity VCS?
Speaker Change #180: Brilliant.
Speaker Change #180: How should we think about those contributing as you launch that?
Speaker Change #180: Two, please.
Speaker Change #180: And then just as a quick follow-up, the OcuMention agreement, excuse my ignorance, I'm just curious, like, the difference that you saw in the end markets in China for, you know, the Ocular Health side relative to surgical and contacts, and why direct makes more sense for one relative, to the distributor-led model for the other?
Speaker Change #180: And then I have a question on dry eye.
Speaker Change #180: If you have any follow up questions.
Speaker Change #180: Just on Unity VCS or even CS, I'm wondering if you could share any initial feedback you're, getting from surgeons and any kind of initial data around the potential efficiency improvements that the systems can provide and how strong that case may be.
Speaker Change #180: Well, the simplest answer, honestly, is that we don't necessarily have the capabilities, in-house today to do what they have already made.
Speaker Change #180: Yeah, well, I mean, I think the way to think about VCS, particularly as we sell joint machines, you know, a combo machine of a VitRet and a cataract machine, internationally, that is a very popular setup, principally because the ORs are shared amongst the VIT and cataract surgeons.
Speaker Change #180: Thank you.
Speaker Change #180: And then the second one was just on equipment.
Speaker Change #180: So, you know, we'd have been in a build mode for China, and frankly, the portfolio was, relatively small with a fairly sizable investment on AR-512.
Speaker Change #180: And so it's a particularly efficient setup, and the use is obviously more efficient.
Speaker Change #180: Our next question comes from the line of David Adlington with J.P. Morgan.
Speaker Change #180: So, could you just kind of give it a color around kind of how much cost effect was here, and whether there's any kind of underlying weakness in demand or if people are kind of holding off ahead of the Unity launch or anything like that.
Speaker Change #180: So, you know, what we were looking at was where do we want to prioritize resource more, than anything else, and, you know, I think what we saw was a very skilled partner who has good regulatory experience, good marketing experience, good manufacturing and R&D, and, you know, it really seemed to make a lot of sense for us to let them, you know, take on the eye drops business for us instead of us trying to build all of that capacity while we do all these other products, while we do, you know, as many things as we've got going on.
Speaker Change #180: We expect to kind of make a premium on those.
Speaker Change #180: Please proceed with your question.
Speaker Change #180: For the media reach out to our corporate Communications Department.
Speaker Change #180: So, you know, it was really more of a what's the most efficient way to maximize profit.
Speaker Change #180: So again, I would think about it as put the two together at the current ASPs and think about a premium, and that's really where we are with that particular idea.
Speaker Change #180: Hey guys, thanks for the questions.
Speaker Change #180: Love it.
Speaker Change #180: The cassette element is part of the discussion, but I do think there's more to it than that.
Speaker Change #180: First one, just in terms of your supply chain issues and contact lens care, I just wondered why you had to take provision and were you not able to go back and get some compensation from your supplier?
Speaker Change #180: Thanks.
Speaker Change #180: Thanks for the questions.
Speaker Change #180: You know, the packs broadly are going to get launched with new instrumentation.
Speaker Change #180: And then secondly, just on the equipment growth, I just wanted to give you a feel of what percentage of units you sold this quarter actually have an upgrade option to a unity at some point later down the line.
Speaker Change #180: Yeah, the second one, Jack, is pretty easy.
Speaker Change #180: Thank you.
Speaker Change #180: So, you know, things that may not seem really important but are to the surgeons, like moving from 23-gauge or 25-gauge instruments to 27-gauge instruments, this creates less trauma in the eye.
Speaker Change #180: Thanks.
Speaker Change #180: We kind of expected, as you remember from the beginning of the year, that we'd see a little bit of a stall in console growth, particularly about this time.
Speaker Change #180: Or from investors or analysts certainly feel free to reach out to either Allen or myself. Thanks again.
Speaker Change #180: Thank you.
Speaker Change #180: Our next question comes from the line of Jack Reynolds-Clark with RBC Capital Markets.
Speaker Change #180: We've got a new entry system that is, you know, the trocars, you know, on our retina piece.
Speaker Change #180: You know, on the provision, you know, we took it because obviously we had a lot of product in hand that had been made with something that wasn't going to contribute, you know, to the final product correctly.
Speaker Change #180: And what I'm excited about with the equipment is underlying that is actually pretty solid demand for biometry, for scopes, for other equipment, which we've done quite well with while we have kind of seen the console business kind of slow down.
Speaker Change #180: Our next question comes from the line of Anthony Petrone with Mizuho Group.
Speaker Change #180: Please proceed with your question.
Speaker Change #180: I mean, there's a lot of stuff that we're bringing in that will make this procedure safer, faster, and, you know, we think that really matters a lot.
Speaker Change #180: You know, we are obviously going to talk to our supplier about, you know, that situation and we'll be careful to comment on that one right now.
Speaker Change #180: So, directionally, I think, you know, you should feel pretty good about equipment right now because we, you know, most everybody knows that we've got, you know, a bunch of product out there in the market with some key customers, you know, making sure we get it all kind of perfect before we launch it.
Speaker Change #180: Please proceed with your question.
Speaker Change #180: Hi there.
Speaker Change #180: So the consumables element, again, we'll be looking for a premium on it from our current project.
Speaker Change #180: But I think directionally, you know, we feel like that's under control and we're pursuing all the proper avenues to get that product safely secured and we're moving down that path.
Speaker Change #180: But directionally, I think equipment looks pretty good to us.
Speaker Change #180: Thanks and good morning.
Speaker Change #180: This concludes today's conference call.
Speaker Change #180: Thank you for taking the questions.
Speaker Change #180: But remember that, you know, we have a fairly sizable, you know, share of the markets right now.
Speaker Change #180: On the equipment growth, you know, we aren't really prepared to talk about the units sold and, you know, upgrading.
Speaker Change #180: On the Unity piece, you know, we are very excited from the feedback that we've gotten from surgeons on this, and we've had it with some of the best folks in the world, in Japan, in the United States, in Europe.
Speaker Change #180: Maybe one on margins and one on capital allocation.
Speaker Change #181: So directionally, this isn't really a share play as much as it is a, you know, an upgrade and replacement play.
Speaker Change #181: I think directionally, you know, we have, as I said, you know, something on the order of 30,000 units out there.
Speaker Change #181: You know, consistently what we're hearing is, you know, very, very safe.
Speaker Change #181: Tim, just on margin, you called out the supplier quality issue was 120 basis points.
Speaker Change #181: And the only way we're going to get that done is if we can generate real efficiencies that generate real economics for both payers and surgeons.
Speaker Change #181: Those are generally done on an upgrade cycle of about 10 years.
Speaker Change #181: You know, people operating at, you know, IOPs that are considerably lower than where they have been in the past, you know, in the 20s.
Speaker Change #181: You back it out, you're at 21%.
Speaker Change #181: Okay, that's helpful, David.
Speaker Change #181: So, you know, think of the world as kind of roughly 2,500 to 3,000 units every year, kind of roughly comes in or out of the market.
Speaker Change #181: You know, there are people now operating, you know, at physiological IOP, which we think is the end game, you know, for this product.
Speaker Change #181: You're leaving the guidance unchanged, but if I heard you correctly, there'll still be a margin impact from the quality, supply quality issues, at least in some portion of the second half.
Speaker Change #181: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change #181: And then, you know, turning to dry eye for a second, AR15512, congrats on the PDUFA date.
Speaker Change #181: There will probably be an enthusiasm in the beginning for the product. That's usually what has happened historically. And then it slows down a little bit.
Speaker Change #181: And when you do that, you know, basically everything kind of, you know, looks safer and more stable, and you can move a little bit faster.
Speaker Change #181: So it suggests the underlying.
Speaker Change #181: You know, as I think about that relative to other prescription pharmaceuticals in the dry eye market, how would you have us think about that product launch?
Speaker Change #181: But we'll try and meter that carefully so that you have both an upgrade element of it but also kind of people who really want additional units.
Speaker Change #181: You may disconnect your lines at this time.
Speaker Change #181: And that's really the key to this thing is to get the safety into a level where you really can speed up a little bit.
Speaker Change #181: Margin's actually a little bit better.
Speaker Change #181: I mean, we've tracked Zydra, Restasis, Mevo now, you know, we've seen how those have launched.
Speaker Change #181: And, you know, we are excited about the combo unit, particularly in the international market.
Speaker Change #181: The cut speeds on the VIT machine are twice as fast as the Constellation.
Speaker Change #181: Are we thinking about that correctly?
Speaker Change #181: In your mind, you know, what closely mirrors kind of what you expect for AR15512 as you launch that?
Speaker Change #181: So that's about what I can help you with now.
Speaker Change #181: And, you know, our observation of the Cataract machine is, again, we'll see some efficiency improvements there as well.
Speaker Change #181: And if there is underlying momentum, what are the sources there?
Speaker Change #181: Well, you know, it's tough right now, because, you know, the market has changed quite a lot, you know, since, you know, Restasis or Zydra.
Speaker Change #181: Great.
Speaker Change #181: So we're very excited about what happens here, both in the – everything from the setup to the teardown to the time in surgery.
Speaker Change #181: And then I'll have one quick follow-up.
Speaker Change #181: And probably you're going to have to look at the more recent launches to really get a feel for the trajectory.
Speaker Change #181: Thank you.
Speaker Change #181: It just looks like it's a more efficient machine on both Cataract and Retina.
Speaker Change #181: Yeah, great question, Anthony.
Speaker Change #181: The payer dynamics is a big part of what happens now.
Speaker Change #181: Our next question comes from the line of Patrick Wood with Morgan Stanley.
Speaker Change #181: So we're, you know, optimistic, and the feedback has been very positive.
Speaker Change #181: Listen, the way we're thinking about it is, obviously, we weren't expecting the impact of the inventory provision and, you know, $30 million is called, you know, 30 or 40 basis points.
Speaker Change #181: And of course, Medicare is probably 50% of the prescription.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: Great.
Speaker Change #181: But the other thing to think about is, at the same time, we have quite a few investments in the second half related to new product launches that we're committed to making, because, obviously, revenue growth is key to the financial thesis.
Speaker Change #181: So, you know, you need to think about the cycle of when Medicare brings formulary products on, you need to think about the cycle for which payers begin to pay.
Speaker Change #181: Brilliant.
Speaker Change #181: Thank you very much.
Speaker Change #181: So, you know, that's really why, you know, we give a range.
Speaker Change #181: And we'll obviously manage all of that.
Speaker Change #181: Thank you for taking the questions.
Speaker Change #181: Thank you.
Speaker Change #181: So, you know, given the assumptions we've laid out, we're comfortable that we can hit that range.
Speaker Change #181: We're still working our way through it.
Speaker Change #181: Just to think about all the new product launches that are coming through, I'm just curious how you're thinking about incremental investment behind them, sales and marketing.
Speaker Change #181: Our next question comes from the line of David Saxon with Needham & Company.
Speaker Change #181: And the other thing to think about is, if you look at our R&D spend in the first half of the year, we're coming in at about 8.2%.
Speaker Change #181: And so I'd be a little, it's a little premature for me to give you a lot of detail around it for us.
Speaker Change #181: You obviously have a massive distribution network.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: Again, we'd like to be at the high end of that, because we think innovation is super important.
Speaker Change #181: But I think in the next, I would say, you know, four to six months, we'll have a pretty good read on what we're going to do and how to think about this one.
Speaker Change #181: But you know, dry eye takes a bit of dollars to sometimes get working.
Speaker Change #181: Great.
Speaker Change #181: And given the pipeline that we have right now, I'd expect the R&D spend to be a little bit heavier in the back half as well.
Speaker Change #181: But I think it's, look, what we're excited about with this product is in the market, there is a real need for faster acting products that treat, you know, successfully more patients.
Speaker Change #181: But then, you know, Unity, you also you already have a Rolodex of customers there.
Speaker Change #181: Thanks.
Speaker Change #181: That's helpful.
Speaker Change #181: And I think, you know, those two elements will be a will feature in the way we think about this product.
Speaker Change #181: So how are you thinking about the interplay between incremental investment behind pushing the products as we move into next year versus that kind of top line opportunity?
Speaker Change #181: Good morning.
Speaker Change #181: And just capital allocation, there was speculation out there during the quarter that perhaps Alcon was looking at a larger transaction than we've historically seen it pursue.
Speaker Change #181: Yeah, I mean, look, we're really trying to struggle with that question, Patrick.
Speaker Change #181: Thanks for taking my questions.
Speaker Change #181: So maybe just your latest thoughts on the M&A market.
Speaker Change #181: It's a great question.
Speaker Change #181: Maybe I'll start on the glaucoma portfolio.
Speaker Change #181: Is the priority still for some of the therapeutic assets that are out there?
Speaker Change #181: And I think, you know, as we come into the fourth quarter, and we really get our budget set for next year, we'll have an opportunity to describe that to you next quarter, I think, with some degree of detail.
Speaker Change #181: I know HYDROS is a smaller product for you, but can you talk about how that's been trending, and the attachment rate you're seeing with your IOLs?
Speaker Change #181: What are you looking at in medtech these days?
Speaker Change #181: I do think that we are going to want to put additional investment behind major project launches like Unity VCS, like 512.
Speaker Change #181: And then on Belkin Vision DSLT, maybe timing to launching that in the U.S.?
Speaker Change #181: There's some high-level thoughts there.
Speaker Change #181: And so I think, you know, that's what's been in our plan.
Speaker Change #181: And then, lastly, on glaucoma, David, I think you mentioned a new drop in the pipeline.
Speaker Change #181: Yeah, you know, Anthony, we're always looking at stuff in ophthalmology, you know, if it's in eye care, you know, you can count on us being somehow involved in looking at it.
Speaker Change #181: So I don't think there's anything new there necessarily.
Speaker Change #181: Is that in glaucoma or is that in a different part of the portfolio?
Speaker Change #181: And so directionally, we still like the kind of technology-oriented, bolt-on ideas that kind of range in that 50 to 500.
Speaker Change #181: But it does matter how many products we've got right now.
Speaker Change #181: Yeah, let me start with HYDROS.
Speaker Change #181: Obviously, you know, with the strength of our balance sheet, we can do any number of things.
Speaker Change #181: And how many opportunities we have, and we want to make sure we maximize all those to try and, you know, really drive revenue at its maximum value.
Speaker Change #181: You know, the HYDROS business is going well. I mean, it's double-digit growth, which is ahead of the market, kind of as we expected. So we're doing well with that product.
Speaker Change #181: But I think really, you know, what we're trying to do is fill out white spaces.
Speaker Change #181: So, you know, my sense of it is we'll have a better, more clear picture as we as we guide for next year.
Speaker Change #181: We really don't think about attachment rate very much with the IOLs.
Speaker Change #181: And so think glaucoma, think refractive, think, you know, contact lens technology, think, I know, pharmaceuticals.
Speaker Change #181: And certainly we'll begin to work that process next quarter.
Speaker Change #181: It's really kind of indifferent to us.
Speaker Change #181: You know, those are areas where we have big growth opportunities and relatively low shares.
Speaker Change #181: Brilliant.
Speaker Change #181: It's really specific about how we handle the glaucoma patient's needs.
Speaker Change #181: So that's kind of the, generally speaking, that's what we're looking at in that zone.
Speaker Change #181: And then just as a quick follow-up, the OcuMention agreement, excuse my ignorance, I'm just curious, like, the difference that you saw in the end markets in China for, you know, the ocular health side relative to surgical and contacts and why direct makes more sense for one relative to the distributor-led model for the other?
Speaker Change #181: So relative to HYDROS, we think adding Belkin makes a ton of sense, because if you start with SLT, and we think this is a much faster, easier way to do SLT, that's going to make a ton of sense, and then you'll move into whatever's next, whether that's drops or HYDROS or whatever, depending on the patient need.
Speaker Change #181: Tim, you want to add?
Speaker Change #181: Well, the simplest answer, honestly, is that we don't necessarily have the capabilities in-house today to do what they have already made.
Speaker Change #181: But I think the launch timing on Belkin will be likely first quarter next year, and I think we're working through some of the final details of that launch. But we've got manufacturing to take care of, and we're building inventory on that product now.
Speaker Change #181: That's right.
Speaker Change #181: So, you know, we'd have been in a build mode for China, and frankly, the portfolio was relatively small with a fairly sizable investment on AR-512.
Speaker Change #181: On the new drop, I'm not 100% sure which one you're talking about.
Speaker Change #181: Thank you.
Speaker Change #181: So, you know, what we were looking at was where do we want to prioritize resource more than anything else.
Speaker Change #181: We have a number of things going on in the pharmaceutical space, but in glaucoma, I think one of the things that was mentioned earlier was a follow-on to Roclatan, which, again, we have put in a clinical trial. That is a reformulation to try and improve the efficacy or the safety of that brand.
Speaker Change #181: Our next question comes from the line of Larry Biegelsen with Wells Fargo.
Speaker Change #181: And, you know, I think what we saw was a very skilled partner who has good regulatory experience, good marketing experience, good manufacturing and R&D.
Speaker Change #181: So there's one of those out there, but there's also several other things that we're working on in the pharmaceutical space.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: And, you know, it really seemed to make a lot of sense for us to let them, you know, take on the eyedrops business for us instead of us trying to build all of that capacity while we do all these other products, while we do, you know, as many things as we've got going on.
Speaker Change #181: Okay, great.
Speaker Change #181: Thanks for taking the question this morning.
Speaker Change #181: So, you know, it was really more of a what's the most efficient way to maximize profit.
Speaker Change #120: And the only way we're going to get that done is if we can generate real efficiencies that generate real economics for both payers and surgeons.
Speaker Change #181: That's super helpful.
Speaker Change #181: Hey, just one quick one on timing, and I had one follow-up.
Speaker Change #181: Love it.
Speaker Change #181: Thanks for that.
Speaker Change #181: So, the AR-155 data and publication, when will we see that, and how far behind is the CS, Unity CS, from ACS?
Speaker Change #181: Thanks for the questions.
Speaker Change #181: And then, just on cataract procedure, volumes, low single digits this quarter, I think it was like 2% last quarter.
Speaker Change #181: Yeah, Larry, thanks for the question.
Speaker Change #181: Thank you.
Speaker Change #181: So, I think that's a slowdown from what we've seen in the past.
Speaker Change #181: 512 data will likely be available at the American Academy of Ophthalmology coming up in, I think, October or November.
Speaker Change #181: Our next question comes from the line of Jack Reynolds-Clark with RBC Capital Markets.
Speaker Change #121: Lewis, okay, that's helpful, David.
Speaker Change #181: So, what's driving that?
Speaker Change #181: It's somewhere in that zone.
Speaker Change #181: Hi there, thank you for taking the questions.
Speaker Change #181: Anything specific from a geographical perspective, or is it kind of global?
Speaker Change #181: I think it's late October-ish.
Speaker Change #181: Two please.
Speaker Change #181: Thanks so much for taking the question.
Speaker Change #181: And then on the Unity VCS and CS, the CS will come pretty close.
Speaker Change #181: Just on Unity VCS, or even CS, I'm wondering if you could share any initial feedback you're getting from surgeons, and any kind of initial data around the potential efficiency improvements that the systems can provide, and how strong that case may be.
Speaker Change #181: Yeah, you know, the cataract weakness in the second quarter was real in the U.S., and it, was pretty stable, you know, I would say solid in the international market.
Speaker Change #181: I think, you know, probably six months behind VCS, but plus or minus a bit on that, let's just say, because I'm not 100% sure.
Speaker Change #181: And then the second one was just on equipment.
Speaker Change #181: So, you know, if you think about the difference, it really has been the U.S. that's been a little bit slower recently.
Speaker Change #181: David, just one follow-up, just what have you guys said publicly on just FACIC IOLs in general?
Speaker Change #122: And then, you know, turning to dry eye for a second, AR-155-12, congrats on the Purdue Fidate.
Speaker Change #181: So, could you just kind of give it a colour around kind of how much cost effect was here, and whether there's any kind of underlying weakness in demand, or if people are kind of holding off ahead of the Unity launch, or anything like that.
Speaker Change #181: You know, I can't tell you why exactly.
Speaker Change #181: I know Alcon had an internal program 20 years ago that never, you know, I don't think it ever, obviously wasn't launched, but what is your high-level view of just the FACIC IOL market in general?
Speaker Change #181: Yeah, the second one, Jack's pretty easy.
Speaker Change #181: I could give you a nine thesis on what it might be, but I don't think we know.
Speaker Change #181: Thank you.
Speaker Change #181: You know, we kind of expected, as you remember, from the beginning of the year, that we'd see a little bit of a stall in console growth, particularly about this time, you know, and, you know, what I'm excited about with equipment is underlying that is actually pretty solid demand for biometry, for scopes, for, you know, other equipment, which we've done quite well with, while we have kind of seen the console business kind of slow down.
Speaker Change #181: I do think that over time, these things tend to be idiosyncratic. You'll have one quarter that will do really well, you'll have a slowdown, and then you'll have another quarter that does really well.
Speaker Change #181: Um, you know, I think directionally, we think it's a good idea.
Speaker Change #181: So directionally, I think, you know, you should feel pretty good about equipment right now, because we know, most everybody knows that we've got, you know, a bunch of product out there in the market with some key customers, you know, making sure we get it all kind of perfect before we launch it.
Speaker Change #181: So, you know, our view is that the normal rate of cataract growth around the world is in the mid-single digits, kind of the low-end of mid-single digits, call that 4, 4.5.
Speaker Change #181: I think, you know, the projects that have been out there before we were in it, you know, historically with Cachet and, you know, we had some challenges with that.
Speaker Change #181: But directionally, I think equipment looks pretty good to us.
Speaker Change #181: Higher in international, lower in the U.S., but directionally, you know, we've got a lot more surgeons coming into the international markets.
Speaker Change #181: But I think directionally, you know, we like the progress that's being made there.
Speaker Change #181: On the unity piece, you know, we are very excited from the feedback that we've gotten from surgeons on this, and we've had it with some of the best folks in the world, in Japan, in the United States, in Europe, and, you know, consistently, what we're hearing is, you know, very, very safe, you know, people operating at, you know, IOPs that are considerably lower than where they have been in the past, you know, in the 20s.
Speaker Change #181: You know, think China, think Asia in general, and then we've got, you know, a lot of efficiency gains coming through in the United States, which is driving basically the volumes up over time.
Speaker Change #181: You know, again, LASIK is really a very, very good procedure.
Speaker Change #181: You know, there are people now operating, you know, a physiological IOP, which we think is the end game, you know, for this product.
Speaker Change #181: So, I think that's the best I can give you in terms of dynamics.
Speaker Change #181: And I think directionally, we still sell, you know, a lot of lasers for that procedure.
Speaker Change #181: And when you do that, you know, basically, everything kind of, you know, looks safer and more stable, and you can move a little bit faster.
Speaker Change #181: I, you know, generally think this thing evens out over time, and, you know, we expect to see, you know, solid quarters coming up.
Speaker Change #181: So, you know, I think for high myopes, this is a really inappropriate kind of project.
Speaker Change #181: And that's really the key to this thing is to get the safety into a level where you really can speed up a little bit.
Speaker Change #181: Great.
Speaker Change #181: And I think for anybody who's kind of minus six and under, I think you'd be hard pressed to go away from LASIK.
Speaker Change #181: The cut speeds on the VIT machine are twice as fast as the Constellation, and, you know, our observation of the Cataract machine is, again, we'll see some efficiency improvements there as well.
Speaker Change #181: Thanks so much.
Speaker Change #181: So our view is that that market doesn't really impact our refractive market.
Speaker Change #181: So we're very excited about what happens here, both in the, everything from the setup to the teardown to the time in surgery, it just looks like it's a more efficient machine on both Cataract and Retina.
Speaker Change #181: Thank you.
Speaker Change #181: So our LASIK business is still really solid.
Speaker Change #181: So we're, you know, optimistic, and the feedback has been very positive.
Speaker Change #181: Our next question comes from the, line of Anthony Patron with Mizuho Group.
Speaker Change #181: And what's really going on is I think the consumer is driving most of these decisions at this point. So strength of the consumer drives the strength of the refractive market.
Speaker Change #181: Great, thank you very much.
Speaker Change #123: You know, the thing about that relative to other prescription pharmaceuticals in the dry market, how would you have a thing about that product launch?
Speaker Change #181: Please proceed with your question.
Speaker Change #181: You know, there's a lot of up and down in that, but directionally, I'm still in an important market.
Speaker Change #181: Thank you.
Speaker Change #181: Thanks, and good morning.
Speaker Change #181: Thank you.
Speaker Change #181: Our next question comes from the line of David Saxon with Needham & Company.
Speaker Change #181: Maybe one on margins and one on capital allocation.
Speaker Change #124: I mean, we've tracked the Zedra or the Stasis, Mibo now.
Speaker Change #181: Thank you.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: Tim, just on, margin, you called out the supplier quality issue was 120 basis points.
Speaker Change #181: Thank you.
Speaker Change #181: Great.
Speaker Change #181: You back it out, you're at 21%.
Speaker Change #181: Our next question comes from the line of Michael Sarcone with Jeffreys.
Speaker Change #181: Thanks.
Speaker Change #181: You're leaving the guidance unchanged, but if I heard you correctly, there'll still be a margin impact from the quality, supplier quality issue, at least in some portion of the second half.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: Good morning.
Speaker Change #181: So, it suggests the underlying margin's actually a little bit better.
Speaker Change #181: Good morning, and thanks for taking the questions.
Speaker Change #124: You know, we've seen how those have launched.
Speaker Change #181: Thanks for taking my questions.
Speaker Change #181: Are we thinking about that correctly?
Speaker Change #181: Just, you know, first, you talked about a broader unity launch in the second quarter of 2025.
Speaker Change #181: Maybe I'll start on the Glaucoma portfolio.
Speaker Change #181: And if there is underlying momentum, what are the sources there?
Speaker Change #181: Can you maybe just elaborate on, you know, what the goalposts or things you're looking to accomplish prior to the broader launch are?
Speaker Change #181: I know Hydrus is a smaller product for you, but can you talk about how that's been trending and the attachment rate you're seeing with your IOLs?
Speaker Change #181: And then I'll have one quick follow-up.
Speaker Change #181: Yeah, Michael, one of the things that we, you know, have really been careful about with the Unity launch is to make sure that, you know, it we really understand that we understand all the corner cases that could come up that we've, you know, that we've looked at the preferences for software, you know, the way in which it looks and feels the way it gets set up, there's a lot of detail that is important to kind of fine tune, I would say, you know, once the products approved, and, you know, we have the good fortune of having two tremendously successful products out there with, with Centurion and Constellation.
Speaker Change #125: In your mind, you know, what closely mirrors kind of what you expect for AR-155-12 as you launch that next year.
Speaker Change #181: And then on Belkin Vision, DSLT, maybe timing to launching that in the U.S.?
Speaker Change #181: Yeah, great question, Anthony. Listen, the way we're thinking about it is, obviously, we weren't expecting the impact of the inventory provision and, you know, $30 million, let's call it, you know, 30 or 40 basis points.
Speaker Change #181: And so when you go in, and you say, hey, you know, I'd like to get a premium for this product, or this is a better product, you know, it really has to be.
Speaker Change #181: And then lastly, on Glaucoma, David, I think you mentioned a new drop in the pipeline.
Speaker Change #181: But the other thing to think about is, at the same time, we have quite a few investments, in the second half related to new product launches that we're committed to making because, obviously, revenue growth is key to the financial thesis.
Speaker Change #181: And that's really what we're after right now is making sure that we know how to describe that know how, you know, we have the data to actually prove that.
Speaker Change #181: Is that in Glaucoma or is that in a different part of the portfolio?
Speaker Change #181: So, you know, that's really why, you know, we give a range.
Speaker Change #181: And those are the things that we're working on.
Speaker Change #181: Yeah, let me start with HYDRIS.
Speaker Change #181: So, you know, given the assumptions we've laid out, we're comfortable that we can hit that range.
Speaker Change #181: And so we're being patient with this, for sure.
Speaker Change #181: You know, the HYDRIS business is going well. I mean, it's double-digit growth, which is ahead of the market, kind of as we expected. So, we're doing well with that product.
Speaker Change #181: And the other thing to think about is, if you look at our R&D spend in the first half of the year, we're coming in at about 8.2%.
Speaker Change #181: I recognize that, you know, we it was approved some time ago, but directionally, this is the way really great products get launched, I think.
Speaker Change #181: We really don't think about attachment rate very much with the IOLs.
Speaker Change #181: Again, we'd like, to be at the high end of that because we think innovation is super important.
Speaker Change #181: Understood.
Speaker Change #181: It's really kind of indifferent to us.
Speaker Change #181: And given the pipeline that we have right now, I'd expect the R&D spend to be a little bit heavier in the back half as well.
Speaker Change #181: That's helpful.
Speaker Change #181: It's really specific about how we handle the glaucoma patients' needs.
Speaker Change #181: That's helpful.
Speaker Change #181: And then just a last question for me.
Speaker Change #126: Well, you know, it's tough right now because, you know, the market has changed quite a lot, you know, since, you know, Rastasis or Zedra.
Speaker Change #181: So, relative to HYDRIS, we think adding Belkin makes a ton of sense, because if you start with SLT, and we think this is a much faster, easier way to do SLT, you know, that's going to make a ton of sense, and then you'll move into whatever's next, whether that's drops or HYDRIS or whatever, depending on the patient need.
Speaker Change #181: And just capital allocation, there was speculation out there during the, quarter that perhaps Alcon was looking at a larger transaction than we've historically seen it pursue.
Speaker Change #181: On the next-gen Panoptix, I think you mentioned you're still deciding on launch timing over the next few months.
Speaker Change #181: But I think the launch timing on Belkin will be, you know, likely first quarter next year, and I think we're working through some of the final details of that launch, but we've got manufacturing to take care of, and we're building inventory on that product now.
Speaker Change #181: So maybe just your latest thoughts on the M&A market.
Speaker Change #181: Can you just elaborate on the factors that you're thinking about as you decide on the launch timing and then, you know, any color on economics and if you may be able to take incremental pricing there?
Speaker Change #181: On the new drop, I'm not 100% sure which, you know, on the pharmaceutical, which one you're talking about.
Speaker Change #181: Is the priority still for some of the therapeutic assets that are out there?
Speaker Change #181: Yeah, I mean, I think, you know, what we're trying to do right now is, you know, we have two different ideas, you know, we're working on a product that already is kind of the gold standard in trifocal lenses that has a patented set point.
Speaker Change #181: We have a number of things going on in the pharmaceutical space, but in glaucoma, I think one of the things that was mentioned earlier was a follow-on to Roclatan, which, again, we have put in a clinical trial. That is a reformulation to try and improve the efficacy or the safety of that brand.
Speaker Change #181: What are you looking at in, MedTech these days?
Speaker Change #181: Its optical design is particularly unique.
Speaker Change #181: So, there's one of those out there, but there's also several other things that we're working on in the pharmaceutical space.
Speaker Change #181: And maybe just some high-level thoughts there.
Speaker Change #181: And, you know, this is a really important product for us.
Speaker Change #181: Okay, great.
Speaker Change #181: Thanks.
Speaker Change #181: So, you know, we're being very careful about how we work at improving it.
Speaker Change #181: That's super helpful.
Speaker Change #181: Go ahead.
Speaker Change #181: And as we kind of get there, you know, we're looking at enhanced distance vision through improved contrast.
Speaker Change #127: And probably you're going to have to look at the more recent launches to really get a feel for the trajectory.
Speaker Change #181: Thanks for that.
Speaker Change #181: Yeah, you know, Anthony, we're always looking at stuff in ophthalmology.
Speaker Change #181: We're looking at different ways to improve acuity, you know, at all ranges using different light distributions.
Speaker Change #181: And then just on cataract procedure volumes, low single digits this quarter, I think it was like 2% last quarter.
Speaker Change #181: You know, if it's, in eye care, you know, you could count on us being somehow involved in looking at it.
Speaker Change #181: And so the optical designs we're getting feedback on now, we'll see which one really, you know, has the best chance of improving this.
Speaker Change #127: The payer dynamics is a big part of what happens now.
Speaker Change #181: So I think that's a slowdown from what we've seen in the past.
Speaker Change #181: And so directionally, we still like the kind of technology-oriented, bolt-on ideas that, kind of range in that 50 to 500.
Speaker Change #181: And when we get that information, again, as we do that through our testing work right now, we'll decide, you know, which product we want to launch and when that would be.
Speaker Change #127: And of course, Medicare is probably 50% of the prescriptions.
Speaker Change #181: So what's driving that?
Speaker Change #181: Obviously, you know, with the strength of our balance sheet, we can do any number of things.
Speaker Change #181: So I would expect that in the front half of next year.
Speaker Change #181: Anything specific from a geographical perspective?
Speaker Change #181: But I think really, you know, what we're trying to do is fill out white spaces.
Speaker Change #181: But again, I, you know, we'll see, you know, as we kind of go forward.
Speaker Change #181: Or is it kind of global?
Speaker Change #181: And so think glaucoma, think refractive, think, you know, contact lens technology, think, I know, pharmaceuticals.
Speaker Change #181: Got it.
Speaker Change #181: Thanks so much for taking the question.
Speaker Change #181: You know, those are areas where we have big growth opportunities and relatively low shares.
Speaker Change #181: Thank you.
Speaker Change #181: Yeah, you know, the cataract weakness in the second quarter was real in the U.S. and it was pretty stable, you know, I would say solid in the international market.
Speaker Change #181: So that's kind of the – generally speaking, that's what we're looking at in that zone.
Speaker Change #181: Any color on the potential economics there versus current trend?
Speaker Change #181: So, you know, if you think about the difference, it really has been the U.S. that's been a little bit slower recently.
Speaker Change #181: Tim, you want to add to that?
Speaker Change #127: So, you need to think about the cycle of when Medicare brings ordinary products on.
Speaker Change #181: No, not yet.
Speaker Change #181: You know, I can't tell you why exactly.
Speaker Change #181: No, that's fine.
Speaker Change #181: I mean, I think I think we really need to see kind of what this looks like.
Speaker Change #181: I could give you a nine thesis on what it might be, but I don't think we know.
Speaker Change #181: Thank you.
Speaker Change #181: Okay, thank you.
Speaker Change #181: I do think that over time, these things tend to be idiosyncratic.
Speaker Change #181: Thank you.
Speaker Change #181: Thank you.
Speaker Change #181: You'll have one quarter that will do really well. You'll have a slowdown and then you'll have another quarter that does really well.
Speaker Change #181: Our next question comes from the line of Larry Beagleton with Wells Fargo.
Speaker Change #181: Our next question comes from the line of Issie Kirby with Redbird Atlantic.
Speaker Change #181: So, you know, our view is, is that, you know, that the normal rate of cataract growth around the world is in the mid single digits, kind of the low end of mid single digits, call that four, four and a half, higher in international, lower in the U.S.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: But directionally, you know, we've got a lot more surgeons coming into the international markets.
Speaker Change #181: Thanks for taking the question, Marnie.
Speaker Change #181: Hi guys, thanks for taking my question.
Speaker Change #181: You know, think China, think Asia in general.
Speaker Change #181: Hey, just one quick one on timing, and I had one, follow-up.
Speaker Change #181: Firstly, on the Unity Ramp, I guess if we look to Centurion when it first launched, is there any reason why the Unity Ramp should vary in terms of how quickly it penetrates your installed base versus Centurion?
Speaker Change #181: And then we've got, you know, a lot of efficiency gains coming through in the United States, which is driving basically the volumes up over time.
Speaker Change #181: So the AR155 data and publication, when will we see that?
Speaker Change #181: And also any comments you have on the health of, I guess, the end purchaser for the Unity systems from a financial perspective?
Speaker Change #181: So I think that's the best I can give you in terms of dynamics.
Speaker Change #181: And how far behind is the CS, Unity CS, from ACS?
Speaker Change #181: And then I have a follow up on implants.
Speaker Change #181: I generally think this thing evens out over time and we expect to see, you know, solid quarters coming up.
Speaker Change #127: You need to think about the cycle for which payers begin to pay.
Speaker Change #181: Yeah, Larry, thanks for the question.
Speaker Change #181: Yeah, I mean, I think directionally, that's not a bad way to kind of model it.
Speaker Change #181: Great, thanks so much.
Speaker Change #181: 512 data will likely be available at the American, Academy of Ophthalmology coming up in, I think, October or November.
Speaker Change #181: I would think about the Centurion and the Constellation launches and really kind of think about the installed base.
Speaker Change #181: It's somewhere in that zone.
Speaker Change #181: One of the reasons we gave you the installed base in the opening remarks was really to give you some sense of how big the market is.
Speaker Change #181: I think it's late October-ish.
Speaker Change #181: And I think the other factor to think about is that these are generally 8 to 10 years of cycle time.
Speaker Change #181: And then on the Unity VCS and CS, the CS will come pretty close.
Speaker Change #181: So, you know, taking some division against the installed base and then some, you know, some portion of additional market is probably the right way to think about it.
Speaker Change #181: I think, you know, probably six months behind VCS, but plus or minus a bit on that, let's just say, because I'm not 100 percent sure.
Speaker Change #127: And we'll obviously manage all of that.
Speaker Change #181: The rate will be probably a little bit more enthusiastic in the beginning because it usually is.
Speaker Change #181: David, just one follow-up.
Speaker Change #181: You can see that in probably the original Centurion launch.
Speaker Change #181: Just what have you guys said publicly on just FACIC IOLs, in general?
Speaker Change #181: And then, you know, again, it'll slow down as you get a little bit more into a natural replacement cycle.
Speaker Change #181: I know Alcon had an internal program 20 years ago that never, you know, I don't think it ever, obviously, wasn't launched.
Speaker Change #127: We're still working our way through it.
Speaker Change #181: So directionally, that's kind of the way to think about it.
Speaker Change #181: But what is your high-level view of just the, FACIC IOL market in general?
Speaker Change #181: And on the health of the end purchaser, again, I think there's room for these kind of capital choices, particularly if they create value.
Speaker Change #181: Thank you.
Speaker Change #181: And so I think what we're really focused on is trying to establish, you know, in some of these preference testing, you know, what is the actual duration and turnover of the ORs so that, you know, if the health authority wants to do more surgery and wants to shorten lines or wants to, you know, really benefit the time in the OR for somebody else, the utilization of that OR is much more efficient.
Speaker Change #128: And so, I'd be a little, it's a little premature for me to give you a lot of detail around it for us, but I think in the next, I would say, you know, four to six months, we'll have a pretty good read on what we're going to do and how to think about this one.
Speaker Change #181: You know, I think directionally, we think it's a good idea.
Speaker Change #181: So that's what we're trying to figure out.
Speaker Change #181: I think, you know, the projects, that have been out there before we were in it, and, you know, historically with Cachet and, you know, we had some challenges with that.
Speaker Change #181: And as we get to that, that'll help, I think, drive a real interest in moving these products forward.
Speaker Change #181: But I think directionally, you know, we like the progress that's being made there.
Speaker Change #181: That's great, thank you.
Speaker Change #181: You know, again, LASIK is really a very, very good procedure.
Speaker Change #181: And then just on the implantables business and where penetration has reached in some of your other markets like Japan and in some of these developed European markets, I guess, could you comment on where premium IOL penetration has reached?
Speaker Change #181: And I think directionally, we still sell, you know, a lot of lasers for that procedure.
Speaker Change #181: And if you're seeing perhaps any of these markets reach a bit of a ceiling like perhaps we have in the US?
Speaker Change #128: But I think it's, look, what we're excited about with this product is, in the market, there is a real need for faster-acting products that treat, you know, successfully more patients.
Speaker Change #181: So, you know, I think for high myopes, this is a really appropriate kind of project.
Speaker Change #181: Thanks.
Speaker Change #181: And I think for anybody who's kind of minus six and under, I think you'd be hard-pressed to go away from LASIK.
Speaker Change #181: Yeah, you know, I'm, I'm unconvinced that there's a ceiling in the US. And then I think, well, I do, there's a ceiling, but it's, it's considerably higher than where we are.
Speaker Change #128: And I think, you know, those two elements will be a feature in the way we think about this product.
Speaker Change #181: So, our view is that that market doesn't really impact our refractive market.
Speaker Change #181: I mean, I think historically, we've talked about, you know, willingness to pay, we've done every year, I think we do work with a consumer that if they really understand this choice, they're willing to pay.
Speaker Change #181: So, our LASIK business is still really solid.
Speaker Change #181: And it's about, you know, kind of usually in the mid 30s, plus or minus a little bit of the market that will do that.
Speaker Change #181: And what's really going on is I think the consumer is driving most of these decisions at this point. So, strength of the consumer drives the strength of the refractive market.
Speaker Change #181: So I think there's plenty of room for the US to grow from what was a 19.2%, you know, and again, the second quarter.
Speaker Change #181: You know, and, there's a lot of up and down in that, but directionally, still an important market.
Speaker Change #181: If you look around the world for ATI Wells, you know, the penetration globally is 15.
Speaker Change #128: Thank you.
Speaker Change #181: Thank you.
Speaker Change #181: But obviously, that's a blend of the US and the international market.
Speaker Change #181: Our next question comes from the line of Michael Sarcone with Jefferies.
Speaker Change #181: So international markets on penetration directionally, you know, are a good bit lower than that somewhere in the 14.3 is what I've got internationally.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: So, you know, I think what you'll see is continued steady growth of penetration internationally, in particular, because, you know, Europe had a good quarter and moved quite a little bit.
Speaker Change #181: Good morning, and thanks for taking the question.
Speaker Change #181: China is helping a lot as it kind of moves, Japan has been solid, Korea has been solid.
Speaker Change #181: Just, you know, first, you talked about a broader Unity launch in the second quarter, of 2025.
Speaker Change #181: So there's a lot of opportunities still out there to move penetration.
Speaker Change #128: Our next question comes from the line of David Abbotton with JP Morgan.
Speaker Change #181: Can you maybe just elaborate on, you know, what the goalposts or things you're looking, to accomplish prior to the broader launch are?
Speaker Change #181: And, you know, most of those markets, you know, we have growing share, not declining share in any way.
Speaker Change #181: Yeah, Michael, one of the things that we, you know, have really been careful about with, the Unity launch is to make sure that, you know, we really understand it, we understand all the corner cases that could come up, that we've, you know, that we've looked at the preferences for software, you know, the way in which it looks and feels, the way it gets set up.
Speaker Change #181: And, and so if you get penetration and share moving, that helps us a lot.
Speaker Change #181: There's a lot of detail that is important to kind of fine-tune, I would say, you know, once the product's approved.
Speaker Change #181: Great, thanks.
Speaker Change #181: And, you know, we have the good fortune of having two tremendously successful products, out there with Centurion and Constellation.
Speaker Change #181: Thank you.
Speaker Change #181: And so when you go in and you say, hey, you know, I'd like to get a premium for this, product, or this is a better product, you know, it really has to be.
Speaker Change #181: Our next question comes from the line of Richard Felton with Goldman Sachs.
Speaker Change #181: And that's really what we're after right now is making sure that we know how to, describe that, know how, you know, we have the data to actually prove that.
Speaker Change #181: Great, thank you.
Speaker Change #181: And those are the things that we're working on.
Speaker Change #181: My first question is on the deceleration in ocular health.
Speaker Change #181: And so we're being patient with this, for sure.
Speaker Change #181: I know you called out the impact from contact lens care in the quarter, but even adjusting for that, it seems like the rest of the business slowed a little bit in Q2.
Speaker Change #181: I recognize that, you know, it was approved some time ago.
Speaker Change #181: So is there any additional color you can share for that division?
Speaker Change #129: Please proceed with your question.
Speaker Change #181: But directionally, this is the way really great products get launched, I think.
Speaker Change #181: And specifically, were there any changes to the strong trends that you've seen to sustain?
Speaker Change #181: Understood.
Speaker Change #181: Now look, Sustane is doing great. I mean, it was another quarter of double-digit growth for Sustane, the Sustane brand.
Speaker Change #181: That's helpful.
Speaker Change #181: You know, the multi-dust preservative-free all around the world is doing quite well, and I do think that it will continue to.
Speaker Change #181: And then just last question for me.
Speaker Change #181: You know, I think the quarter is pretty normal.
Speaker Change #181: On the next-gen Panoptix, I think you mentioned you're still deciding on launch, timing over the next few months.
Speaker Change #181: I think it was somewhere in the five, you know, kind of mid-single-digit range for the market, and as we kind of calculate out the CLC element of it, the kind of lens care element of it, I think that we were probably moving around 6%.
Speaker Change #181: Can you just elaborate on the factors that you're thinking about as you decide on the, launch timing?
Speaker Change #181: So, you know, a little bit faster than the market as we saw it, but I think you should just think about it as another normal quarter.
Speaker Change #181: And then, you know, any color on economics and if you may be able to take, incremental pricing there.
Speaker Change #181: Great, thank you.
Speaker Change #129: Hey guys, just thanks for questions.
Speaker Change #181: Yeah, I mean, I think, you know, what we're trying to do right now is, you know, we have two different ideas.
Speaker Change #181: And then maybe one for Tim on free cash flow, saying a strong improvement in cash generation in H1.
Speaker Change #181: You know, we're working on a product that already is kind of the gold standard in, trifocal lenses that has a patented set point. Its optical design is particularly unique. And, you know, this is a really important product for us.
Speaker Change #181: Is this sort of the new normal level of cash conversion that we should expect from Alcon moving forward?
Speaker Change #181: So, you know, we're being very careful about how we work at improving it.
Speaker Change #181: Thank you.
Speaker Change #181: And as we kind of get there, you know, we're looking at enhanced distance vision, through improved contrast.
Speaker Change #181: Yeah, great question.
Speaker Change #181: We're looking at different ways to improve acuity, you know, at all ranges using different light distributions.
Speaker Change #181: Listen, we're very pleased with our free cash flow performance in the first half.
Speaker Change #181: And so the optical designs we're getting feedback on now, we'll see which one really, you know, has the best chance of improving this.
Speaker Change #181: And as we said, we would expect to see a significant increase year over year.
Speaker Change #181: And when we get that information, again, as we do that through our testing work right now, we'll decide, you know, which product we want to launch and when that would be.
Speaker Change #181: So the one thing I would remind you of is we did have some unusual items that pressured free cash flow last year.
Speaker Change #181: So I would expect that in the front half of next year.
Speaker Change #181: So if you think about the legal settlement we had, if you think about the transformation costs, and some of the higher level inventory that we purchased.
Speaker Change #181: But, again, I, you know, we'll see, you know, as we kind of go forward.
Speaker Change #181: So I think you're going to see this step up this year.
Speaker Change #181: Got it.
Speaker Change #181: And then next year and beyond, you're going to see more of a normalized free cash flow progression that's sort of in line with our operating income. That's a good proxy for free cash flow.
Speaker Change #181: Again, any color on the potential economics there versus current trend?
Speaker Change #181: But we're pleased with our performance so far.
David Abbotton: First one, just in terms of your supply chain issues and contact lens care, I just wondered why I'd had to take provision on why and where you're not able to go back and get some compensation from your supplier.
Speaker Change #181: Not yet.
Speaker Change #181: Thank you.
David Abbotton: And then secondly, just on the equipment growth, I just wanted to give you a feel of what percentage of units you sold this quarter actually have an upgrade option to a unit at some point later down the lane.
Speaker Change #181: I mean, I think we really need to see kind of what this looks like.
Speaker Change #181: Thank you.
Speaker Change #181: Okay.
Speaker Change #181: Our next question comes from the line of Tom Stephan with CFO.
Speaker Change #181: Thank you.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: Our next question comes from the line of Izzy Kirby with Redburn Atlantic.
Speaker Change #181: Great, hey guys, thanks for the questions.
David Abbotton: Thanks.
Speaker Change #181: Hi, guys.
Speaker Change #181: I think just one for me, David, I believe in the past you've talked about the tunable accommodative ballpark.
Speaker Change #181: Thanks for taking my question.
Speaker Change #181: Potentially not requiring an incremental system for the post-op adjustment.
Speaker Change #181: Firstly, on the unity ramp, I guess if we look to Centurion, when it first launched, is there any reason why the unity ramp should vary in terms of how quickly it penetrates your installed base versus Centurion?
Speaker Change #181: And then maybe those could be done with a laser that, I guess, surgeons already have in their clinic.
Speaker Change #181: And also any comments you have on the health of, I guess, the end purchaser for the unity systems from a financial perspective?
Speaker Change #181: Is that still the thought or the strategy when it comes to your future tunable offering?
Speaker Change #181: And then I have a follow up on implants.
Speaker Change #181: Yeah, interesting question, Tom.
Speaker Change #181: Yeah, I mean, I think directionally that's not a bad way to kind of model it.
Speaker Change #181: And I think, you know, we've got a lot of projects in the what I'd listed called tunable and adjustable areas, we probably have several projects, one of them I showed, I think, at Capital Markets Day, last, last time we did it, which was a laser adjustment, which we think is probably a better long term idea than, you know, kind of adjusting material with UV light, which again, you know, stray UV light and, you know, and locking that in is still a little bit tricky.
Speaker Change #131: You know, on the provision, you know, we took it because obviously we had a lot of product in hand that had been made with something that wasn't going to contribute, you know, to the final product correctly.
Speaker Change #181: I would think about the Centurion and the Constellation launches and really kind of, think about the installed base.
Speaker Change #181: So I think directionally, you know, my view is that there'll be better ideas going forward for tuning and adjusting, whether that's accommodation, you know, again, which we have a number of ideas around or tuning itself.
Speaker Change #181: One of the reasons we gave you the installed base in the opening remarks was really to, give you some sense of how big the market is.
Speaker Change #181: We're working on several.
Speaker Change #181: And I think the other factor to think about is that these are generally eight to ten years, of cycle time.
Speaker Change #181: Gallagher.
Speaker Change #181: So taking some division against the installed base and then some portion of additional market, is probably the right way to think about it.
Speaker Change #181: Thanks.
Speaker Change #181: The rate will be probably a little bit more enthusiastic in the beginning, because it, usually is.
Speaker Change #181: Thank you.
Speaker Change #132: You know, we are obviously going to talk to our supplier about, you know, that situation and we'll be careful to comment on that one right now.
Speaker Change #181: You can see that in probably the original Centurion launch.
Speaker Change #181: Our next question comes from the line of Steve Lichtman with Oppenheimer and Company.
Speaker Change #181: And then, again, it will slow down as you get a little bit more into a natural replacement, cycle.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: So directionally, that's kind of the way to think about it.
Speaker Change #181: Thank you.
Speaker Change #181: And on the health of the end purchaser, again, I think there's room for these kind of capital, choices, particularly if they create value.
Speaker Change #181: Good morning, guys.
Speaker Change #181: And so I think what we're really focused on is trying to establish in some of these preference, testing, what is the actual duration and turnover of the ORs so that if the health authority wants to do more surgery and wants to shorten lines or wants to really benefit the time in the OR for somebody else, the utilization of that OR is much more efficient.
Speaker Change #181: David, as you gear toward Precision 7 launch, any color you can provide and how you think you'll position it relative to total 30 and how it can help you expand your share and reusable.
Speaker Change #181: So that's what we're trying to figure out.
Speaker Change #181: So what does your market assessment say on the type of patient that you can target with P7?
Speaker Change #181: And as we get to that, that'll help, I think, drive a real interest in moving these products, forward.
Speaker Change #181: Yeah, you know, P7 has been a really interesting product for us because, you know, we were unclear a little bit when we started down this path how big this market might be, so I think you're asking an interesting question that we've spent some time on.
Speaker Change #181: That's great.
Speaker Change #181: The Precision 7 is unique in that we've created a technology that allows water to move from the, you know, the lens material to the surface for kind of seven consecutive days.
Speaker Change #181: Thank you.
Speaker Change #181: That keeps a fresh lens nearly every day, and that experience and that regimen of kind of every Sunday or every Monday, whatever day you want to choose, you know, of replacing it with a fresh lens seems to be very attractive to both patients and to the optometrists that we've talked to.
Speaker Change #181: And then just on the implantables business and where penetration has reached in some, of your other markets, like Japan and in some of these developed European markets, I guess, could you comment on where premium IOR penetration has reached and if you're seeing perhaps any of these markets reach a bit of a ceiling like perhaps we have in the U.S.?
Speaker Change #181: And right now we've got a select group of key opinion leaders, you know, using this product.
Speaker Change #181: Thanks.
Speaker Change #181: They've had it for, oh, I guess a couple of months while we were building inventory on it, and it seems to be, you know, quite pleasing to them. And so I think they like the intuitive nature of the replacement schedule, and they like the fact that they're, you know, they're moving down to a fresh lens a little more frequently.
Speaker Change #181: Yeah.
Speaker Change #181: That just, you know, I think appeals to everybody.
Speaker Change #181: You know, I'm unconvinced that there's a ceiling in the U.S. And I think, well, there's a ceiling, but it's considerably higher than where we are. I mean, I think historically we've talked about, you know, willingness to pay.
Speaker Change #181: And then, again, you know, the price point on this will fit in nicely, you know, between, you know, a dailies lens and a reusable lens.
Speaker Change #181: We've done every year, I think we do work with a consumer that if they really understand, this choice, they're willing to pay.
Speaker Change #181: So what we're trying to do is squeeze a little bit of room in here, and I think there's a pretty good place for it.
Speaker Change #181: And it's about, you know, kind of usually in the mid-30s, plus or minus a little bit, of the market that will do that.
Speaker Change #181: So we're, you know, we'll see how it plays, but I think directionally the feedback early on has been very positive.
Speaker Change #181: So I think there's plenty of room for the U.S. to grow from what was a 19.2 percent, you know, I think in the second quarter.
Speaker Change #181: Great.
Speaker Change #181: If you look around the world for ATI wells, you know, the penetration globally is 15, but obviously that's a blend of the U.S. and the international markets.
Speaker Change #181: And then just to follow up, you mentioned earlier in the call the strategic deal in China with Akin mentioned, it seems like an interesting new opportunity.
Speaker Change #181: So international markets on penetration directionally, you know, are a good bit lower than that.
Speaker Change #181: Can you give a little more color on how you view that opportunity long term?
Speaker Change #181: They're in the 14.3 is what I've got internationally.
Speaker Change #132: But I think directionally, you know, we feel like that's under control and we're pursuing all the proper avenues to get that product safely secured and we're moving down that path.
Speaker Change #181: Well, you know, we like the team that they've got there. I mean, they've built a business that has local manufacturing, local R&D regulatory folks that really understand that market.
Speaker Change #181: So, you know, I think what you'll see is continued steady growth of penetration internationally, in particular because, you know, Europe had a good quarter and moved quite a little bit.
Speaker Change #181: You know, for us to get in there, you know, our assessment was it was going to take us a while to do that and to build the capabilities that are really effective, you know, is expensive.
Speaker Change #181: China is helping a lot as it kind of moves.
Speaker Change #181: And we really thought through carefully how we wanted to think about China.
Speaker Change #181: Japan has been solid.
Speaker Change #181: And I think really, you know, we decided that we had a lot of opportunity in surgical, a good bit of opportunity in vision care, and that the eye drops business, we could find a partner for, you know, in a very efficient way.
Speaker Change #181: Korea has been solid.
Speaker Change #181: And so this is a this is a move for efficiency for profitability.
Speaker Change #181: So there's a lot of opportunity still out there to move penetration.
Speaker Change #181: And I think capability really is the way to think about it.
Speaker Change #181: And, you know, in most of those markets, you know, we have growing share, not declining, share in any way.
Speaker Change #181: Got it.
Speaker Change #181: And so if you get penetration and share moving, that helps us a lot.
Speaker Change #181: Thanks.
Speaker Change #181: Great.
Speaker Change #181: Our final question comes from the line of Brett Fishbin with KeyBank Capital Markets.
Speaker Change #132: On the equipment growth, you know, we aren't really prepared to talk about the unit sold and upgrading.
Speaker Change #181: Thanks.
Speaker Change #181: Hey guys, thank you so much for squeezing me in.
Speaker Change #181: Thank you.
Speaker Change #181: I think we hit on pretty much every business area, maybe except for consumables, so I'll ask about that one.
Speaker Change #181: Our next question comes from the line of Richard Felton with Goldman Sachs.
Speaker Change #181: Didn't really come up much on the call, you know, kind of like down the middle this quarter, but a little bit lower than some of the recent high single digit or double digit quarters that you've put up over the past couple of years.
Speaker Change #133: I think directionally, you know, we have, as I said, you know, something on the order of 30,000 units out there.
Speaker Change #181: Great.
Speaker Change #181: So just curious if you're looking at this as a bit of a one-off quarter, you know, ebb and flow, or if there was any type of headwinds that you could call out there.
Speaker Change #181: Thank you.
Speaker Change #181: Yeah, good question, Brett.
Speaker Change #181: My first question is on the deceleration in ocular health.
Speaker Change #181: I mean, look, I mean, I would think about it as we generally think about the market and consumables as quite correlated.
Speaker Change #181: I know, you called out the impact from contact lens care in the quarter, but even adjusting for that, it seems like the rest of the business slowed a little bit in Q2.
Speaker Change #181: So, you know, I think, you know, we always get a little bit of share and a little bit of price as we kind of trade people up into the the newer consumables, newer disposables.
Speaker Change #181: So is there any additional color you can share for that division?
Speaker Change #181: So think about the market overall, as kind of 3% low single digits kind of number.
Speaker Change #133: Those are generally done on an upgrade cycle of about 10 years.
Speaker Change #181: And specifically, were there any changes to the strong trends that you've seen for Sustane?
Speaker Change #181: And, you know, we grew, you know, what 5% consumables.
Speaker Change #181: No.
Speaker Change #181: So, you know, I think that's the right way to think about it.
Speaker Change #181: Look, Sustane is doing great. I mean, it was another quarter of double-digit growth for Sustane brand.
Speaker Change #181: It was just a little bit softer quarter around the world.
Speaker Change #181: You know, the multi-dose preservative-free all around the world is doing quite well.
Speaker Change #181: For procedural growth.
Speaker Change #181: And I do think that it will continue to.
Speaker Change #181: And, you know, I think that's all there was to it.
Speaker Change #181: You know, I think the quarter is pretty normal.
Speaker Change #181: Early in the year, the first quarter, we had a really good, you know, procedural growth numbers.
Speaker Change #181: I think it was somewhere in the five, you know, kind of mid-single-digit range for the market.
Speaker Change #181: So again, I think you've got the you kind of got the gist of it.
Speaker Change #133: So, you know, think of the world as kind of roughly 2,500 to 3,000 units every year.
Speaker Change #181: And as we kind of calculate out the CLC element of it, the kind of lens care element of it, I think that we were probably moving around 6%.
Speaker Change #181: All right, and then just last follow-up question on contact lenses.
Speaker Change #181: So, you know, a little bit faster than the market as we saw it, but I think you should just think about it as another normal quarter.
Speaker Change #181: You guys keep calling out strength and portics and multifocals as one of the key drivers, which is great to see.
Speaker Change #181: Great.
Speaker Change #181: Just, I think it's interesting, the number of new launches in the DailySci High Torque category, with another one, you know, pretty recently.
Speaker Change #181: Thank you.
Speaker Change #181: I'm curious just on how you're viewing competitive dynamics there, and whether you expect, like, any change to the level of growth you've seen in some of your daily portics for the rest of the year.
Speaker Change #181: And then maybe one for Tim on free cash flow, saying a strong improvement, in cash generation in H1.
Speaker Change #181: Thank you.
Speaker Change #181: Is this sort of the new normal level of cash conversion that we should expect from Alcon moving forward?
Speaker Change #181: Yeah, good question.
Speaker Change #181: Thank you.
Speaker Change #181: The specialty lenses really are, you know, where the action is right now.
Speaker Change #181: Yeah, great question.
Speaker Change #181: And I think that's, that's good, because they're, you know, again, I think they're underdeveloped in terms of category.
Speaker Change #181: Look, and we're very pleased with our free cash flow performance, in the first half.
Speaker Change #181: So I think people see correctly that, you know, the multifocal designs today are, you know, they're acceptable, they're pretty good, but they aren't perfect. There's a lot of work we're doing right now to kind of improve those multifocal designs.
Speaker Change #181: And as we said, we would expect to see a significant increase year over year.
Speaker Change #181: Multifocal Torx, very difficult to make, very expensive to make.
Speaker Change #181: So the one thing I would remind you of is we did have some unusual items that pressured free cash flow last year. So if you think about the legal settlement we had, if you think about the transformation costs and some of the higher level inventory that we purchased.
Speaker Change #181: And I think, you know, there's still some launches going on in that space, but relatively small market.
Speaker Change #181: So I think you're going to see this step up this year.
Speaker Change #181: We've spent a lot of time thinking about our Toric design, and I spoke to it in the prepared remarks, but I think directionally, we're very pleased with the uptake of our Toric lenses, and how the Toric lenses halo the rest of the brand family. So we've had a nice run with dailies, particularly with the Torics.
Speaker Change #181: And then next year and beyond, you're going to see more of a normalized free cash flow progression that's sort of in line with our operating income. That's a good proxy for free cash flow.
Speaker Change #181: And so P1 Toric, DT1, you know, for astigmatism, those are terrific lens movements for us.
Speaker Change #181: But we're pleased with our performance so far.
Speaker Change #181: And I do think there'll be more competitive dynamic around it.
Speaker Change #133: Kind of roughly comes in and out of the market.
Speaker Change #181: Thank you.
Speaker Change #181: But I think we may be in a very strong position given the design that we have for our Toric, which is, which is really unique.
Speaker Change #181: Thank you.
Speaker Change #181: Thank you.
Speaker Change #181: Our next question comes from the line of Tom Stephan with CFO.
Speaker Change #181: Ladies and gentlemen, that concludes our question and answer session.
Speaker Change #181: Please proceed, with your question.
Speaker Change #181: I'll turn the floor back to Mr. Cravens for any final...
Speaker Change #181: Great.
Speaker Change #181: All right.
Speaker Change #181: Hey, guys.
Speaker Change #181: Well, thanks, everybody, again, for joining us this morning.
Speaker Change #181: Thanks for the questions.
Speaker Change #181: If you have any follow-up questions for the media, reach out to our Corporate Communications Department or from investors or analysts, certainly feel free to reach out to either Alan Turing or myself.
Speaker Change #181: I think just one for me, David.
Speaker Change #181: Thanks again.
Speaker Change #181: I believe in the past you've talked about the tunable, accommodative offering potentially not requiring an incremental system for the post-op adjustments. And then maybe those could be done with a laser that I guess surgeons already have in, their clinic.
Speaker Change #181: Thank you.
Speaker Change #133: There'll probably be an enthusiasm in the beginning for the product. That's usually what has happened historically and then it slows down a little bit.
Speaker Change #181: Is that still the thought or the strategy when it comes to your future tunable offering?
Speaker Change #181: This concludes today's conference call.
Speaker Change #133: But we'll try and meter that carefully so that you have both an upgrade element of it, but also kind of people who really want additional units.
Speaker Change #181: Thanks.
Speaker Change #181: You may disconnect your lines at this time.
Speaker Change #181: Yeah.
Speaker Change #181: Thank you for your participation.
Speaker Change #133: And, you know, we are excited about the combo unit particularly in the international markets.
Speaker Change #181: Interesting question, Tom.
Speaker Change #181: And I think we've got a lot of projects in what I'd listed called tunable and adjustable areas.
Speaker Change #181: We have several projects.
Speaker Change #181: One of them I showed I think at Capital Markets Day last time we did it, which was a laser adjustment, which we think is probably a better long-term idea than kind of adjusting material with UV light, which again, stray UV light and locking that in is still a little bit tricky.
Speaker Change #181: So I think directionally, my view is that there'll be better ideas going forward for tuning and adjusting, whether that's accommodation, again, which we have a number of ideas around, or tuning itself.
Speaker Change #181: We're working on several.
Speaker Change #181: Got it.
Speaker Change #133: So, that's about what I can help you with now.
Speaker Change #181: Thanks.
Speaker Change #181: Thank you.
Speaker Change #181: Our next question comes from the line of Steve Lickman with Oppenheimer and Company.
Speaker Change #181: Please proceed with your question.
Speaker Change #181: Thank you.
Speaker Change #181: Good morning, guys.
Speaker Change #133: Good.
Speaker Change #181: David, as you gear toward Precision 7 launch, any color you can provide on how you think, you'll position it relative to total 30 and how it can help you expand your share in reusables?
Speaker Change #181: What does your market assessment say on the type of patient that you can target with P7?
Speaker Change #133: Great.
Speaker Change #181: Yeah, you know, P7 has been a really interesting product for us because, you know, we were, unclear a little bit when we started down this path how big this market might be.
Speaker Change #133: Thank you.
Speaker Change #181: So I think you're asking an interesting question that we've spent some time on.
Speaker Change #134: Our next question comes from the line of Patrick Wood with Morgan Stanley.
Speaker Change #181: The Precision 7 is unique in that we've created a technology that allows water to move from, the, you know, the lens material to the surface for kind of seven consecutive days.
Speaker Change #181: That keeps a fresh lens nearly every day, and that experience and that regimen of kind, of every Sunday or every Monday, whatever day you want to choose, you know, of replacing it with a fresh lens seems to be very attractive to both patients and to the optometrists that we've talked to.
Speaker Change #135: Please proceed with your question.
Speaker Change #181: And right now we've got a select group of key opinion leaders, you know, using this, product. They've had it for, oh, I guess a couple of months while we were building inventory on, it. And it seems to be, you know, quite pleasing to them. And so I think they like the intuitive nature of the replacement schedule, and they like, the fact that they're, you know, they're moving down to a fresh lens a little more frequently.
Speaker Change #135: Brilliant.
Speaker Change #181: That just, you know, I think appeals to everybody.
Speaker Change #136: Thank you for taking the questions.
Speaker Change #181: And then again, you know, the price point on this will fit in nicely, you know, between, you know, a dailies lens and a reusable lens.
Speaker Change #137: Just to think about all the new product launches that are coming through, I'm just curious how you're thinking about incremental investment behind themselves and marketing.
Speaker Change #181: So what we're trying to do is squeeze a little bit of room in here, and I think there's a, pretty good place for it.
Speaker Change #138: You obviously have a massive distribution network, but, you know, dry eye takes a bit of dollars to sometimes get working, but then, you know, unity you know, so you already have a role of exit customers.
Speaker Change #181: So we're, you know, we'll see how it plays, but I think directionally the feedback early, on has been very positive.
Speaker Change #138: How do you think about the interplay between incremental investment behind pushing the products as we move it to next year versus that kind of tough one opportunity?
Speaker Change #181: Great.
Speaker Change #139: Yeah, I mean, look, we're really trying to struggle with that question, Patrick.
Speaker Change #181: And then just to follow up, you mentioned earlier in the call, the strategic deal in, China with Akin mentioned, it seems like an interesting new opportunity.
Speaker Change #140: It's a great question.
Speaker Change #181: Can you give a little more color on how you view that opportunity long term?
Speaker Change #141: And I think, you know, as we come into the fourth quarter and we really get our budget set for next year, we'll have an opportunity to describe that to you next quarter.
Speaker Change #181: Well, you know, we like the team that they've got there. I mean, they've built a business that has local manufacturing, local R&D regulatory, folks that really understand that market.
Speaker Change #142: I think with some degree of detail, I do think that we are going to want to put additional investment behind major project launches like Unity VCS, like 512.
Speaker Change #181: You know, for us to get in there, you know, our assessment was it was going to take us, a while to do that and to build the capabilities that are really effective, you know, is expensive.
Speaker Change #142: And so I think, you know, that's what's been in our plan.
Speaker Change #181: And we really thought through carefully how we wanted to think about China.
Speaker Change #142: So I don't think there's anything new there necessarily, but it does matter how many products we've got right now and how many opportunities we have.
Speaker Change #181: And I think really, you know, we decided that we had a lot of opportunity in surgical, a, good bit of opportunity in vision care, and that the eye drops business we could find a partner for, you know, in a very efficient way.
Speaker Change #142: And we want to make sure we maximize all those to try and, you know, really drive revenue at its maximum value.
Speaker Change #181: And so this is a move for efficiency, for profitability, and I think capability really, is the way to think about it.
Speaker Change #142: So, you know, my sense of it is, we'll have a better, more clear picture as we guide for next year.
Speaker Change #181: Got it.
Speaker Change #142: And certainly we'll begin to work that process, you know, next quarter.
Speaker Change #181: Thanks, David.
Speaker Change #142: Brilliant.
Speaker Change #181: Thank you.
Speaker Change #142: And then just as a quick follow up, the occupancy agreement, excuse my ignorance.
Speaker Change #181: Our final question comes from the line of Brett Fishbin with KeyBank Capital Markets.
Speaker Change #143: I'm just curious, like, the difference that you saw in the end marks in China, you know, the ocular health side relative to surgical and contacts and why direct makes more sense for one relative to the distributed level for the other.
Speaker Change #181: Please proceed with your question.
Speaker Change #144: Well, the simplest answer honestly is that we don't necessarily have the capabilities in house today to do what they have already made.
Speaker Change #181: Hey, guys.
Speaker Change #144: So, you know, we've been in a build mode for China and we frankly the portfolio was relatively small with a fairly sizable investment on AR 512.
Speaker Change #181: Thank you so much for squeezing me in.
Speaker Change #144: So, you know, what we were looking at was where do we want to prioritize resource more than anything else.
Speaker Change #181: I think we hit on pretty much every business area, maybe except for consumables.
Speaker Change #145: And, you know, I think what we saw was a very skilled partner who has good regulatory experience, good marketing experience, good manufacturing and R&D.
Speaker Change #181: So I'll ask about that one.
Speaker Change #146: And, you know, it really seemed to make a lot of sense for us to let them take on the iDrop's business for us instead of us trying to build all of that capacity while we do all these other products while we do, you know, as many things as we've got going on.
Speaker Change #181: Didn't really come up much on the call.
Speaker Change #146: So, you know, it was really more of a what's the most efficient way to maximize profit.
Speaker Change #181: You know, kind of like down the middle of this quarter, but a little bit lower than, some of the recent high single digits or double digits.
Speaker Change #146: I love it.
Speaker Change #181: So I'll ask about that one.
Speaker Change #146: Thanks for questions.
Speaker Change #181: Didn't really come up much on the call.
Speaker Change #146: Thank you.
Speaker Change #181: You know, kind of like down the middle of this quarter, but a little bit lower than, some of the recent high single digits or double digits.
Speaker Change #147: Our next question comes from the line of Jack Reynolds Clark with RBC Capital Markets.
Speaker Change #181: So I'll ask about that one, pretty much every business area, maybe except for consumables.
Speaker Change #148: Please proceed with your question.
Speaker Change #181: All right, thank you guys so much.
Speaker Change #149: Hi there.
Speaker Change #181: Yeah, good question, Brett.
Speaker Change #150: Thank you for taking the questions.
Speaker Change #181: I mean, look, I mean, I would think about it as we generally, think about the market and consumables as quite correlated.
Speaker Change #151: Two, please.
Speaker Change #181: So, you know, I think, you know, we always get a little bit of share and a little bit of price as we kind of trade people up into the newer consumables, newer disposables.
Speaker Change #151: Just on on Unity VCS or even CS, and you won't need to share any initial feedback getting from surgeons and any kind of initial data around the potential efficiency improvements that the systems can provide and can have hashed on that case maybe.
Speaker Change #181: So think about the market overall as kind of 3% low single digits kind of number.
Speaker Change #151: And then the second one was just on equipment.
Speaker Change #181: And, you know, we grew, you know, what, 5% So, you know, I think that's the right way to think about it.
Speaker Change #151: So could you just kind of give it a color around kind of how much.
Speaker Change #181: It was just a little bit, softer quarter around the world for procedural growth.
Speaker Change #152: Compt effective here, and whether there's any kind of underlying weakness in in demand or if people kind of holding off ahead of the head of the into launch or anything like that.
Speaker Change #181: And, you know, I think that's all there was to it.
Speaker Change #152: Thanks.
Speaker Change #181: Early in the year, the first quarter, we had a really good, you know, procedural growth number.
Speaker Change #153: Yeah, the second one, Jack's pretty easy.
Speaker Change #181: So, again, I think you've got the, you kind of got the gist of it.
Speaker Change #154: You know, we kind of expect it as you remember from the beginning of the year that we'd see a little bit of a stall in console growth, particularly about this time.
Speaker Change #181: All right.
Speaker Change #155: You know, and you know, what I'm excited about with equipment is underlying that is actually pretty solid demand for biometry, for scopes, for, you know, other equipment, which we've done quite well with while we have kind of seen the console business kind of slow down.
Speaker Change #181: And then just last follow-up question on contact lenses.
Speaker Change #156: So, directionally, I think, you know, you should feel pretty good about equipment right now, because we, you know, most everybody knows that we've got, you know, a bunch of product out there in the market with some key customers, you know, making sure we get it all kind of perfect before we launch it.
Speaker Change #181: You guys keep calling out, strength in products and multifocals as one of the key drivers, which is great to see.
Speaker Change #157: But directionally, I think equipment looks pretty good to us on the, on the unity piece, you know, we are very excited from the feedback that we've gotten from, from surgeons on this.
Speaker Change #181: Just, I think it's interesting, the number of new launches in the daily PHY high torque, category with another one, you know, pretty recently.
Speaker Change #158: And we've had it with some of the best folks in the world in Japan, in the United States and Europe.
Speaker Change #181: I'm curious on how you're viewing competitive dynamics there and whether you expect like any change to the level of growth you've seen in some of your daily products for the rest of the year.
Speaker Change #158: And, you know, consistently what we're hearing is, you know, very, very safe, you know, people operating at, you know, IOPs that are considerably lower than where they have been in the past, you know, in the 20s.
Speaker Change #181: Thank you.
Speaker Change #158: You know, there are people now operating, you know, at physiological IOP, which we think is the end game, you know, for this product.
Speaker Change #181: Yeah, good question.
Speaker Change #158: And when you do that, you know, basically everything kind of, you know, looks safer and more stable, and you can move a little bit faster.
Speaker Change #181: The specialty lenses really are, you know, where the action is, right now.
Speaker Change #158: And that's really the key to this thing is to get the safety into a level, where you really can speed up a little bit.
Speaker Change #181: And I think that's good because, you know, again, I think they're underdeveloped in terms of categories.
Speaker Change #158: The cut speed zone, you know, down to the machine are half, are sorry, twice as fast as, as the constellation.
Speaker Change #181: So, I think people see correctly that, you know, the multifocal designs today are, you know, they're acceptable, they're pretty good, but they aren't perfect. There's a lot of work we're doing right now to kind of improve those multifocal designs.
Speaker Change #158: And, you know, our observation of the cataract machine is, again, we'll see some efficiency improvements there as well.
Speaker Change #181: Multifocal torque is very difficult to make, very expensive to make.
Speaker Change #159: So we're, we're very excited about what happens here, both in the, everything from the setup to the tear down to the, the time and surgery, it just looks like it's a more efficient machine on both cataract and retina.
Speaker Change #181: And I think, you know, there are still some launches going on in that space, but relatively small market.
Speaker Change #159: So we're, you know, optimistic and the feedback has been very positive.
Speaker Change #181: We've spent a lot of time thinking about our torque design and I spoke to it in the prepared, remarks, but I think directionally, we're very pleased with the uptake of our torque lenses and how the torque lenses halo the rest of the brand family.
Speaker Change #159: Great.
Speaker Change #181: So, we've had a nice run with dailies, particularly with the torques.
Speaker Change #159: Thank you very much.
Speaker Change #181: And so, P1 torque, DT1, you know, from first images, and those are our terrific lens movements for us.
Speaker Change #159: Thank you.
Speaker Change #181: And I do think there'll be more competitive dynamic around it, but I think we may be in a very strong position given the design that we have for our torque, which is really unique.
Speaker Change #160: Our next question comes from line of David Sachsen, with a need of my company.
Speaker Change #181: Thank you.
Speaker Change #161: Please proceed with your question.
Speaker Change #181: Ladies and gentlemen, that concludes our question and answer session.
Speaker Change #161: Great.
Speaker Change #181: I'll turn the floor back to Mr. Cravens for any final comments.
Speaker Change #161: Thanks.
Speaker Change #181: All right.
Speaker Change #162: Good morning.
Speaker Change #181: Well, thanks, everybody, again, for joining us this morning.
Speaker Change #163: Thanks for taking my questions.
Speaker Change #181: If you have any follow-up questions for the media, reach out to our corporate communications, department, or from investors or analysts, certainly feel free to reach out to either, Alan Turing or myself.
Speaker Change #164: Maybe I'll start on the glaucoma portfolio.
Speaker Change #181: Thanks again.
Speaker Change #164: I know hydros is a smaller product for you.
Speaker Change #181: Thank you.
Speaker Change #164: But can you talk about how that's been trending and the attachment rate you're seeing with your IOLs?
Speaker Change #165: And then, on, on bell confusion, DSLP, maybe timing to watching that in the US.
Speaker Change #166: And then, lastly, on glaucoma, David, I think you mentioned a new drop in the pipeline.
Speaker Change #167: Is that in glaucoma or is that in a different part of that portfolio?
Speaker Change #168: Yeah, let me, let me start with hydros.
Speaker Change #169: You know, the hydros business is going well. I mean, it's, it's double digit growth, which is ahead of the market.
Speaker Change #170: Kind of as we expected.
Speaker Change #171: So we're, we're doing well with that product.
Speaker Change #171: And we really don't think about attachment rate very much with the, with the IOLs.
Speaker Change #171: That's really kind of indifferent to us.
Speaker Change #171: It's really specific about how we handle the glaucoma patients needs.
Speaker Change #172: So relative to hydros, we think adding Belkin makes a ton of sense because if you start with SLT and we think this is a much faster, easier way to do SLT, you know, that's going to make a ton of sense.
Speaker Change #172: And then you'll move into whatever's next, whether that's drops or hydros or whatever, depending on the patient need.
Speaker Change #172: But I think the launch timing on Belkin will be in a likely first quarter next year.
Speaker Change #172: And, and I think we're working through some of the final details of that launch.
Speaker Change #172: But we, we've got manufacturing to take care of and we're building inventory on that product now.
Speaker Change #173: On the new drop, I'm not 100% sure which, you know, on the pharmaceutical, which one you're talking about, we have a number of things going on in the pharmaceutical space, but in glaucoma.
Speaker Change #174: I think one of the things that was mentioned earlier was a was was a follow on to Rockletan, which again we have put in the clinical trial. That is a reformulation to try and improve the efficacy or the safety of that brand.
Speaker Change #174: So there's one of those out there, but there's also several other things that we're working on in the pharmaceutical space.
Speaker Change #174: David Okay, great.
Speaker Change #174: That's super helpful.
Speaker Change #174: Thanks for that.
Speaker Change #175: And then just on the cataract procedure volumes, low single digit this quarter, I think was like 2% last quarter.
Speaker Change #176: So I think that's a slowdown from what we've seen in the past.
Speaker Change #177: So what's driving that?
Speaker Change #178: Anything specific to eat from a geographical perspective, or is it kind of global?
Speaker Change #178: Thanks so much for taking the question.
Speaker Change #179: Yeah, you know, the cataract weakness in the second quarter was real in the US, and it was pretty stable, you know, I would say solid in the international market.
Speaker Change #179: So, you know, if you think about the difference, it really has been the US, it's been a little bit slower recently.
Speaker Change #179: You know, I can't tell you why exactly I could give you nine thesis on what it might be, but I don't think we know.
Speaker Change #179: I do think that over time, these things tend to be idiots and credit.
Speaker Change #179: You'll have one quarter that will do really well.
Speaker Change #179: You'll have a slowdown, and then you'll have another quarter that does really well.
Speaker Change #180: So, you know, our view is that the normal rate of cataract growth around the world is in the mid-single digits, kind of the low end of mid-single digits, called that four or four and a half.
Speaker Change #181: You know, higher in international, lower in the US, but directionally, you know, we've got a lot more surgeons coming into the international markets, you know, think China, think, you know, Asia in general.
Speaker Change #181: And then we've got, you know, a lot of efficiency gains coming through in the United States, which is driving basically the volumes up over time.
Speaker Change #181: So, I think that's the best I can give you in terms of dynamics.
Speaker Change #181: I, you know, generally think this thing evens out over time, and you know, we expect to see, you know, solid quarters coming up.
Speaker Change #181: Great.
Speaker Change #181: Thanks so much.
Speaker Change #181: Thank you.
Speaker Change #182: Our next question comes from the line of Anthony Patron with Mizuho Group.
Speaker Change #183: Please proceed with your question.
Speaker Change #184: Thanks, and good morning.
Speaker Change #185: Maybe one on margins and one on capital allocation.
Speaker Change #186: Tim, just on margin, you, you called out the supplier quality issue was 120 basis points.
Speaker Change #187: You back it out, you're at 21%.
Speaker Change #188: You're leaving the guidance unchanged, but if I heard you correctly, there'll still be a margin impact from the quality, supplier quality issue at least in some portion of the second half.
Speaker Change #189: So, it suggests the underlying margins actually a little bit better.
Speaker Change #189: Are we thinking about that correctly?
Speaker Change #189: And if there is underlying momentum, what are the sources there?
Speaker Change #189: And then I'll have one quick follow up.
Speaker Change #190: Yeah, great question, Anthony. Listen, the way we're thinking about it is obviously we weren't expecting the impact of the inventory provision, and you know, $30 million is called 30 or 40 basis points.
Speaker Change #191: But the other thing to think about is at the same time we have quite a few investments in the second half or latest new product launches that we're committed to making because obviously revenue growth is key to the financial thesis.
Speaker Change #192: So, you know, that's really why, you know, we give a range.
Speaker Change #192: So, you know, given the assumptions we've laid out, we're comfortable that we can hit that range.
Speaker Change #192: And the other thing to think about is if you look at our R&D spend in the first half of the year, we're coming in at about 8.2 percent.
Speaker Change #192: Again, we'd like to be at the high end of that because we think innovation is super important.
Speaker Change #192: And given the pipeline that we have right now, I'd expect the R&D spend to be a little bit heavier in the back half as well.
Speaker Change #192: That's helpful.
Speaker Change #192: I'm just capital allotation.
Speaker Change #192: It was speculation out there during a quarter that perhaps Alcon was looking at a larger transaction than we've historically seen it pursue.
Speaker Change #193: So maybe just your your latest thoughts on the M&A market is the priority still for some of the therapeutic assets that are out there.
Speaker Change #193: What are you looking at and that tech these days and maybe just some high level thoughts there.
Speaker Change #193: Thanks.
Speaker Change #194: Yeah, you know, Anthony, we're always looking at stuff in ophthalmology.
Speaker Change #195: You know, if it's in eye care, you know, you can count on us being somehow involved in looking at it.
Speaker Change #196: And so directionally, we still like the kind of technology oriented bolt on ideas that kind of range in that 50 to 500.
Speaker Change #197: Obviously, you know, with the strength of our balance sheet, we can do any number of things.
Speaker Change #197: But I think really, you know, what we're trying to do is fill out white spaces.
Speaker Change #198: And so think glaucoma, think refractive, think, you know, contact lens technology, think, I know pharmaceuticals, you know, those are areas where we have big growth opportunities and relatively low shares.
Speaker Change #198: So that's kind of the generally speaking.
Speaker Change #198: That's what we're looking at in that zone.
Speaker Change #198: Thank you.
Speaker Change #198: Our next question comes from the line of Larry Beagleton with Wells Fargo.
Speaker Change #199: Please proceed with your question.
Speaker Change #200: Oh, thanks for taking the question morning.
Speaker Change #200: Just one quick one on timing and I had one follow up.
Speaker Change #201: So the AR 155 data and publication, when will we see that?
Speaker Change #202: And how far behind is the CS unity CS from from ACS?
Speaker Change #202: Yeah.
Speaker Change #203: Larry, thanks for the question.
Speaker Change #204: 5 to 2 data will likely be available at the American Academy of Ophthalmology coming up in I think October and November and somewhere in that zone.
Speaker Change #205: I think it's late October.
Speaker Change #206: And then on the unity VCS and CS the CS will come pretty close.
Speaker Change #207: I think, you know, probably six months behind VCS, but plus or minus a bit on that.
Speaker Change #207: Let's just say because I'm not 100% sure.
Speaker Change #208: David, just one follow up.
Speaker Change #209: Just what, what have you guys said publicly on just fake or fake IOLs in general?
Speaker Change #210: I know Alcott had an internal program called 20 years ago that never, you know, I don't think it ever obviously wasn't launched, but what is your high level view of just the fake IOL market in general?
Speaker Change #210: Thank you.
Speaker Change #211: You know, I think directionally we think it's a good idea.
Speaker Change #212: I think, I think, you know, the projects that have been out there before we were in it and, you know, historically with cache and you know, we had some challenges with that, but I think directionally, you know, we like the progress that's being made there.
Speaker Change #213: You know, again, LASIC is really a very, very good procedure and I think directionally we still sell, you know, a lot of fake or a lot, sorry, a lot of lasers for for that procedure.
Speaker Change #213: So, you know, I think for high my hopes, this is a really appropriate kind of project.
Speaker Change #213: And I think for anybody who's kind of minus six and under, I think you'd be hard pressed to go away from LASIC.
Speaker Change #214: So our view is that that market doesn't really impact our refractive market.
Speaker Change #214: So our LASIC business is still really solid.
Speaker Change #214: And what's really going on is, I think the consumer is driving most of these decisions at this point. So strength of the consumer drives the strength of the refractive market.
Speaker Change #214: You know, there's a lot of up and down in that, but directionally, I'm still an important market.
Speaker Change #214: Thank you.
Speaker Change #214: Our next question comes from the line of Michael Sarcone with Jeffrey.
Speaker Change #215: Please proceed with your question.
Speaker Change #216: Good morning, and thanks for taking the questions.
Speaker Change #216: Just, you know, first we talked about a broader unity launch in the second quarter of 2025.
Speaker Change #217: Can you maybe just elaborate on, you know, what the goalposts or things you're looking to accomplish prior to the broader launch are?
Speaker Change #218: Yeah, Michael, one of the things that we, you know, have really been careful about with the unity launch is to make sure that, you know, it we really understand that we understand all the corner cases that could come up that we've, you know, that we've looked at the preferences for software, you know, the way in which it looks and feels, the way it gets set up.
Speaker Change #219: There's a lot of detail that is important to kind of fine tune, I would say, you know, once the products approved and, you know, we have the good fortune of having to tremendously successful products out there with, with Centurion and Constellation.
Speaker Change #220: And so when you go in and you say, hey, you know, I'd like to give premium for this product or this is a better product, you know, it really has to be.
Speaker Change #220: And that's really what we're after right now is making sure that we know how to describe that know how, you know, we have the data to actually prove that.
Speaker Change #220: And those are the things that we're working on.
Speaker Change #220: And so we're being patient with this for sure.
Speaker Change #220: I recognize that, you know, we, it was approved some time ago, but directionally, this is the way really great products get launched, I think.
Speaker Change #220: I understand that's helpful.
Speaker Change #220: And then just last question from me on the next 10 pan optics, I think you mentioned you're still deciding on launch timing over the next few months.
Speaker Change #220: Can you just elaborate on the factors that you're thinking about as you decide on the launch timing and then, you know, any color on economics and if you may be able to take incremental pricing there?
Speaker Change #221: Yeah, I mean, I think, you know, what we're trying to do right now is, you know, we have two different ideas, you know, we're working on a product that already is kind of the gold standard in in trifocal lenses that has a patented set point.
Speaker Change #221: It's optical design is particularly unique.
Speaker Change #221: And, you know, this is a really important product for us.
Speaker Change #221: So, you know, we're being very careful about how we work at improving it.
Speaker Change #221: And as we kind of get there, you know, we're looking at enhanced distance vision through improved contrast.
Speaker Change #221: We're looking at different ways to improve acuity, you know, at all ranges using different light distributions.
Speaker Change #221: And so the optical designs, we're getting feedback on now.
Speaker Change #221: We'll see which one really, you know, has the best chance of improving this.
Speaker Change #221: And when we get that information, again, as we do that through our testing work right now, we'll decide, you know, which product we want to launch and when that would be.
Speaker Change #221: So I would expect that in the front half of next year.
Speaker Change #221: But again, I, you know, we'll see, you know, as we kind of go forward.
Speaker Change #221: Got it.
Speaker Change #221: Thank you.
Speaker Change #222: Any color on the potential economics there versus Karen Chan?
Speaker Change #222: No, not yet.
Speaker Change #222: I mean, I think, I think we really need to see kind of what this looks like.
Speaker Change #222: Thank you.
Speaker Change #222: Okay.
Speaker Change #223: Thank you.
Speaker Change #224: Our next question comes from the line of busy Kirby with Redburn and Lana.
Speaker Change #225: Please proceed with your question.
Speaker Change #226: Hi guys.
Speaker Change #227: Thanks for taking my question.
Speaker Change #227: Firstly, on the unity ramp.
Speaker Change #228: I guess if we look to San Churian when it first launched, is there any reason why the unity ramp should vary in terms of how quickly it penetrates your installed base?
Speaker Change #228: versus San Churian?
Speaker Change #228: And also any comments you have on the health of I guess the end purchaser for the unity system for a financial perspective.
Speaker Change #228: And then I have a follow up on implants.
Speaker Change #228: Yeah, I mean, I think, directly, that's not a bad way to kind of model it.
Speaker Change #228: I would think about Centurion and the constellation launches and really kind of think about the installed base.
Speaker Change #229: One of the reasons we gave you the installed base in the opening remarks was really to give you some sense of how big the market is.
Speaker Change #229: And I think the other factor to think about is that these are generally 8 to 10 years of cycle time.
Speaker Change #229: So, taking some division against the installed base and then some portion of additional market is probably the right way to think about it.
Speaker Change #229: The rate will be probably a little bit more enthusiastic in the beginning because it usually is.
Speaker Change #229: You can see that in probably the original Centurion launch.
Speaker Change #229: And then again, it'll slow down as you get a little bit more into a natural replacement cycle.
Speaker Change #229: So, directly, that's kind of the way to think about it.
Speaker Change #229: And on the health of the end, you purchase it again.
Speaker Change #229: I think there's a room for these kind of capital choices, particularly if they create value.
Speaker Change #229: And so, I think what we're really focused on is trying to establish, you know, in some of these preference testing, you know, what is the actual duration and turnover of the ORs so that, you know, if the health authority wants to do more surgery and wants to shorten lines or wants to.
Speaker Change #229: You know, really benefit the time in the OR for somebody else, the utilization of that OR is much more efficient.
Speaker Change #229: So, that's what we're trying to figure out and as we get to that, that'll help.
Speaker Change #229: I think drive a real interest in moving these products forward.
Speaker Change #229: That's great.
Speaker Change #229: Thank you.
Speaker Change #229: And then just on the implantables business and where penetration has reached in some of your other markets like Japan and in some of these developed European markets.
Speaker Change #230: I guess could you comment on where premium IOR penetration has reached and if you're seeing perhaps any of these markets reach a bit of a ceiling, like perhaps we have in the US.
Speaker Change #230: Thanks.
Speaker Change #231: Yeah, you know, I'm unconvinced that there's a ceiling in the US and then I think, well, there's a ceiling, but it's considerably higher than where we are. I mean, I think historically we've talked about, you know, willingness to pay.
Speaker Change #231: We've done every year.
Speaker Change #232: I think we do work with a consumer that if they really understand this choice, they're willing to pay and it's about, you know, kind of usually in the mid 30s plus or minus a little bit of the market that will do that.
Speaker Change #233: So I think there's plenty of room for the US to grow from what was a 19.2% in the second quarter.
Speaker Change #233: If you look around the world for ATI wells, you know, the penetration globally is 15, but obviously that's a blend of the US and the international markets.
Speaker Change #234: So international markets on penetration directionally, you know, are a good bit lower than that somewhere in the 14.3 is what I've got internationally.
Speaker Change #235: So, you know, I think what you'll see is continued steady growth of penetration internationally, in particular because, you know, you've had a good quarter and moved quite a little bit.
Speaker Change #235: China is helping a lot as it kind of moves.
Speaker Change #235: Japan has been solid, Korea has been solid.
Speaker Change #235: So there's a lot of opportunity still out there to move penetration.
Speaker Change #235: And, you know, in most of those markets, you know, we have growing share, not declining share in any way.
Speaker Change #235: And so if you get penetration and share moving, that helps us a lot.
Speaker Change #235: Great.
Speaker Change #235: Thanks.
Speaker Change #235: Thank you.
Speaker Change #236: Our next question comes from line, I've Richard Veltin with Goldman Sachs.
Speaker Change #236: Please.
Speaker Change #237: Thank you for your question.
Speaker Change #238: Great, thank you.
Speaker Change #239: My first question is on the deceleration in ocular health.
Speaker Change #240: I know you called out the impact from contact lens care in the court, but even just for that, it seems like the rest of the business slowed a little bit in Q2.
Speaker Change #240: So is there any additional color you can share for that division, and specifically whether any changes to the strong trends that you've seen for sustain?
Speaker Change #241: Now look, sustain is doing great. I mean, it was another quarter of double digit growth for sustain and stand brand.
Speaker Change #242: You know, the multi dust preservative free all around the world is doing quite well, and I do think that it will continue to.
Speaker Change #243: You know, I think the quarter is pretty normal.
Speaker Change #243: I think it was somewhere in the five, you know, kind of mid single digit range for the market, and as we kind of calculate out the CLC element of the kind of lens care element of it, I think that we were probably moving around 6%.
Speaker Change #243: So, you know, a little bit faster than the market as we saw it, but I think you should just think about it as another normal quarter.
Speaker Change #243: Great.
Speaker Change #243: Thank you.
Speaker Change #244: And then maybe one for Tim on free cash flow.
Speaker Change #244: So, you know, strong improvement in cash generation in H1.
Speaker Change #245: Is this sort of the new normal level of cash conversion that we should expect from alcohol moving forward?
Speaker Change #246: Thank you.
Speaker Change #247: Yeah, great question.
Speaker Change #248: Listen, we're very pleased with our free cash flow performance in the first half.
Speaker Change #249: And as we said, we would expect to see a significant increase year over year.
Speaker Change #250: So, the one thing I would remind you of is we did have some unusual items that pressured free cash flow last year. So, if you think about the legal settlement we had, if you think about the transformation costs and some of the higher level inventory that we purchased.
Speaker Change #250: So, I think you're going to see the step up this year.
Speaker Change #250: And then next year and beyond, you're going to see more of a normalized free cash flow progression.
Speaker Change #251: That's sort of in line with our operating income.
Speaker Change #251: That's a good property for cash flow.
Speaker Change #251: But we're pleased with our performance so far.
Speaker Change #251: Thank you.
Speaker Change #252: Our next question comes from the line of Tom Steffan with Feeville.
Speaker Change #253: Please proceed with your question.
Speaker Change #253: Great.
Speaker Change #254: Hey, guys.
Speaker Change #255: Thanks for the questions.
Speaker Change #256: I think just one for me, David.
Speaker Change #257: I believe in the past, you've talked about the tunable, accommodative offering, potentially not requiring an incremental system for the post-stop adjustments.
Speaker Change #258: And then maybe those to be done with the laser that, I guess, surgeons already have their clinic.
Speaker Change #259: Is that still the thought or the strategy when it comes to your future tunable offering?
Speaker Change #259: Thanks.
Speaker Change #259: Yeah, interesting question, Tom.
Speaker Change #260: And I think, you know, we've got a lot of projects in what I'd listed called tunable and adjustable areas.
Speaker Change #261: We probably have several projects. One of them I showed, I think at Capital Markets Day last time we did it, which was a laser adjustment, which we think is probably a better long-term idea than kind of adjusting material with UV light, which again, you know, stray UV light and locking that in is still a little bit tricky.
Speaker Change #261: So I think, directionally, my view is that there'll be better ideas going forward for tuning and adjusting, whether that's accommodation, again, which we have a number of ideas around or tuning itself, we're working on several.
Speaker Change #261: Yeah, thank you.
Speaker Change #261: George.
Speaker Change #262: Thank you.
Speaker Change #263: Our next question comes from the line of Steve Lickman with Oppenheimer Company.
Speaker Change #264: Please proceed with your question.
Speaker Change #265: Thank you.
Speaker Change #266: Good morning guys.
Speaker Change #267: David, as you geared toward precision seven launch, any color you can provide and how you think your position at relative to total 30 and how can help you expand your share and reusable.
Speaker Change #268: So what does your market assessment say on the type of patient that you can target with P7?
Speaker Change #269: Yeah, you know, P7 has been a really interesting product for us because, you know, we were unclear a little bit when we started down this path, how big this market might be.
Speaker Change #269: So I think you're asking an interesting question that we've spent some time on.
Speaker Change #270: The precision seven is unique in that we've created a technology that allows water to move from the, you know, the lens material to the surface for kind of seven consecutive days.
Speaker Change #271: That keeps the fresh lens nearly every day and that experience and that redness of the measurement of kind of every Sunday or every Monday, whatever day you want to choose, you know, of replacing it with a fresh lens.
Speaker Change #272: It seems to be very attractive to both patients and to the optometrist that we've talked to.
Speaker Change #272: And right now we've got a select group of key opinion leaders, you know, using this product.
Speaker Change #272: They've had it for, oh, I guess a couple of months while we are building inventory on it. And it seems to be, you know, quite, quite pleasing to them.
Speaker Change #273: And so I think they like the intuitive nature of the replacement schedule and they like the fact that they're, you know, they're moving down to a fresh lens a little more frequently.
Speaker Change #273: That's just, you know, I think appeals to everybody.
Speaker Change #273: And then again, you know, the price point on this will fit in nicely, you know, between, you know, a daily lens and a reusable lens.
Speaker Change #273: So what we're trying to do is squeeze a little bit of room in here.
Speaker Change #273: And I think there's a pretty good place for it.
Speaker Change #273: So we're, you know, we'll see how it plays, but I think directionally the feedback early on has been very positive.
Speaker Change #273: Great.
Speaker Change #274: And then just a follow up you mentioned earlier in the call of the strategic deal in China with occupant mentioned, it seems like an interesting new opportunity can give a little more color on how you view that opportunity long term.
Speaker Change #275: Well, you know, we like the team that they've got there. I mean, they've built a business that has local manufacturing local R&D regulatory folks that really understand that market.
Speaker Change #276: You know, for us to get in there, you know, our assessor was going to take us a while to do that and to build the capabilities that are really effective, you know, is expensive.
Speaker Change #276: And we really thought through carefully how we wanted to think about China.
Speaker Change #276: And I think really, you know, we decided that we had a lot of opportunity and surgical, a good bit of opportunity and care.
Speaker Change #276: And that the eyedrops business, we could find a partner for, you know, in a very efficient way.
Speaker Change #276: And so this is a, this is a move for efficiency for profitability.
Speaker Change #276: And I think capability really is the way to think about it.
Speaker Change #276: Thank you.
Speaker Change #276: Our final question comes from the line of Brett Fishman with Cuban capital markets.
Speaker Change #277: Please proceed with your question.
Brett Fishman: Hey guys, thank you so much for squeezing me in.
Speaker Change #279: I think we hit on pretty much every business area, maybe except for consumables.
Brett Fishman: So I'll ask about that one didn't really come up much on the call.
Speaker Change #280: You know, kind of like down the middle of this quarter, but a little bit lower than some of the recent high energy or double did your quarters that you put up over the past couple of years.
Speaker Change #280: So just curious if you're looking at this as a bit of a one off quarter, you know, Evan flow or if there was any type of headwinds that you could call out there.
Speaker Change #280: Grant.
Grant: Yeah, good question, Brett.
Speaker Change #282: I mean, look, I mean, I would think about it as we generally think about the market and consumables as quite correlated.
Speaker Change #283: So, you know, I think, you know, we always get a little bit of share and a little bit of price as we kind of trade people up into the newer consumables, newer disposables.
Speaker Change #283: So think about the market overall as kind of 3% low single digits, kind of number.
Speaker Change #283: And, you know, we grew, you know, what, 5% consumables.
Speaker Change #283: So, you know, I think that's the right way to think about it.
Speaker Change #284: It was just a little bit softer quarter around the world for procedural growth.
Speaker Change #284: And, you know, I think that's all there was to it.
Speaker Change #285: Early in the year, the first quarter, we had a really good, you know, procedural growth number.
Speaker Change #285: So, again, I think you've got to, you've kind of got to just other.
Speaker Change #286: And then just last follow up on contact lenses, you guys keep calling out strength in products and multifocals as one of the drivers, which is great to see.
Speaker Change #287: Just I think it's interesting, the number of new launches in the daily side, high port category with another one, you know, pretty recently.
Speaker Change #288: Curious on how you're viewing competitive dynamics there and whether you expect like any change to the level of growth you've seen in some of your daily products for the rest of the year.
Speaker Change #288: Thank you.
Speaker Change #288: Yeah, good question.
Speaker Change #288: The specialty lenses really are, you know, where the action is right now.
Speaker Change #288: And I think that's, that's good because there, you know, again, I think they're underdeveloped in terms of categories.
Speaker Change #288: I think people see correctly that, you know, the multifocal designs today are, you know, they're acceptable.
Speaker Change #289: They're pretty good, but they aren't perfect. There's a lot of work we're doing right now to kind of improve those multifocal designs.
Speaker Change #290: Multifocal Torx, very difficult to make, very expensive to make.
Speaker Change #290: And I think, you know, there's still some launches going on in that space, but relatively small market.
Speaker Change #291: We've spent a lot of time thinking about our torque design.
Speaker Change #292: And I spoke to it in the prepared remarks, but I think directionally, we're very pleased with the top take of our torque lenses and how the torque lenses.
Speaker Change #292: Halo, the rest of the brand families.
Speaker Change #293: So we've had a nice run with Dailies, particularly with the Torx.
Speaker Change #294: And so P1 Torx, DUT1, you know, from first images, and those are our terrific lens movements for us.
Speaker Change #295: And I do think there'll be more competitive dynamic around it, but I think we may be in a very strong position given the design that we have for our torque, which is, which is really unique.
Speaker Change #296: Thank you, ladies and gentlemen, back includes our question and answer session.
Speaker Change #296: I'll turn before back to Mr. Craven's final comments.
Speaker Change #296: All right.
Speaker Change #296: Well, thanks, everybody.
Speaker Change #296: Again, for joining us this morning.
Speaker Change #297: If you have any follow-up questions for the media, reach out to our corporate communications department.
Speaker Change #298: Or from investors or analysts, certainly feel free to reach out to either Alan Trang on myself.
Speaker Change #298: Thanks again.
Speaker Change #298: Thank you.
Speaker Change #299: This concludes today's conference call.
Speaker Change #300: You may disconnect your lines at this time.
Speaker Change #301: Thank you for your party.