Q2 2026 Alcon Inc Earnings Call

August 11, 2026

Speaker #1: Greetings, welcome to Alcon Q2 2026 earnings call. At this time I'll participant certain listen-only mode. The question-answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star 0 from your telephone keypad.

Speaker #1: Please note this conference is being recorded. At this time I'll turn the conference over to Dan Cravens, Vice President. Investor Relations. Thank you, you may begin.

Speaker #2: Welcome to Alcon Q2 2026 earnings conference call. Yesterday we issued our press release, interim financial report, and earnings presentation. All of these documents are available on our website at investor.alcon.com.

Speaker #2: Joining me on today's call are. Kat, our Chief Executive Officer, and Tim Stonecipher, our Chief Financial Officer. Before we begin, please note that our press release, presentation, and remarks will include forward-looking statements, including statements regarding our future outlook.

Speaker #2: We undertake no obligation to update these statements as a result of new information or future events, except as required by law. Actual results may differ materially from those expressed or implied in these forward-looking statements.

Speaker #1: Greetings. Welcome to Alcon's second quarter 2026 earnings call. At this time, all participants are in listen-only mode. The question-and-answer session will follow the formal presentation.

Speaker #2: So please do not place undue reliance on them. Important factors that could cause actual results to differ materially are included in our Form 20F earnings press release and interim financial report.

Speaker #1: If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded.

Speaker #1: At this time, I'll turn the conference over to Dan Cravens, Vice President and Global Head, Investor Relations. Thank you. You may begin.

Speaker #2: Each of which is available on file with the Securities Exchange Commission and available on their website at sec.gov. We'll also discuss certain non-IFRS financial measures.

Speaker #2: Welcome to Alcon's second quarter 2026 earnings conference call. Yesterday, we issued our press release, interim financial report, and earnings presentation. All of these documents are available on our website at investor.alcon.com.

Speaker #2: These measures may be calculated differently from and may not be comparable to similar measures used by other companies. They should be considered in addition to and not as a substitute for IFRS-prescribed performance measures.

Speaker #2: Joining me on today’s call are David Endicott, our Chief Executive Officer, and Tim Stonesifer, our Chief Financial Officer. Before we begin, please note that our press release, presentation, and remarks will include forward-looking statements, including statements regarding our future outlook.

Speaker #2: Reconciliation between our non-IFRS measures and the most directly comparable IFRS measures can be found in our earnings press release. For discussion purposes, our comments on growth rates are expressed in Constant Currency.

Speaker #2: In a moment, David will begin with highlights from the second quarter. After his remarks, Tim will walk through our financial performance and outlook for the remainder of the 2026.

Speaker #2: David will then return with closing comments before we open the line for Q&A. So with that, I'll turn the call over to our CEO, David Endicott.

Speaker #2: So, please do not place undue reliance on them. Important factors that could cause actual results to differ materially are included in our Form 20-F, earnings press release, and interim financial report.

Speaker #3: Thanks, Dan. And good morning, everyone. Our second quarter results demonstrate the strength of our new products and the benefits of our innovation investments. We delivered 7% sales growth, which was broad-based, across both franchises and geographies, reinforcing the impact of our diverse portfolio and our commercial reach.

Speaker #2: Each of which is available on file with the Securities Exchange Commission and available on their website at sec.gov. We'll also discuss certain non-IFRS financial measures.

Speaker #2: These measures may be calculated differently from, and may not be comparable to, similar measures used by other companies. They should be considered in addition to, and not as a substitute for, IFRS-prescribed performance measures.

Speaker #3: Now I'll start my remarks today with Unity, which is one of the clearest examples of our innovation translating into commercial success. Demand for Unity VCS remains robust, reflecting its versatility across both cataract and vitreoretinal procedures.

Speaker #3: Surgeons are experiencing firsthand the benefits of Unity CS, including its advanced energy delivery for DPHACO, improved fluoridics, and streamlined workflow. I'm encouragingly, Unity ASPs have exceeded our expectations and underscore our customers' belief in the platform's differentiated value.

Speaker #2: In a moment, David will begin with highlights from the second quarter. After his remarks, Tim will walk through our financial performance and outlook for the remainder of 2026.

Speaker #2: David will then return with closing comments before we open the line for Q&A. So, with that, I'll turn the call over to our CEO, David Endicott.

Speaker #3: With strong customer engagement and a healthy sales funnel, we have clear visibility into our second-half placements. Turning to implantables, as we highlighted in our earnings release, we made the decision to discontinue our work on the PowerVision IOL programs following the analysis of the latest clinical study data.

Speaker #3: Thanks, Dan. And good morning, everyone. Our second quarter results demonstrate the strength of our new products and the benefits of our innovation investments. We delivered 7% sales growth, which was broad-based across both franchises and geographies, reinforcing the impact of our diverse portfolio and our commercial reach.

Speaker #3: This data demonstrated persistent, unpredictable shifts in postoperative distance vision in a subset of patients that remain unresolved after multiple developmental efforts. As a result, the programs did not meet our standards for visual performance and patient outcomes.

Speaker #3: Now, I'll start my remarks today with Unity, which is one of the clearest examples of our innovation translating into commercial success. Demand for Unity VCS remains robust, reflecting its versatility across both cataract and vitreoretinal procedures.

Speaker #3: Although we are disappointed that the programs ultimately did not advance, they generated valuable insights into accommodation, tunability, and long-term visual outcomes that will inform future innovation efforts.

Speaker #3: Looking at our performance in the quarter, implantables grew 1%, with IOLs up 2% despite new competitive launches. The PanOptics family grew double digits in the quarter driven by strong adoption of PanOptics Pro, building on the foundation of PanOptics, the world's most implantable trifocal IOL, PanOptics Pro enhances quality of vision through its advanced optical design and continues to gain traction with surgeons globally.

Speaker #3: In the US, adoption has exceeded expectations nearly all PanOptics accounts have been converted to PanOptics Pro, with the platform now representing approximately 90% of PanOptics implants.

Speaker #3: This data demonstrated persistent, unpredictable shifts in postoperative distance vision in a subset of patients that remain unresolved after multiple development efforts. As a result, the programs did not meet our standards for visual performance and patient outcomes.

Speaker #3: Feedback on visual performance and reduced light scatter remains very encouraging. We expect this momentum to extend internationally as we roll out PanOptics Pro and continue to build on the strength of Clarion Toric.

Speaker #3: Early launches in Japan, Canada, Australia, and more recently in Europe have been well-received, supporting our confidence in share stabilization and long-term growth. Now we're also excited about the acceleration of our pipeline of new IOLs.

Speaker #3: We've begun a KOL launch of TruePlus in the US and recently received CE mark for Europe. This lens is an important addition to our portfolio and provides an entry point into the monofocal plus segment.

Speaker #3: Building on the foundation of PanOptix, the world's most implantable trifocal IOL, PanOptix Pro enhances quality of vision through its advanced optical design and continues to gain traction with surgeons globally.

Speaker #3: We intend to phase these launches deliberately as we continue to prioritize the scale-up of PanOptics Pro in international markets, and prepare for the introduction of Vivity Pro.

Speaker #3: Expected to launch with KOLs late this year, Vivity Pro builds on the success of the Vivity platform through a next-generation lens that is designed to extend the range of vision and enhances near performance.

Speaker #3: In the US, adoption has exceeded expectations. Nearly all PanOptix accounts have been converted to PanOptix Pro, with the platform now representing approximately 90% of PanOptix implants.

Speaker #3: The new lens is designed to deliver up to one additional line of near vision while maintaining Vivity's strong distance and intermediate vision performance, and its clinically proven low visual disturbance profile.

Speaker #3: Early launches in Japan, Canada, Australia, and more recently in Europe have been well received, supporting our confidence in share stabilization and long-term growth. Now, we're also excited about the acceleration of our pipeline of new IOLs.

Speaker #3: Importantly, TruePlus and Vivity Pro represent only the next wave of innovation from our IOL portfolio. Our pipeline remains robust, and we expect to continue to deliver a steady cadence of new technologies and product enhancements in the years ahead.

Speaker #3: We've begun a KOL launch of True Plus in the US and recently received CE mark for Europe. This lens is an important addition to our portfolio and provides an entry point into the monofocal plus segment.

Speaker #3: Beyond cataract surgery, we continue to see enthusiasm for Valeta, our first of its kind treatment for dry AMD. This technology uses three specific wavelengths of light to improve mitochondrial activity in retinal health.

Speaker #3: We intend to phase these launches deliberately, as we continue to prioritize the scale-up of PanOptix Pro in international markets and prepare for the introduction of Vivity Pro.

Speaker #3: Importantly, clinical studies showed that more than 80% of patients maintained or improved their vision at approximately two years. Adoption accelerated during the quarter as we expanded the installed base and increased utilization across existing accounts.

Speaker #3: We were also encouraged by continued progress with the Medicare Administrative Contractors, which we believe will further support access to this therapy. Based on current adoption trends, clinical experience, and reimbursement progress, we continue to believe the platform has the potential to generate sales of between $100 and $150 million over time.

Speaker #3: The new lens is designed to deliver up to one additional line of near vision while maintaining Vivity's strong distance and intermediate vision performance, along with its clinically proven low visual disturbance profile.

Speaker #3: Importantly, True Plus and Vivity Pro represent only the next wave of innovation from our IOL portfolio. Our pipeline remains robust, and we expect to continue to deliver a steady cadence of new technologies and product enhancements in the years ahead.

Speaker #3: Turning to contact lenses, innovation continues to drive growth across our portfolio. The overall contact lens market remained healthy in the second quarter, providing a supportive backdrop for continued category expansion.

Speaker #3: Against that backdrop, we achieved a record global market share position, supported by strong US share gains and continued momentum across both dailies and reusables.

Speaker #3: Beyond cataract surgery, we continue to see enthusiasm for Valeta, our first-of-its-kind treatment for dry AMD. This technology uses three specific wavelengths of light to improve mitochondrial activity and retinal health.

Speaker #3: In dailies, total 1 in Precision One remained important growth drivers and continued to gain share in one of the largest fastest growing market segments.

Speaker #3: We're also encouraged by the momentum in reusables. Total 30 continues to perform well across the family, supported by the recent launch of Total 30 multifocal for astigmatism, which expands our reach into an attractive and underserved segment.

Speaker #3: In addition, Precision 7 sales have more than doubled versus the prior year, reflecting strong adoption of the weekly replacement category and providing another meaningful avenue for growth.

Speaker #3: With multiple platforms across dailies and reusables, we believe we're well-positioned to continue capturing share and pursuing attractive growth opportunities across the contact lens market.

Speaker #3: Now finally, in ocular health, execution remains strong across both our prescription and consumer dry eye franchises. Cryptear, our novel prescription treatment for dry eye disease, continues to gain momentum.

Speaker #3: Against that backdrop, we achieved a record global market share position, supported by strong U.S. share gains and continued momentum across both dailies and reusables.

Speaker #3: Market access now includes nearly two-thirds of commercial lives and more than 20% of Medicare lives, including the recent edition of Humana Medicare Part D, less than a year post-launch Cryptear has already captured approximately 5% market share, reflecting strong early adoption in a market that's growing double digits.

Speaker #3: In dailies, TOTAL1 and Precision1 remained important growth drivers and continued to gain share in one of the largest, fastest-growing market segments. We're also encouraged by the momentum in reusables.

Speaker #3: TOTAL30 continues to perform well across the family, supported by the recent launch of TOTAL30 Multifocal for Astigmatism, which expands our reach into an attractive and underserved segment.

Speaker #3: On the OTC side, sustain continues to perform well, delivering another quarter of double-digit growth in share gains further strengthening its leadership position in artificial tears.

Speaker #3: In addition, Precision1 sales have more than doubled versus the prior year, reflecting strong adoption of the weekly replacement category and providing another meaningful avenue for growth.

Speaker #3: Given the strength of the franchise and the opportunities we see ahead, we believe sustain remains well-positioned on its path towards becoming a billion-dollar brand in the coming years.

Speaker #3: With multiple platforms across dailies and reusables, we believe we're well positioned to continue capturing share and pursuing attractive growth opportunities across the contact lens market.

Speaker #3: As we look ahead, we see a robust pipeline of growth catalysts across both our surgical and our vision care franchises. Beyond the positive contributions from our recent launches, we're preparing for the introductions of Vivity Pro, as well as the planned launch of our new eye whitener, among others.

Speaker #3: Now, finally, in ocular health, execution remains strong across both our prescription and consumer dry eye franchises. Cryptear, our novel prescription treatment for dry eye disease, continues to gain momentum.

Speaker #3: In addition, I'm pleased to report that we recently made our first sale of Unity M, our new microscope, and are beginning to ramp up our commercialization efforts.

Speaker #3: Market access now includes nearly two-thirds of commercial lives and more than 20% of Medicare lives, including the recent addition of Humana Medicare Part D. Less than a year post-launch, Cryptear has already captured approximately 5% market share, reflecting strong early adoption in a market that's growing at double digits.

Speaker #3: Together, these near-term opportunities are expected to support steady future growth across our portfolio and further strengthen our market positions. We're also excited about the potential of our recently announced collaboration with our Excite.

Speaker #3: While still in the early stages, the collaboration combines Alcon's expertise in advanced optics and lens architecture with our Excite's adjustability platform. Together, we aim to develop a next-generation lens designed specifically for the platform, with the potential to further enhance visual performance and refractive precision.

Speaker #3: On the OTC side, Systane continues to perform well, delivering another quarter of double-digit growth and share gains, further strengthening its leadership position in artificial tears.

Speaker #3: Given the strength of the franchise and the opportunities we see ahead, we believe Systane remains well positioned on its path toward becoming a billion-dollar brand in the coming years.

Speaker #3: Before discussing the individual markets, it's worth highlighting the attractiveness of Alcon's portfolio. We participate across a variety of surgical and vision care markets, including cataract, vitreoretinal, refractive, contact lenses, ocular health, and dry eye, among others.

Speaker #3: Each of these markets is supported by unique growth drivers ranging from procedural growth to innovation, premialization, and increasing adoption of advanced technologies. Taken together, we estimate these aggregated markets grew approximately 3 to 4 percent in the second quarter.

Speaker #3: In addition, I'm pleased to report that we recently made our first sale of Unity M, our new microscope, and are beginning to ramp up our commercialization efforts.

Speaker #3: Within cataract, we estimate global procedure volumes grew low single digits in the quarter, led by strength in international, while the US was flat. This was a sequential improvement compared to the first quarter, importantly ATIOL penetration increased by approximately 110 basis points globally, and 180 basis points in the US.

Speaker #3: While still in the early stages, the collaboration combines Alcon's expertise in advanced optics and lens architecture with our Excite adjustability platform. Together, we aim to develop a next-generation lens designed specifically for the platform, with the potential to further enhance visual performance and refractive precision.

Speaker #3: In contact lenses, we estimate the global market remained healthy and grew mid single digits, led primarily by strength in the US, this was moderated by international markets where prices contributed less to growth.

Speaker #3: In summary, our focus remains on disciplined execution of a steady flow of new product launches. Combined with our leading positions in a broad range of attractive eye care markets, we believe Alcon is well-positioned to extend its leadership, capitalize on future growth opportunities, and create long-term shareholder value.

Speaker #3: Each of these markets is supported by unique growth drivers, ranging from procedural growth to innovation, premiumization, and increasing adoption of advanced technologies. Taken together, we estimate these aggregated markets grew approximately 3 to 4 percent in the second quarter.

Speaker #3: With that, I'll turn the call over to Tim, who will walk you through the financials.

Speaker #1: Thanks, David. Beginning with the top line, our second quarter sales were 2.8 billion dollars, up 7% versus prior year. In our surgical franchise, sales were up 7% year over year to 1.6 billion dollars.

Speaker #3: Within cataract, we estimate global procedure volumes grew low single digits in the quarter, led by strength in international, while the US was flat. This was a sequential improvement compared to the first quarter. Importantly, ATIOL penetration increased by approximately 110 basis points globally, and 180 basis points in the US.

Speaker #1: Implantable sales were 466 million dollars in the quarter, up 1% versus the prior year period. Within this, IOLs were up 2%, partially offset by lower sales in surgical glaucoma.

Speaker #1: As David mentioned, PanOptics Pro continued to perform well, growing nicely in the US and Japan. Strong customer interest and continued commercial execution supported growth despite increased competitive activity.

Speaker #3: In contact lenses, we estimate the global market remained healthy and grew mid-single digits, led primarily by strength in the US. This was moderated by international markets, where prices contributed less to growth.

Speaker #3: In summary, our focus remains on the disciplined execution of a steady flow of new product launches. Combined with our leading positions in a broad range of attractive eye care markets, we believe Alcon is well positioned to extend its leadership, capitalize on future growth opportunities, and create long-term shareholder value.

Speaker #1: In consumables, second quarter sales of 825 million dollars were up 5%. This growth was driven by strong vitreoretinal market trends, healthy international cataract procedural volumes, and favorable pricing, and reflects softer US cataract procedure volumes.

Speaker #1: For reference, one point of growth of the global cataract market, including IOLs and consumables, is worth approximately 10 million dollars per quarter to Alcon, while one point of ATIOL penetration is worth approximately 15 million dollars.

Speaker #3: With that, I'll turn the call over to Tim, who will walk you through the financials.

Speaker #1: In equipment, solid performance from our recent product launches, including Unity, drove sales of 279 million dollars, which were up 25% versus prior year. Unity adoption was strong throughout the quarter, underscoring the commercial traction we're seeing across markets.

Speaker #1: Implantable sales were $466 million in the quarter, up 1% versus the prior year period. Within this, IOLs were up 2%, partially offset by lower sales in surgical glaucoma.

Speaker #1: As David mentioned, PanOptix Pro continued to perform well, growing nicely in the U.S. and Japan. Strong customer interest and continued commercial execution supported growth despite increased competitive activity.

Speaker #1: Turning to vision care, second quarter sales of 1.2 billion dollars were up 7%. Contact lens sales were up 5% to 726 million dollars, lacking a strong prior year period with 7% growth.

Speaker #1: In Consumables, second quarter sales of $825 million were up 5%. This growth was driven by strong vitreoretinal market trends, healthy international cataract procedural volumes, and favorable pricing, and reflects softer U.S. cataract procedure volumes.

Speaker #1: Positive trends from our innovative product portfolio, including share gains and pricing, were partially offset by declines in legacy products. In ocular health, second quarter sales of 486 million dollars were up 12%, as Cryptear and Sustain continued to drive meaningful growth in the category.

Speaker #1: For reference, 1 point of growth of the global cataract market, including IOLs and consumables, is worth approximately 10 million dollars per quarter to Alcon, while 1 point of ATIOL penetration is worth approximately 15 million dollars.

Speaker #1: Cryptear continues to perform well, with prescription demand growing steadily and high refill rates. We've made meaningful progress on market access, positioning us to increase investment behind the brand in the second half of the year.

Speaker #1: In Equipment, solid performance from our recent product launches, including Unity, drove sales of $279 million, which were up 25% versus the prior year. Unity adoption was strong throughout the quarter, underscoring the commercial traction we’re seeing across markets.

Speaker #1: We believe the combination of improved access, growing awareness, and expanded commercial efforts will support continued TRX growth while driving a more favorable payer mix over time.

Speaker #1: Sustain delivered another strong quarter with double-digit growth and remains a key contributor to ocular health. Growth was driven by continued share gains and strong momentum in our multi-dose preservative-free portfolio, which grew more than 40% during the quarter.

Speaker #1: Turning to Vision Care, second quarter sales of $1.2 billion were up 7%. Contact lens sales were up 5% to $726 million, lapping a strong prior-year period with 7% growth.

Speaker #1: Second quarter core gross margin was 64.7%, up 250 basis points year over year. This improvement reflected price increases and manufacturing efficiencies, as well as 15 million dollars in other revenue from a licensee.

Speaker #1: Positive trends from our innovative product portfolio, including share gains and pricing, were partially offset by declines in legacy products. In Ocular Health, second quarter sales of $486 million were up 12%, as Cryptear and Systane continued to drive meaningful growth in the category.

Speaker #1: The prior year period also included higher inventory-related costs. Moving to operating expenses, as noted on our first quarter call, we are investing behind new product launches, including Cryptear, Unity, and others, and will continue to prioritize investments that support near and long-term growth.

Speaker #1: Our resulting core operating income was 574 million dollars and 20.6% of sales, up 160 basis points versus the prior year on a constant currency basis.

Speaker #1: We believe the combination of improved access, growing awareness, and expanded commercial efforts will support continued TRx growth while driving a more favorable payer mix over time.

Speaker #1: This improvement was driven by our strong revenue performance, net of our targeted commercial investments, and also benefited from the timing of the 15 million dollar and other revenue that I referred to earlier.

Speaker #1: SYSTANE delivered another strong quarter with double-digit growth and remains a key contributor to ocular health. Growth was driven by continued share gains and strong momentum in our multi-dose preservative-free portfolio, which grew more than 40% during the quarter.

Speaker #1: Below the operating line, interest expense was 53 million dollars during the quarter, broadly in line with the prior year. Turning to taxes, our core effective tax rate was 20.7% in the second quarter, which was broadly in line with our guidance.

Speaker #1: Finally, core diluted earnings were 84 cents per share in the quarter, up 9% versus prior year. Turning to cash, we generated 693 million dollars of free cash flow in the first half of the year, allowing us to return 538 million dollars to shareholders through dividends and share repurchases over the same period.

Speaker #1: The prior-year period also included higher inventory-related costs. Moving to operating expenses, as noted on our first quarter call, we are investing behind new product launches, including Cryptear, Unity, and others, and will continue to prioritize investments that support near- and long-term growth.

Speaker #1: Moving to our outlook for 2026, we continue to assume that aggregate eye care markets grow 3% to 4% for the year, and exchange rates as of the end of July hold through year-end.

Speaker #1: Our resulting core operating income was $574 million and 20.6% of sales, up 160 basis points versus the prior year on a constant currency basis.

Speaker #1: This improvement was driven by our strong revenue performance, net of our targeted commercial investments, and also benefited from the timing of the $15 million and other revenue that I referred to earlier.

Speaker #1: We also assume the tariffs currently applicable to Alcon's business remain in effect through year-end. Including US import tariff rates of approximately 10% to 12.5%.

Speaker #1: Below the operating line, interest expense was $53 million during the quarter, broadly in line with the prior year. Turning to taxes, our core effective tax rate was 20.7% in the second quarter, which was broadly in line with our guidance.

Speaker #1: This guidance also reflects an anticipated refund of approximately 60 million dollars from the US government in the third quarter, of which we plan to reinvest approximately two-thirds back into the business.

Speaker #1: Based on these assumptions and our performance through the first half of the year, our guidance is as follows. We continue to expect constant currency sales growth of between 5 and 7 percent.

Speaker #1: Finally, core diluted earnings were $0.84 per share in the quarter, up 9% versus the prior year. Turning to cash, we generated $693 million of free cash flow in the first half of the year, allowing us to return $538 million to shareholders through dividends and share repurchases over the same period.

Speaker #1: For the second half of the year, we expect tougher equipment comparisons, partially offset by easier comparisons in contact lenses, particularly in the fourth quarter.

Speaker #1: We also expect launch contributions from Cryptear, Valeta, Unity CS, as well as PanOptics Pro in Europe, to become more meaningful as we move through the balance of the year.

Speaker #1: Moving to our outlook for 2026, we continue to assume that aggregate eye care markets grow 3% to 4% for the year, and that exchange rates as of the end of July hold through year-end.

Speaker #1: Turning to profitability, we are increasing our expected core operating margin expansion to a range of 90 to 190 basis points in constant currency, reflecting the strong first half operating performance.

Speaker #1: We also assume the tariffs currently applicable to Alcon's business remain in effect through year-end, including U.S. import tariff rates of approximately 10% to 12.5%.

Speaker #1: Gross margin will also benefit from the tariff refund of approximately 60 million dollars. On SG&A, given the favorable response to our recent launches, we intend to reinvest a portion of the tariff refund to support growth.

Speaker #1: This guidance also reflects an anticipated refund of approximately $60 million from the US government in the third quarter, of which we plan to reinvest approximately two-thirds back into the business.

Speaker #1: As such, we expect SG&A spending for the second half to be consistent with last year, on a percentage of sales basis. Lastly, we're increasing our core diluted EPS growth outlook to a range of 12% to 15% in constant currency.

Speaker #1: Based on these assumptions and our performance through the first half of the year, our guidance is as follows: We continue to expect constant currency sales growth of between 5% and 7%.

Speaker #1: For the second half of the year, we expect tougher equipment comparisons, partially offset by easier comparisons in contact lenses, particularly in the fourth quarter.

Speaker #1: This reflects our strong operational performance, as well as the benefit from our share repurchase program. In summary, we delivered another quarter of solid financial results.

Speaker #1: We also expect launch contributions from Cryptear, Valeta, Unity CS, as well as PanOptics Pro in Europe, to become more meaningful as we move through the balance of the year.

Speaker #1: Sales grew 7%, earnings increased meaningfully, free cash flow remained healthy, and we returned significant capital to shareholders. These results reflect the strength of our portfolio, the impact of recent launches, and the dedication of more than 25,000 associates around the world.

Speaker #1: And with that, I'll turn it back to David.

Speaker #1: Gross margin will also benefit from the tariff refund of approximately $60 million. On SG&A, given the favorable response to our recent launches, we intend to reinvest a portion of the tariff refund to support growth.

Speaker #2: Thanks, Tim. In closing, our recent launches are performing well, our pipeline continues to progress, and we remain focused on executing against the opportunities in front of us.

Speaker #2: While we continue to operate in an evolving environment, we believe our portfolio, innovation pipeline, and disciplined execution position Alcon well for long-term growth. With that operator, please open the line for questions.

Speaker #1: As such, we expect SG&A spending for the second half to be consistent with last year on a percentage-of-sales basis. Lastly, we're increasing our core diluted EPS growth outlook to a range of 12% to 15% in constant currency.

Speaker #3: Thank you. We'll now be conducting a question-and-answer session. In the interest of time, we ask you to please limit yourself to one question and one follow-up.

Speaker #1: This reflects our strong operational performance, as well as the benefit from our share repurchase program. In summary, we delivered another quarter of solid financial results.

Speaker #3: If you'd like to ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone indicate your line is in the question queue.

Speaker #3: 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.

Speaker #3: Thank you, and our first question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your questions.

Speaker #4: Thank you, and good morning, everyone. Congratulations on a nice print here. I'll have one on equipment and one on IOLs. Dave, just on equipment here, obviously, mid-20s, you're holding better price than you had expected.

Speaker #1: And with that, I'll turn it back to David.

Speaker #2: Thanks, Tim. In closing, our recent launches are performing well, our pipeline continues to progress, and we remain focused on executing against the opportunities in front of us.

Speaker #4: At the onset of the launch, and the funnel looks good in the back half. Maybe you gave some data at the beginning of this cycle, 30,000 pieces of equipment.

Speaker #4: By the end of this year, what percent will have upgraded to Unity VCS, and what will the cycle look like over the next two to three years, let's say?

Speaker #1: Thank you. We'll now be conducting a question-and-answer session. In the interest of time, we ask that you please limit yourself to one question and one follow-up.

Speaker #1: If you'd like to ask a question at this time, you may press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue.

Speaker #4: And then I'll have a follow-up on IOL.

Speaker #2: Yeah, Anthony, we have been pleased with the response that we've gotten out of VCS in particular. The ASPs have been solid, and I think that reflects customers' view that this is really a step change in what they can do in retina, in particular, but also cataract.

Speaker #1: You may press star-2 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.

Speaker #1: Thank you, and our first question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your questions.

Speaker #2: We are on track with our funnel. We are on track with what we've given to you in the past in terms of the movement of the base of product.

Speaker #3: Thank you, and good morning, everyone. Congratulations on a nice print here. I'll have one on equipment and one on IOLs. Dave, just on equipment here, obviously mid-20s, you're holding better price than you had expected.

Speaker #2: We've actually gained some share in this market as well. So I think all things are kind of green light on the unit movement. I think what I would tell you is that there really isn't a change in the way in which we've thought about it.

Speaker #3: At the onset of the launch, the funnel looks good in the back half. Maybe you gave some data at the beginning of this cycle—30,000 pieces of equipment.

Speaker #2: Over the 10 years I've divided by 10, the 30,000, add a little more up front, take a little away on the back end, and then you're going to be kind of close to where we've always expected this to be.

Speaker #3: By the end of this year, what percent will have upgraded to Unity VCS, and what will the cycle look like over the next two to three years, let's say?

Speaker #2: So in these first couple of years of launch, we'll do a little better. It'll settle down a little bit, and then we'll replace on a kind of a steady replacement basis.

Speaker #2: So that's probably the main thing. You had an IOL question too.

Speaker #3: And then I'll have a follow-up on IOL.

Speaker #4: Yeah, IOLs are a little bit of an improvement sequentially. PanOptics Pro is helping, but it's still lower than the historical growth rate. Maybe just the outlook on IOLs as it relates to surgeon capacity in the US, and where you think that business could trend to, let's say, in the 2027 timeframe.

Speaker #2: We are on track with our funnel. We are on track with what we've given to you in the past in terms of the movement at the base of the product.

Speaker #4: Thanks.

Speaker #2: Sure. Yeah, I think we're very pleased with PanOptics Pro. I mean, the response to that product has been outstanding. I think we made a comment around 90% of our folks at UC use PanOptics are now using Pro, and that's probably tells you all you need to know.

Speaker #2: We've actually gained some share in this market as well, so I think all things are kind of green light on the unit movement. I think what I would tell you is that there really isn't a change in the way in which we've thought about it.

Speaker #2: Over the 10 years, I'd divide it by 10. If 30,000 add a little more upfront, take a little away on the back end, and then you're going to be kind of close to where we've always expected this to be.

Speaker #2: That's inside of the year. So the use of light in that lens is. Period of just about everything out there, we're getting, I think, 93% of the light being used.

Speaker #2: And productive ways, which creates less scatter. That has made a big difference, and I think it also shrinks the market for things like Vivity penetration.

Speaker #2: So, in these first couple of years after launch, we'll do a little better, it'll settle down a little bit, and then we'll replace on kind of a steady replacement basis.

Speaker #2: So that's probably the main thing. You had an IOL question too.

Speaker #2: We know Vivity is a good lens. We also know there's competitors to it. And again, we are chasing a new Vivity, which does even more than what Vivity did on its own.

Speaker #3: Yeah, IOL is a little bit of improvement sequentially. PanOptix Pro is helping, but it's still lower than the historical growth rate. Maybe just the outlook on IOLs as it relates to surgeon capacity in the US, and where you think that business could trend to, let's say, in the 2027 timeframe.

Speaker #2: So again, we're looking for another line of vision at near out of Vivity. So we get that done, I think, again, we continue to push our lenses out in front of competitive lenses.

Speaker #2: And so we're very confident in our long-term share. Stabilization, I would say that we're getting towards the end of it, but we're not there.

Speaker #3: Thanks.

Speaker #2: Sure. Yeah, I think we're very pleased with PanOptix Pro. I mean, the response to that product has been outstanding. I think we made a comment that around 90% of our folks who used to use PanOptix are now using Pro, and that probably tells you all you need to know.

Speaker #2: It's still a very competitive market out there, but we've seen now, I think, in most of the rest of the world and in the US, pretty much the most difficult competitors we're going to face.

Speaker #2: And I feel pretty good about where we're headed. So I think the only other thing I'd tell you is that relative to penetration and movement and implantables themselves, penetration matters a lot, and we're seeing a very positive trend right now in the United States.

Speaker #2: That's inside of a year. So the use of light in that lens is superior to just about everything out there. We're getting, I think, 93% of the light being used in productive ways, which creates less scatter.

Speaker #2: I think this is the second quarter in a row we've seen more than 150 basis points in the US move up. And I do think that for some surgeons doing more ATIOLs is a very productive thing.

Speaker #2: That has made a big difference, and I think it also shrinks the market for things like Vivity penetration. We know Vivity is a good lens.

Speaker #2: We also know there are competitors to it. And again, we are chasing a new Vivity, which does even more than what Vivity did on its own.

Speaker #2: They're kind of getting used to it. They're getting better at the diagnostics. And there's just a lot of promotion out there on this. So I think that's moving the market, and that does help.

Speaker #2: So, again, we're looking for another line of vision at near out of Vivity. So, if we get that done, I think, again, we continue to push our lenses out in front of competitive lenses.

Speaker #2: And as we kind of settle out on share, and I think we will settle out on share, we benefit a lot from penetration. So I just keep that in mind.

Speaker #2: And so we're very confident in our long-term share. Stabilization—I would say that we're getting towards the end of it, but we're not there yet.

Speaker #4: Thank you.

Speaker #3: Our next question is in the line of Brett Fishbein with KeyBank. Please just use your question.

Speaker #5: Hey, guys. Thank you so much for taking the questions. I'll just ask two. First on the tariff refund and reinvestment plans. We're just curious if you could give a little bit more color on where your driving that incremental investment into the business into each.

Speaker #5: And should we think of this step up in investment activity as a little bit more one-time in nature given the fact that it's tied to the tariff refund?

Speaker #2: I think this is the second quarter in a row we've seen more than 150 basis points in the US move up. And I do think that for some surgeons doing more ATI wells, it's a very productive thing.

Speaker #4: Yeah, sure. Great question. So we are reinvesting back in the business. I would say that now that we have a better view on the new product launches, we're going to double down in a couple of the areas that we think that there's more opportunity.

Speaker #2: They're kind of getting used to it. They're getting better at the diagnostics. And there's just a lot of promotion out there on this, so I think that's moving the market.

Speaker #4: We're also going to look at other OTC products. If you think about the ocular health business, we may have some opportunities there. But we're going to put the money to work.

Speaker #2: And that does help. And as we kind of settle out on share—and I think we will settle out on share—we benefit a lot from penetration.

Speaker #4: It's $40 million is relatively small if you look at our total marketing and sales spend. But nonetheless, we're going to put the money to work, and some of that will drive some near-term revenue and then some of it will obviously drive long-term revenue.

Speaker #2: So I just keep that in mind.

Speaker #3: Thank you.

Speaker #1: Our next question is in the line of Brett Fishbein with KeyBank. Please just see through questions.

Speaker #5: All right. And then second question, just on the contact lens market. I think you might have used the word healthy. Describing the market in QQ.

Speaker #4: Hey, guys. Thank you so much for taking the questions. I'll just ask. To first on the tariff refund and reinvestment plans, was just curious if you could give a little bit more color on where your driving that incremental investment into the business into H, and should we think of this step up in investment activity as a little bit more one-time in nature, given the fact that it's tied to the tariff refund?

Speaker #5: So curious if there's any signals that things are picking up a little bit maybe closer to the mid-single digit or mid to high end of the typical four to six percent range, after what we viewed as some softer quarters.

Speaker #5: Thank you so much.

Speaker #2: Yeah, I mean, I think the VisionCare business and contact lenses was a bit mixed. The US had a very strong quarter. I think it was like 8%.

Speaker #2: Yeah, sure. Great question. So, we are reinvesting back in the business. I would say that now that we have a better view on the new product launches, we're going to double down in a couple of the areas that we think there's more opportunity.

Speaker #2: International was more like 3. So in aggregate, it was 6. I would say 6 is very healthy globally. So what you're really seeing is the US is bouncing some price.

Speaker #2: We're also going to look at other OTC products, if you think about the ocular health business. We may have some opportunities there. But we're going to put the money to work.

Speaker #2: I think it's slapping two price increases. International is much more difficult to get price. So you're seeing much more mix there. So I would just say that in aggregate, it looks pretty normal in that four to six range.

Speaker #2: It's $40 million—relatively small if you look at our total marketing and sales spend. But nonetheless, we're going to put the money to work, and some of that will drive near-term revenue, and some of it will obviously drive long-term revenue.

Speaker #2: It's really on the high end of it.

Speaker #3: Our next question is in the line of Ryan Zimmerman with US Bancorp. Please receive their questions.

Speaker #4: All right. And then second question, just on the contact lens market. I think you might have used the word healthy describing the market in Q2.

Speaker #6: Good morning, David, Tim, Dan. Thanks for taking the question. With the write-down of PowerVision and the RX site, collaboration agreement, David, want to get your thoughts on kind of what you hope to achieve now that you've made that decision to go purely and adjustable route versus maybe an adjustable and accommodative route and how you think when it is available, how you think it impacts your core franchise.

Speaker #4: So curious if there's any signals that things are picking up a little bit maybe closer to the mid-single digit or mid to high end of the typical four to six percent range, after what we viewed as some softer quarters.

Speaker #4: Thank you so much.

Speaker #2: Yeah, I mean, I think the Vision Care business and contact lenses was a bit mixed. The U.S. had a very strong quarter—I think it was like 8%.

Speaker #2: International was more like 3. So, in aggregate, it was 6. I would say 6 is very healthy globally. So what you're really seeing is the US is bouncing some price.

Speaker #6: And then I have a follow-up question.

Speaker #2: Well, I would maybe change the premise a little bit. I don't think we've made a decision to do one or the other. I think we still think that adjustable accommodating is the best long-term answer.

Speaker #2: We just couldn't get there with this particular technology. So I think I would describe these as two different ideas. RX site really is an idea about how do we take a step forward in tunability.

Speaker #2: It's really on the high end of it.

Speaker #1: Our next question is from Ryan Zimmerman with US Bancorp. Please go ahead with your questions.

Speaker #2: With an optic that we already have or one that we could design for it. And that's a I would call that an intermediate step towards where I think we need to go, which is long-term into an accommodating lens.

Speaker #5: Good morning, David, Tim, Dan. Thanks for taking the questions. With the write-down of PowerVision and the RX site, collaboration agreement, David, want to get your thoughts on kind of what you hope to achieve now that you've made that decision to go purely and adjustable route versus maybe an adjustable and accommodative route, and how you think when it is available, how you think it impacts your core franchise.

Speaker #2: And so PowerVision was always a big idea. We learned a ton from it. We've got a lot of really great science and a lot of great scientists, who I think have a better informed probably the world's best informed vision of how it is that we could get to an accommodating lens.

Speaker #2: I just don't know that we have the technology yet, but we've probably been through, I would say, a number of accommodating ideas over the last four or five years, including PowerVision.

Speaker #5: And then I have a follow-up question.

Speaker #2: Well, I would maybe change the premise a little bit. I don't think we've made a decision to do one or the other. I think we still think that adjustable, accommodating is the best long-term answer.

Speaker #2: And we'll continue to look at them. There's still more out there. Somebody's going to figure this out, I suspect. It'll be us. But we're watching very carefully.

Speaker #2: So I would think about accommodating and tunable as the end game. It's just further out than we wish it was.

Speaker #6: Helpful. And turning the surgical glaucoma, I mean, we've seen the changes you've made in Hydrus over the last year or so, continues to be a drag on the business.

Speaker #2: With an optic that we already have, or one that we could design for it. I would call that an intermediate step towards where I think we need to go, which is long-term, into an accommodating lens.

Speaker #6: You've done a ton in terms of pharmaceuticals and glaucoma. So what are your thoughts at this point? And what are your plans potentially with surgical glaucoma?

Speaker #2: And so PowerVision was always a big idea. We learned a ton from it. We've got a lot of really great science and a lot of great scientists, who I think have a better-informed, probably the world's best-informed, vision of how it is that we could get to an accommodating lens.

Speaker #6: What do you want to do? Do you feel like you still need to be in that market? Just be good to kind of get your high-level thoughts there, David.

Speaker #2: Well, I mean, obviously, the reimbursement arena there has changed the dynamic quite substantially. And I think we're obviously working on that dynamic, but I don't know that that changes anytime soon.

Speaker #2: And we'll continue to look at them. There's still more out there. Somebody's going to figure this out, I suspect. It'll be us. But we're watching very carefully.

Speaker #2: So I wouldn't count on that. I think from our point of view, Hydrus still is the most effective implant out there. But it is used by a select group of folks who really understand that point of view.

Speaker #2: So, I would think about accommodating and tunable as the end game. It's just further out than we wish it was.

Speaker #2: And so I think what we believe is that there are other parts of the glaucoma therapy in the algorithm of treatment that probably have more accessibility.

Speaker #5: Helpful. And turning to surgical glaucoma, I mean, we've seen the changes you've made in Hydrus over the last year or so. It continues to be a drag on the business.

Speaker #2: So think about Voyager, we think that's a really good idea. We think everybody should be starting with SLT. I think that's a broadly accepted idea.

Speaker #5: You’ve done a ton in terms of pharmaceuticals and glaucoma. So, what are your thoughts at this point? And what are your plans, potentially, with surgical glaucoma?

Speaker #2: I think we are excited about what we can do there. Again, Voyager has moved a little slower than we had hoped for because of the kind of frequency of the people who use their own current argon leaders.

Speaker #5: What do you want to do? Do you feel like you still need to be in that market? It would just be good to get your high-level thoughts there, David.

Speaker #2: But as people really understand that product, I think we're going to get better and better traction on it. So we're optimistic there. I think there are other technologies out there as well that we keep an eye on that I think could do some things in glaucoma interventions that are also maybe a little bit more on the horizon.

Speaker #2: But in terms of stents, stenting generally I think is pretty stable right now and is likely to kind of stay that way.

Speaker #2: So I wouldn't view—Hydrus still is the most effective implant out there. But it is used by a select group of folks who really understand that point of view.

Speaker #6: Thank you.

Speaker #3: The next question is in the line of Graham Doyle with UBS. Please receive their questions.

Speaker #2: And so I think what we believe is that there are other parts of the glaucoma therapy in the algorithm of treatment that probably have more accessibility.

Speaker #7: Yep. Good morning. Thanks, guys, for taking my questions. Just a couple from me. Just firstly on the top line guide, Tim, the 5 to 7, is it still reasonable to think the 7 is plausible and a reasonable case rather than best case for the full year?

Speaker #2: So, think about Voyager. We think that's a really good idea. We think everybody should be starting with SLT. I think that's a broadly accepted idea.

Speaker #2: I think we are excited about what we could do there. Again, Voyager's moved a little slower than we had hoped for, because of the frequency of people who use their own current argon lasers.

Speaker #7: Obviously, the comps get a bit tougher. So just to get your thoughts on where you see that in terms of probability. And then it's a good point on IOL.

Speaker #2: But as people really understand that product, I think we're going to get better and better traction on it, so we're opportunistic there. I think there are other technologies out there as well that we keep an eye on, that I think could do some things in glaucoma interventions that are also maybe a little bit more on the horizon.

Speaker #7: So another way of looking at this is when do you think you'll have PanOptix Pro, Vivity Pro, and True Plus approved in US and Europe?

Speaker #7: Just in terms of competitive dynamics, it'd be good to get that sense.

Speaker #6: Yeah, Graham, thanks for the question. Listen, I'll leave it to you as to what you think is plausible. We give a range of 5 to 7 percent.

Speaker #2: But in terms of stents, stenting generally, I think, is pretty stable right now and is likely to kind of stay that way.

Speaker #6: Historically, we have been kind of a midpoint type of company is what we try to say. I will say at the beginning of the year, we thought we stated that the revenue would be relatively level-loaded.

Speaker #5: Thank you.

Speaker #1: The next question is from Graham Doyle with UBS. Please go ahead with your questions.

Speaker #6: I think that's still going to be the case. I mean, we get a lot of questions on the comps to your point. And the way I'd think about it, just to give you a little more color, there will be a tougher comp and equipment with Unity VCS for sure, right?

Speaker #6: Yep. Morning. Thanks, guys, for taking my questions. Just a couple from me. Just firstly, on the top-line guide, Tim, the 5 to 7—is it still reasonable to think the 7 is plausible and a reasonable case rather than best case for the full year?

Speaker #6: Because we launched that sort of at the beginning of the second half of last year. But and then when you look at some of the other launches, like Unity CS as an example, that was launched this year.

Speaker #6: Obviously, the comps get a bit tougher. So just to get your thoughts on where you see that in terms of probability. And then it's another point on IOL.

Speaker #6: So we should get some benefit there. If you look at TripTier, that's accelerating. We continue and improve our market access. So that should be helpful.

Speaker #6: So another way of looking at this is when do you think you'll have pan optics pro, Vivity Pro, and True Plus approved in US and Europe?

Speaker #6: And Valea continues to do well. So we didn't really kick that off until call it mid-second quarter of last year. So we do feel like the new product launches will carry us through and that 5 to 7 guide, again, that assumes aggregate markets grow at 3 to 4 percent.

Speaker #6: Just in terms of competitive dynamics, it would be good to get that sense.

Speaker #5: Yeah, Graham, thanks for the question. Listen, I'll leave it to you as to what you think is plausible. We give a range of 5% to 7%.

Speaker #5: Historically, we have been. Kind of a midpoint type of company is what we try to say. I will say at the beginning of the year, we thought we stated that the revenue would be relatively level-loaded.

Speaker #2: Yeah, Graham, on the approval front, PanOptix Pro is approved now in both US and Europe. We are just launching it. I think we launched it in June, in Europe, and we're still getting it out in major markets.

Speaker #5: I think that's still going to be the case. I mean, we get a lot of questions on the comps to your point. And the way I'd think about it, just to give you a little more color, there will be a tougher comp in equipment with Unity VCS for sure, right?

Speaker #2: So look for the back half to be a meaningful impact on Europe. And then Vivity Pro, I would expect that late this year, maybe early next.

Speaker #5: Because we launched that sort of at the beginning of the second half of last year. But and then when you look at some of the other launches, like Unity CS as an example, that was launched this year.

Speaker #2: It just kind of depends. Neither the US nor Europe have that yet. But it's been submitted to both. And on True Plus, both the US and CE mark, we have CE mark approval.

Speaker #5: So we should get some benefit there. If you look at TripTier, that's accelerating. We continue to improve our market access, so that should be helpful.

Speaker #2: We just received it, I think, recently. But again, I would be careful with that one because we're managing that rollout carefully to not interfere with the PanOptix Pro and Vivity Pro.

Speaker #5: And Valeta continues to do well. So we didn't really kick that off until call it mid-second quarter of last year. So we do feel like the new product launches will carry us through and that 5 to 7 guide, again, that assumes aggregate markets grow at 3 to 4 percent.

Speaker #2: We've got a lot to do right now, which is kind of exciting. But we're going to manage all three of those kind of carefully to prioritize Vivity and PanOptix.

Speaker #3: The next question is in the line of Veronica Drozheva with Citi. Please receive their questions.

Speaker #2: Yeah. Graham, on the approval front, pan optics pro is approved now in both US and Europe. We are just launching it. I think we launched it in June.

Speaker #8: Hi, guys. Good afternoon. Thank you for taking my questions, please. To I have two. One is on equipment. And the second one is on the gross margin.

Speaker #2: In Europe, and we're still getting it out in major markets. So look for the back half to be a meaningful impact on Europe. And then Vivity Pro, I would expect that late this year, maybe early next.

Speaker #8: Just on equipment, Tim, David, just curious if you could provide a little bit more color of what the contribution from Valea was in the quarter.

Speaker #8: And to kind of to what extent it's actually visibly driving an acceleration in the equipment growth rate. I've not heard you guys articulate the peak sales potential before today.

Speaker #2: It just kind of depends. Neither the US nor Europe have that yet, but it's been submitted to both. And on True Plus, both the US and CE Mark—we have CE Mark approval.

Speaker #8: So it'd be really good to understand kind of what's gotten you there and how much of a contributor it's already being. And then my second question is, Tim, for you.

Speaker #2: We just received it, I think, recently. But again, I would be careful with that one because we're managing that rollout carefully to not interfere with the pan optics pro and Vivity Pro.

Speaker #8: Just on the gross margins, really, really strong improvement year on year and also sequentially appreciate, obviously, the color on Q2 margins last year being very depressed.

Speaker #2: We've got a lot to do right now, which is kind of exciting. But we're going to manage all three of those kind of carefully to prioritize Vivity and PanOptix.

Speaker #8: But just curious if you kind of feel the 64-ish level once we strip out the licensing income as a reasonable proxy for the remainder of the year.

Speaker #1: The next question is in the line of Veronica Drzovic with City. Please receive their questions.

Speaker #8: Are there other things we have to bear in mind as we look into the back half of the year? Obviously, I'm excluding the tariff refunds because we all can do the math on that.

Speaker #7: Hi, guys. Good afternoon. And thank you for taking my questions, please. To I have two. One is on equipment. And the second one is on the gross margin.

Speaker #8: Thanks, guys.

Speaker #2: Yeah, Veronica, on Valea, we haven't really called out individual products, as you know. We tend not to do that. I would say that it contributed several points of growth in the quarter.

Speaker #7: Just on equipment, Tim, David, just curious if you could provide a little bit more color of what the contribution from Valeta was in the quarter.

Speaker #2: But we're doing really well with a number of pieces of equipment. Obviously, the main driver in equipment right now is Unity. CS and VCS.

Speaker #7: And to kind of to what extent it's actually visibly driving an acceleration in the equipment growth rate. I've not heard you guys articulate the peak sales potential before today.

Speaker #7: So it'd be really good to understand kind of what's haunting you there. And how much of a contributor it's already being? And then my second question is, Tim, for you.

Speaker #2: And I think over time, we think that's as we had we were trying to make sure we gave everybody some sense of what this product actually is.

Speaker #7: Just on the gross margins, really, really strong improvement year on year. And also sequentially appreciate, obviously, the color on Q2 margins last year being very depressed.

Speaker #2: And so I think 100 to 150 was a nice number that we could kind of get to in that let's call it 3 to 5-year frame.

Speaker #2: So maybe think about it as a typical R-shaped new product curve.

Speaker #7: But just curious if you kind of feel the 64-ish level once we strip out the licensing income as a reasonable proxy for the remainder of the year.

Speaker #6: Yeah. And as far as the gross margin goes, listen, we exited last year at roughly 63%. I'd say the first half of this year is probably in the 64% range.

Speaker #7: Are there other things we have to be bearing in mind as we look into the back half of the year? Obviously, I'm excluding the tariff refund, because we all can do the math on that.

Speaker #6: The tariff is a one-time benefit. So I would strip that out. But I would think that we're going to have probably a higher gross margin in Q3, given that assuming that the tariffs come in and then that'll probably dip down in Q4 to give you kind of a normalized rate.

Speaker #7: Thanks, guys.

Speaker #2: Yeah. Veronica, on Valeta, we haven't really called out individual products, as you know. We tend not to do that. I would say that it contributed several points of growth in the quarter.

Speaker #2: But we're doing really well with a number of pieces of equipment. Obviously, the main driver in equipment right now is Unity, CS, and VCS.

Speaker #3: The next question is in the line of David Saxon with Needleman an Company. Please receive their questions.

Speaker #7: Great. Thanks for taking my questions and congrats on the quarter here. Maybe two product-related questions. First on contact lenses. Maybe if you could peel back the onion there, how much of contact lens growth was priced versus volume?

Speaker #2: And I think over time, we think that's as we had we were trying to make sure we gave everybody some sense of what this product actually is.

Speaker #2: And so I think 100 to 150 was a nice number that we could kind of get to in that, well, let's call it 3 to 5-year frame.

Speaker #2: So maybe think about it as a typical R-shaped new product curve.

Speaker #7: And then any way to break out the legacy decline legacy volume decline versus the core volume growth? And how you're just thinking about the market's ability to take price and the back half into '27.

Speaker #5: Yeah. And as far as the gross margin goes, listen, we exited last year at roughly 63%. I'd say the first half of this year is probably in the 64% range.

Speaker #5: The tariff is a one-time is a one-time benefit. So I would strip that out. But I would think that we we're going to have probably a higher gross margin in Q3, given that assuming that the tariffs come in and then that'll probably dip down in Q4 to give you kind of a normalized rate.

Speaker #2: Let me try and get at that a little bit. Price was about 4% in Q2. I think of the 5, it was significant. I think our view on price in the US in particular was that we were wrapping around, I think, two price increases.

Speaker #2: So we had a couple there that were meaningful. The important part in the US, I think, was that the share performance was outstanding. I think we had almost one and a half share point gain and that is, I think, largely a function of continued promotion around our daily's total one, our P1 in categories that are growing very nicely.

Speaker #1: The next question is in the line of David Saxon with Nina and Company. Please receive their questions.

Speaker #6: Great. Thanks for taking my questions and congrats on the quarter here. Maybe two product-related questions. First on contact lenses. Maybe if you could peel back the onion there, how much of contact lens growth was priced versus volume?

Speaker #2: We continue to see legacy value decline we've had a very large legacy business and it's always been a challenge for us to kind of manage that decline against that growth.

Speaker #6: And then any way to break out the legacy decline legacy volume decline versus the core volume growth? And how you're just thinking about the market's ability to take price and the back half into '27?

Speaker #2: And ultimately, as that goes away, you'll see more and more growth come to the surface. But I do think that it was meaningful and I would hesitate to answer your question directly because I'm not clear on exactly what that contribution was.

Speaker #2: However, I would say broadly that what we're excited about is the breadth of what we've got going on. We've got reusables in categories now like P7 that creates a new avenue for growth.

Speaker #2: So we had a couple there that were meaningful. The important part in the US, I think, was that the share performance was outstanding. I think we had almost one and a half SharePoint gain and that is, I think, largely a function of continued promotion around our daily's total one, our P1 in categories that are growing very nicely.

Speaker #2: We've got data in multifocal astigmatic lenses, which I think makes T30 a very unique lens and completes that family. We've got a product in every category in almost every need and I think we are, as a consequence of that, very effective on the ground growing share.

Speaker #2: So I think we're in a pretty good place. As I said to you earlier, I think the US market looked healthy. International, yeah, pretty good, but maybe a little softer than normal, but I think it'll be fine.

Speaker #2: We continue to see legacy value decline we've had a very large legacy business and it's always been a challenge for us to kind of manage that decline against that growth.

Speaker #7: Okay. That was helpful. Thanks for that. And then just on trip to your any way to qualitatively talk about the contribution either I guess sequentially and then I know you've said IQVIA is not that accurate.

Speaker #2: And ultimately, as that goes away, you'll see more and more growth come to the surface. But I do think that was meaningful, and I would hesitate to answer your question directly because I'm not clear on exactly what that contribution was.

Speaker #7: The directionally it looks like trends have been kind of picking up. So going from here, how should we think about trip to your kind of trajectory going forward?

Speaker #7: Thanks so much.

Speaker #2: Yeah. I think the one thing I'm going to look to trip to your I think is going into a QVIA July 10th. So you can actually get the data now.

Speaker #2: We've got data in multifocal astigmatic lenses, which I think makes T30 a very unique lens and completes that family. We've got a product for every need, and I think we are, as a consequence of that, very effective on the ground, growing share.

Speaker #2: So I think we're giving them the data that we've got from the third party that we use. So I think they should have relatively accurate data for you to use on this one.

Speaker #2: So, I think we're in a pretty good place. As I said to you earlier, I think the US market looked healthy. International—yeah, pretty good, but maybe a little softer than normal, but I think it'll be fine.

Speaker #2: Again, I think we're excited about it because of the share movement and also the refill rates. I think probably the thing that we were probably interested in and we got a lot of feedback on was how will the patients like this and the refill rates seem to indicate that patients are getting a great relief out of this and are happy to refill it.

Speaker #6: Okay, that was helpful. Thanks for that. And then just on TRIPTIO, is there any way to qualitatively talk about the contribution, either, I guess, sequentially? And then I know you've said IQVIA is not that accurate.

Speaker #2: So we're very positive about where trip to your is headed.

Speaker #7: Great. Thanks so much.

Speaker #3: The next questions are in the line of Larry Beagleson with Wells Fargo. Please receive their questions.

Speaker #6: The directionally it looks like trends have been kind of picking up. So going from here, how should we think about trip to your kind of trajectory going forward?

Speaker #8: Good morning. Thanks for taking the question. David, I haven't seen or heard about any update on Unity DX in a while. Actually, I think you got it cleared in the US.

Speaker #6: Thanks so much.

Speaker #2: Yeah. I think the one thing I'm going to look to trip to your I think is going into a QVIA July 10th. So you can actually get the data now.

Speaker #8: A while ago. And that seemed like a good opportunity for you. So just love to hear an update on the DX timeline and add one follow-up.

Speaker #2: So, I think we were giving them the data that we've got from the third party that we used. So, I think they should have relatively accurate data for you to use on this one.

Speaker #2: Yeah. You're right, Larry. We had an approval on DX, I think, early in maybe this year or maybe it was a little bit last year.

Speaker #2: We've had the product for a while. We believe that it's a great product. It was not just it was not enough manufacturable, a scalable manufacturable condition when we got it.

Speaker #2: Again, I think we're excited about it because of the share movement and also the refill rates. I think probably the thing that we were interested in, and we got a lot of feedback on, was how will the patients like this. The refill rates seem to indicate that patients are getting great relief out of this.

Speaker #2: We've been working very diligently to make this a product that will have the kind of durability that our customers expect. And that means it isn't going to it isn't going to break inside of a year.

Speaker #2: And are happy to refill it. So we're very positive about where TRIF is headed.

Speaker #2: It really has got reusable pieces. It's serviceable on the ground. All of that stuff that is I'll call it made for manufacturability that stuff was really not done in a way that we were comfortable with to launch it.

Speaker #6: Great. Thanks so much.

Speaker #1: The next questions are from Larry Biegelsen with Wells Fargo. Please go ahead with your questions.

Speaker #4: Good morning. Thanks for taking the question. David, I haven't seen or heard about any update on Unity DX in a while. Actually, I think you got it cleared in the US.

Speaker #2: So we've been working backwards from what is an excellent designer and an excellent technology. It's hyperparallel OCT, which I think is going to be really great for pre-op cataract use.

Speaker #4: A while ago. And that seemed like a good opportunity for you. So just love to hear an update on the DX timeline and add one follow-up.

Speaker #2: That should be out later this year in, I would say, pilot form. I think we've got a number of folks that we're going to put it in play with along with our Audi platform.

Speaker #2: Yeah, you're right, Larry. We had an approval on DX, I think, early in maybe this year, or maybe it was a little bit last year.

Speaker #2: We've got a lot going on with the ecosystem around the microscope, which again, we just talked about today for the first time. Our new microscope is also approved and we just sold one.

Speaker #2: We've had the product for a while. We believe that it's a great product it was not just it was not in a manufacturable a scalable manufacturable condition when we got it.

Speaker #2: We're not going to sell a ton of them this year, but we are going to get a few of them out there with DX and with Unity VCS so that the Unity platform wrapped around with the Audi system is now kind of complete and as we learn through that and it's going to take us a while, I think what people are going to see is how exciting it is to work in a next-century kind of idea, which is digitizing the whole of the ecosystem and really seeing what that can do in the OR to speed things up and create new efficiencies.

Speaker #2: It really has got reusable pieces. It's serviceable on the ground. All of that stuff—I'll call it 'made for manufacturability'—that stuff was really not done in a way that we were comfortable with to launch it.

Speaker #2: Very exciting stuff. And DX plays a big role in that. I would expect revenue from that middle of next year kind of thing.

Speaker #8: That's helpful. And just one follow-up on the later. I mean, the 100, 150 million peak sales, are you feeling better about the high end there?

Speaker #2: That should be out later this year in a I would say pilot form. I think we've got a number of folks that we're going to put it in play with along with our Audi platform.

Speaker #8: And I think when you bought it, the contribution was about 10 to 15 million a year. Just where is that? What's the run rate now?

Speaker #8: Thanks.

Speaker #2: Yeah. We like the 100 to 150 range. I mean, it's brand new product and we've been selling it now for all of about nine months.

Speaker #2: We're not going to sell a ton of them this year, but we are going to get a few of them out there with DX and with Unity VCS, so that the Unity platform, wrapped around with the Audi system, is now kind of complete.

Speaker #2: So I think we're comfortable with that range. We have been very pleased with the uptake. And I think it makes sense, right? I mean, there's very little for these patients that really improves vision.

Speaker #2: And as we learn through that—and it's going to take us a while—I think what people are going to see is how exciting it is to work in a next-century kind of idea, which is digitizing the whole of the ecosystem and really seeing what that can do in the OR to speed things up and create new efficiencies.

Speaker #2: And so if you can improve them by a line and you can do that in a very kind of non-invasive way, this is an exciting idea.

Speaker #2: So I think we'll see where this takes off. I think it's probably too early to give much more color than we think three to five years is peak revenue and 100 to 150 seems like the trajectory it's on.

Speaker #2: Very exciting stuff. And DX plays a big role in that. I would expect revenue from that middle of next year kind of thing.

Speaker #4: That's helpful. And just one follow-up on Veleda. I mean, the 100, 150 million peak sales, are you feeling better about the high end there?

Speaker #8: Thank you.

Speaker #3: The next questions in the line of Steve Lichtman with William Blair. This is Steve's three questions.

Speaker #4: And I think when you bought it, the contribution was about $10 to $15 million a year. Just where is that? What's the run rate now?

Speaker #9: Thank you. Good morning, everyone. David, coming back to end market health, are there any changes that you're seeing in US consumer sentiment on the IOL side or within contact lenses?

Speaker #4: Thanks.

Speaker #2: Yeah, we liked the $100 to $150 range. I mean, it's a brand-new product, and we've been selling it now for all of about nine months.

Speaker #9: You mentioned premium IOL up year over year. So I assume that's okay. But any color on anything we should be keeping an eye on for the higher-end products in either category?

Speaker #2: So I think we're comfortable with that range. We have been very pleased with the uptake. And I think it makes sense, right? I mean, there's very little for these patients.

Speaker #2: Not really. I mean, we've been surprised, I think, both in terms of positive we've always known that the eye care business was relatively independent of consumer confidence, but the contact lens business sometimes I think historically has had some stall out in trade-up.

Speaker #2: That really improves vision. And so if you can improve them by a line, and you can do that in a very kind of non-invasive way, this is an exciting idea.

Speaker #2: So if you're in a pair of reusable lenses and you can wait and you can put those dailies in on some other month, that's probably been the only sensitivity that we've seen.

Speaker #4: Thank you.

Speaker #1: The next questions in the line of Steve Lichtman with William Blair. This is Steve, three questions.

Speaker #2: We saw mostly trade-up internationally. That drove the market. And then in the US, we saw really steady trade-up and actual price went up, meaningfully in the United States.

Speaker #5: Thank you. Good morning, everyone. David, coming back to end market health, are there any changes that you're seeing in US consumer sentiment on the IOL side or within contact lenses?

Speaker #2: So on the contact lens business, I would say relatively normal. And on IOLs, I think you'd have to say particularly in the US with the penetration rate up 180 basis points or whatever it was, it's really we've said this for a long time.

Speaker #5: You mentioned premium IOL up year over year. So I assume that's okay. But any color on anything we should be keeping an eye on for the higher-end products in either category?

Speaker #2: I mean, this is really the peak on the penetration should be somewhere in the high 30s. And we're still down in the 20s. So I think there's plenty of room to grow.

Speaker #2: Not really. I mean, we've been surprised, I think, both in terms of positives. We've always known that the eye care business was relatively independent of consumer confidence, but the contact lens business sometimes, I think, historically has had some stall out and trade up.

Speaker #2: We think consumers will pay for this. It's a great value long-term. And I think surgeons know that.

Speaker #9: That's helpful. And then Tim, just following up, there's some moving parts with operating expenses this year, including the reinvestment. You talked about today from tariffs.

Speaker #2: So if you're in a pair of reusable lenses and you can wait and you can put those dailies in on some other month, that's probably been the only sensitivity that we've seen.

Speaker #9: Where does the new cost efficiency programs stand that you talked about heading into the year? You're still expecting 50 million in savings and 150 million in charges associated with that program overall?

Speaker #2: We saw mostly trade-up internationally; that drove the market. And then, in the US, we saw really steady trade-up, and actual price went up meaningfully in the United States.

Speaker #2: Yeah. We feel really good about it. In fact, a majority of the actions have already been taken. So we feel good about the 100 million dollar run rate.

Speaker #2: 50 million dollars this year. I would say a vast majority of that just due to the timing of the exits will occur on the second half of the year.

Speaker #2: I mean, this is really the peak on the penetration should be somewhere in the high 30s. And we're still down in the 20s. So.

Speaker #2: So that's all on track. And the 150 million dollars looks good from what we see so far.

Speaker #9: Yeah. Thanks, guys.

Speaker #3: The next questions in the line of Young Lee with Jeffries. Please receive three questions.

Speaker #8: All right. Great. Thanks for taking the questions. Can I maybe double-click on the strong Unity upgrade and adoption a little bit? Then a little bit more than a year since the launch.

Speaker #8: Wanted to hear some of the key drivers for this adoption. Is it mostly converting older equipment? Is it the efficiency benefits? Are Unity accounts more procedures and shorter wait lists from these efficiencies?

Speaker #2: Young, yeah. You've got most of it right there. I mean, the big idea here has been conversion on retina procedures in the near frame.

Speaker #2: I mean, in the first year, we spent a lot of time on the retina, guys, because it was a much different procedure than what we do with constellation.

Speaker #2: So we changed almost everything. We changed the cut speed. We changed the entry system. We changed the gauge of the instrumentation. We changed the fluidics.

Speaker #2: And as a consequence, we also changed the speed and the safety of what was going on. It's much safer and it's also we could if you were doing four or five vitrectomies in a day, you could probably do another one.

Speaker #2: That matters a lot. I mean, you're talking about a saving kind of 20 to 30 percent time that effect when we got kind of people really wrapped their heads around the retina benefit that we had mattered a lot.

Speaker #2: And I think that's been a real positive halo going forward. In fact, I think that accounts for a lot of the reason we've gotten such a nice mix right now of more VCS probably than we expected.

Speaker #2: CS is coming up the curve, but people are also electing to buy VCS because it's handy. And particularly in the international markets where ORs are shared by the retina folks and the cataract guys, you don't have to move one machine over, pull the other one in.

Speaker #2: It's just a better buy. So if you're in the market for it, I think it's very plausible. And efficient, I think, to buy this one machine.

Speaker #2: On the cataract side, I think equal story, same story really. It's just different in that the cataract surgery already today is a very efficient surgery.

Speaker #2: But what you're seeing is the elegance of 40 phaco. And when you see the nucleus, just kind of stay in the center of the eye and not move and not get shoved away from the tip.

Speaker #2: And you see how easily the cut moves and how elegant the fluid stays in place. It's a beautiful thing to watch. And surgeons feel super comfortable with it because it looks and feels safer than just about anything they could be doing.

Speaker #2: And yet it's a good bit faster. So again, if you can imagine doing 20 cataracts in a day, you'd probably do 21. You guys can do the math on all those.

Speaker #2: And I think we do the math for everybody who says look, how do I pay for this? And take does not take very long if you schedule correctly.

Speaker #2: So we're certainly replacing older machines that are going out of out of warranty and out of service. We'll continue to do that, but we're also getting some modest share.

Speaker #2: We've got a lot of share. So I wouldn't say we're getting a huge bunch of new share, but we're very competitive with this machine.

Speaker #2: And again, it's doing what we hoped it would do.

Speaker #8: All right. Great. Really helpful. And then maybe one more just on the RX side partnership. Why do you think the LAL shares have been kind of hovering around the 10% penetration rate in the US?

Speaker #8: What are some of the ways and opportunities that Alcom can potentially introduce down the line to increase this adjustable lens category penetration?

Operator: Greetings. Welcome to Alcon's Q2 2026 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Dan Cravens, Vice President and Global Head of Investor Relations. Thank you. You may begin.

Speaker #2: I redirect that question to Aziz over at RX side. He's a he's got the new position over there. He's a terrific guy. I think he'll do great there.

Speaker #2: And he's going to have a much better answer than I'll have for that one. So let me send it that way for you.

Speaker #8: All right. Fair enough. Thank you.

Dan Cravens: Welcome to Alcon's Q2 2026 earnings conference call. Yesterday, we issued our press release, interim financial report, and earnings presentation. All of these documents are available on our website at investor.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer, and Tim Stonesifer, our Chief Financial Officer. Before we begin, please note that our press release, presentation, and remarks will include forward-looking statements, including statements regarding our future outlook. We undertake no obligation to update these statements as a result of new information or future events, except as required by law. Actual results may differ materially from those expressed or implied in these forward-looking statements, so please do not place undue reliance on them.

Speaker #3: The next questions in the line of Jeff Johnson with Baird. Please receive three questions.

Speaker #5: Yeah. Thanks. Good morning, guys. David, I just wanted to follow up on your comments. It sounds like you have great visibility in the second half here on the Unity order book.

Speaker #5: That's encouraging kind of locks that number in, it sounds like, which is good. How do we think about the size of the backlog? Obviously, Q2 delivered above, I think, what most of us were thinking about.

Speaker #5: But as you look forward, is the order book bigger, smaller today than it was maybe six months ago? And how to think about that backlog going into 2027?

Speaker #5: And I have one follow-up. Thanks.

Speaker #2: I think we're just I think we're just working through the demand that we see out there. So I'm not sure it was I'm not sure it's bigger than it was in the first half.

All right. Great, really helpful. Um, and then move 1 more than on the, um, RX side partnership. Um, why do you think, um, the l l shares have been kind of hovering around the, uh, 10% penetration rate in the US? Um, you know, what are some of the ways and opportunities that outcome can potentially? Um, introduce down the line to um increase this uh, adjustable amount category penetration.

um, you know

Dan Cravens: Important factors that could cause actual results to differ materially are included in our Form 20-F, earnings press release, and interim financial report, each of which is available on file with the Securities and Exchange Commission and available on their website at sec.gov. We'll also discuss certain non-IFRS financial measures. These measures may be calculated differently from and may not be comparable to similar measures used by other companies. They should be considered in addition to, and not as a substitute for, IFRS-prescribed performance measures. Reconciliation between our non-IFRS measures and the most directly comparable IFRS measures can be found in our earnings press release. For discussion purposes, our comments on growth rates are expressed in constant currency. In a moment, David will begin with highlights from the Q2. After his remarks, Tim will walk through our financial performance and outlook for the remainder of 2026.

Speaker #2: I think there was a fairly large bolus of people waiting actually as we kind of anticipated the product and talked about it before it was launched.

Speaker #2: So we've worked our way through that part of it. I think now it's I would just describe it as relatively uniform opportunity. And uniform around the world.

I, I, I redirect that question to Aziz over at, at our site. He, he's a—you know, he's got the new, uh, position over there. He's a terrific guy. I think he'll do great there, and he's gonna have a much better answer than I'll have for that one. So let me, let me take—let me send it that way for you.

All right, fair enough. Thank you.

Speaker #2: I think we're in every market now. We're in with CS and VCS. We've got demo units everywhere. We're demoing them every day. And we've got a lot of good programs out there to make it easy for people to try and use and buy.

The next question is from the line of Jeff Johnson with Baird. Please proceed with your question.

Speaker #2: So I would just call this business as usual at this point. And we feel pretty good about it.

Speaker #5: Fair enough. Tim, maybe a guidance question for you just on the EPS guidance change. You raised by a few pennies at the midpoint there on a constant currency basis.

Speaker #5: I think about the tariff refund. Obviously, you're reinvesting two-thirds of that so we can do the math on that. Share count now expected to be lower.

Yeah, thanks. Good morning guys. Uh, David, I just wanted to follow up on your comments. It sounds like you have great visibility in the second half here on the unity order book. Uh, that's encouraging uh kind of locks that number in, it sounds like uh, which is good. You know, how how do we think about the size of the backlog? Obviously, 2q delivered above, I think what most of us were thinking about, uh, but as you look forward, uh, you know, is, is the order book bigger smaller today than it was maybe 6 months ago and how to think about that uh backlog going into 2027 then I have 1 follow-up. Thanks.

Dan Cravens: David will then return with closing comments before we open the line for Q&A. With that, I'll turn the call over to our CEO, David Endicott.

Speaker #5: You have been buying back aggressively there. That licensing fee in Q2 helps maybe a little bit on the year. But just help us maybe bridge the change in the EPS guidance change that you made today.

David Endicott: Thanks, Dan, and good morning, everyone. Our Q2 results demonstrate the strength of our new products and the benefits of our innovation investments. We delivered 7% sales growth, which was broad-based across both franchises and geographies, reinforcing the impact of our diverse portfolio and our commercial reach. I will start my remarks today with UNITY, which is one of the clearest examples of our innovation translating into commercial success. Demand for UNITY VCS remains robust, reflecting its versatility across both cataract and vitreoretinal procedures. Surgeons are experiencing firsthand the benefits of UNITY CS, including its advanced energy delivery for phaco, improved fluidics, and streamlined workflow. Encouragingly, UNITY ASPs have exceeded our expectations and underscore our customers' belief in the platform's differentiated value. With strong customer engagement and a healthy sales funnel, we have clear visibility into our H2 placements.

Speaker #5: Do you feel fundamentally kind of on the core underlying operational side of the business that that has held in steady and the EPS guidance change was just for those other factors?

Speaker #5: Or did those other factors outweigh maybe a little bit the size of the change? And the core profitability maybe coming down a little bit as you maybe reinvest in some of these product launches or anything like that.

Um, you know I think we're just I think we're just working through the demand that we see out there. So I'm not sure it was, I'm not sure it's bigger than it was in the first half. I think there was a fairly large, uh, bolus of people waiting actually, as we kind of anticipated the product and talked about it before it was launched. So we've worked our way through that part of it. I think now it's, I would just describe it as relatively uniform opportunity, um, and, and, and uniform around the world. I think we're in every market. Now we're in with cs and VCS. Um, we've got demo units.

Speaker #5: Just help us bridge kind of that change. Thank you.

Speaker #2: No. We feel pretty good about the investments and the underlying core operating margin. I think you have most of the components. I mean, if you do the math on the buyback and the refund, that'll pretty much get you there.

Everywhere. We're we're demoing them every day, um, and and we've got a lot of good programs out there to, uh, to make it easy for people to to try and use and buy. So, um, you know, I would just call this business as usual at this point, and we feel pretty good about it.

Speaker #2: Throw in the one-timer as well. But again, every year we have one-timers, so that one I'd be a little careful with. But for sure, the refund and the share buyback has flown through.

Speaker #2: But overall, we think that we continue to manage the cost with a lot of discipline. We're making the appropriate trade-offs. Again, as we get that revenue growth, that gives you a little bit more operating leverage.

David Endicott: Turning to Implantables, as we highlighted in our earnings release, we made the decision to discontinue our work on the PowerVision IOL programs following the analysis of the latest clinical study data. This data demonstrated persistent, unpredictable shifts in postoperative distance vision in a subset of patients that remain unresolved after multiple developmental efforts. As a result, the programs did not meet our standards for visual performance and patient outcomes. Although we are disappointed that the programs ultimately did not advance, they generated valuable insights into accommodation, tunability, and long-term visual outcomes that will inform future innovation efforts. Looking at our performance in the quarter, Implantables grew 1%, with IOLs up 2% despite new competitive launches. The PanOptix family grew double digits in the quarter, driven by strong adoption of PanOptix Pro.

Speaker #2: So the fundamentals seem to be working right now.

Speaker #5: Understood. Thank you.

Speaker #3: All right. Next questions from the line of time, Stephen. Please proceed with your question.

Speaker #8: Great. Hey, guys. Thanks for taking the questions. First one for me on implantables. Pro, doing well. But growth in the segment a little subdued again this quarter against an easy comp.

Fair enough. Uh, Tim maybe a a guiding question for you. Just on the EPS guidance change. Uh, you raised by a few pennies at the midpoint there, on a constant currency basis, you know, I think about, uh, the Tariff refund. Uh, obviously, you're reinvesting 2/3 of that, so we can do the math on that. Uh, share count. Now, expected to be lower, you have been buying back aggressively there, uh, that licensing fee in in 2q helps, maybe a little bit on the year but just help us maybe Bridge the change in the EPS guidance, uh, uh, change that you made today. Uh, do you feel fundamentally kind of on the core underlying operational side of the business that that is held in steady and the, the EPS guidance change was just for those other factors or did those other factors outweigh, maybe a little bit, the size of the change.

Speaker #8: And as we think about competition accelerating from here, you're lapping the US pro contribution. China VBP, maybe delayed a bit. So David, maybe for you, can you help us think about 2H growth and implantables?

And the core profitability may be coming down a little bit as you maybe reinvest in some of these product launches or anything like that. Just help us bridge kind of that change. Thank you.

Speaker #8: And then with Vivity Pro, what's your confidence 2027 implantables can maybe get back to market growth? And then I'll have a follow-up.

Speaker #2: Well, I mean, the implantables growth is a function of three different things, right? It's if you look at our share all in, we've actually we were flat in share.

David Endicott: Building on the foundation of PanOptix, the world's most implantable trifocal IOL, PanOptix Pro enhances quality of vision through its advanced optical design and continues to gain traction with surgeons globally. In the US, adoption has exceeded expectations. Nearly all PanOptix accounts have been converted to PanOptix Pro, with the platform now representing approximately 90% of PanOptix implants. Feedback on visual performance and reduced light scatter remains very encouraging. We expect this momentum to extend internationally as we roll out PanOptix Pro and continue to build on the strength of Clareon Toric. Early launches in Japan, Canada, Australia, and more recently in Europe, have been well-received, supporting our confidence in share stabilization and long-term growth. We are also excited about the acceleration of our pipeline of new IOLs. We have begun a KOL launch of TruPlus in the US and recently received CE mark for Europe.

No, we we feel pretty good about the Investments and the underlying core operating margin. I, I think you have most of the components. I mean, if you do the math on the buyback and the refund that, you know, that'll pretty much get you there. I throw in the uh, the 1 timer as well, but again, every year we have 1 timer, so that 1, I'd be a little careful with but uh, for sure the refund and the uh, the share buyback is

Speaker #2: So we were already stable. The problem is it was in it wasn't ATIOLs that we were flat in. And we were losing in ATIOLs.

Speaker #2: And gaining in monofocal. So I think there's three pieces. One is market growth. One is penetration. One is share. And I think you got to take those three kind of independently.

Flowing through, but overall, we think that, you know, we continue to manage the cost with a lot of discipline. We're making the appropriate trade-offs again, as we get that revenue growth that gives you a little bit more operating leverage. So the fundamentals seem to be working right now.

Understood, thank you.

Our next question is from the line of Tom Stephan with stifel, please receive with your questions.

Speaker #2: I think market growth in the US has been below what we would normally expect. But again, we have forecasted that most of the year.

Speaker #2: So I don't think that was a surprise to us. I think on that one, we'll have to see where we sit next year. And I think as we get into next year, we'll take a position on that.

Great. Hey guys, thanks for taking the questions. Um, first 1 for me on employables Pro doing well, uh, but growth in the in the segment a little subdued, again, this quarter, against an easy comp,

Speaker #2: But for now, we don't anticipate any change for the rest of the year in the US. I think the other one that is a little bit more positive is the penetration.

So, David, maybe for you. Can you help us think about 2H growth in implantables?

Speaker #2: And that was in the US 180 basis points and around the world 110. That's probably 50 basis points higher than the we think the historical average has been.

David Endicott: This lens is an important addition to our portfolio and provides an entry point into the monofocal plus segment. We intend to phase these launches deliberately as we continue to prioritize the scale-up of PanOptix Pro in international markets and prepare for the introduction of Vivity Pro. Expected to launch with KOLs late this year, Vivity Pro builds on the success of the Vivity platform through a next-generation lens that is designed to extend the range of vision and enhances near performance. The new lens is designed to deliver up to one additional line of near vision while maintaining Vivity's strong distance and intermediate vision performance, and its clinically proven low visual disturbance profile. Importantly, TruPlus and Vivity Pro represent only the next wave of innovation from our IOL portfolio.

And then with Vivity Pro, what's your confidence in 2027? Can implantables maybe get back to market growth? And then I'll have a follow-up.

Speaker #2: So people with promotion have obviously decided to use more ATIOLs. We like that move because I think, as Tim said, for one point of market growth for us, it affects us about 10 million.

Speaker #2: But a point of penetration is about 15 million. So if you had to trade one of those for the other, you'd trade it that way.

Speaker #2: Now, we'll see where penetration goes. But we've had a couple of quarters now that look pretty good. I'd be generally on the positive side of that number.

Speaker #2: And then share is a bit of a is a bit of a wildcard. I think this is a very competitive market. And people are trying lenses.

Speaker #2: And surgeons like to try lenses. And there's some good ones out there. So I think what we'll see is continued trial for the new lenses that come in.

David Endicott: Our pipeline remains robust, and we expect to continue to deliver a steady cadence of new technologies and product enhancements in the years ahead. Beyond cataract surgery, we continue to see enthusiasm for Valeda, our first of its kind treatment for dry AMD. This technology uses three specific wavelengths of light to improve mitochondrial activity and retinal health. Importantly, clinical studies showed that more than 80% of patients maintained or improved their vision at approximately 2 years. Adoption accelerated during the quarter as we expanded the installed base and increased utilization across existing accounts. We were also encouraged by continued progress with the Medicare administrative contractors, which we believe will further support access to this therapy. Based on current adoption trends, clinical experience, and reimbursement progress, we continue to believe the platform has the potential to generate sales of between USD 100 million and USD 150 million over time.

Speaker #2: But I think the difference between today and maybe two years ago is I think everybody knows we've got a steady lens cadence now of advances against the market-leading lenses.

Speaker #2: And those are very positive. So I would say Panoptix Pro is a significant improvement on Panoptix. It's doing really well for trifocals. I think it actually gained share if we were looking at the trifocal space.

Well, I mean, you know, the, the the implantable growth is a function of 3 different things, right? It's, you know, you know, if you look at our share all in, we've actually, we were flat and share. So we were already stable. The problem was was in, uh, you know, was it wasn't ATI Wells that we were flat and we were losing an at Wells and uh, and gaining in in monofocal. So, you know, I think the there's 3 pieces 1 is market growth, 1 is penetration 1 is share and I think you got to take those 3 kind of independently I think market growth in the US has been you know, below what we would normally expect. But I you know, again we have forecasted that most of the year so I don't think that was a surprise to us. I, I think, on that 1, you know, we'll have to see where we sit next year, and I think as we get into next year, we'll, we'll we'll take a position on that. But for now, we don't anticipate any change for the rest of the year in the US. Um, I think the other 1 that is a little bit. Um more positive is is the penetration and that was in the US 180 basis points around the world 110. That's probably

Speaker #2: Vivity has got a little bit of a gap here before we get to Vivity Pro. But Vivity Pro, I think, is going to find its way into much better near vision than anything else out there in that space.

Speaker #2: And again, I think that's what people are looking for. They're looking for a better use of visual of the amount of light. So I think that will play well.

Speaker #2: And then we've got a and then we've got a monofocal plus for those folks who really are looking for a better monofocal. And that market in Europe has been fairly positive.

Speaker #2: So we got a little bit of everything for everybody. And I think going forward, I don't know that anybody can match what we've got on a cadence level going forward after that.

David Endicott: Turning to contact lenses, innovation continues to drive growth across our portfolio. The overall contact lens market remained healthy in Q2, providing a supportive backdrop for continued category expansion. Against that backdrop, we achieved a record global market share position, supported by strong US share gains and continued momentum across both dailies and reusables. In dailies, TOTAL1 and PRECISION1 remain important growth drivers and continue to gain share in one of the largest, fastest-growing market segments. We are also encouraged by the momentum in reusables. TOTAL30 continues to perform well across the family, supported by the recent launch of TOTAL30 Multifocal for Astigmatism, which expands our reach into an attractive and underserved segment. In addition, PRECISION7 sales have more than doubled versus the prior year, reflecting strong adoption of the weekly replacement category and providing another meaningful avenue for growth.

Speaker #2: So we're excited about where we're headed. But I would give ourselves some time here to weather the storm of many people entering this market.

Speaker #2: So be patient with it. But I think it's headed the right direction.

50 basis points higher than the. Well we think the historical average has been. So people with promotion, have obviously decided to use more, hi Wells, we like that move because I think, as Tim said uh, for every 1 point of market growth for us, you know, affects us about 10 million but a pen, a penetration is about 15 million. So we, you know, if you had to trade 1 of those for the other, you'd Trade It That Way. Um, now we'll see where penetration goes, but we've had a couple of quarters now that look pretty good. Um, I'd be generally on the positive side of that that number and then share is a bit of a, is a bit of a wild card I think, um, this is a very competitive market and people are trying lenses and they and, you know, surgeons, you know, like to try lenses and there's some good ones out there. So, you know, I think what we'll see is continued trial for the new lenses that come in. Um, but I think the difference between today, and maybe 2 years ago is, I think everybody knows we've got a steady lens, uh, Cadence now of advances against the market leading lenses. Um, and those are

Speaker #8: Got it. And then my follow-up, maybe just on kind of constant currency growth ex equipment. When I look at that number, I'm arriving at, I think, around 5% constant currency in the first half.

Speaker #8: With the two-year CAGR closer to 4%. So David, I'll stick with you. How do we think about this four to five percent ex equipment growth moving forward, particularly in 2027, when you really fully lap Unity and especially relative to your 6 to 8 percent long-term target that you laid out last year?

Are very positive. So I would say. Panoptx Pro is a, is a significant Improvement on panoptx. It's doing really well for trifocals. I think it actually gain share. Um, if we're looking at the trifocal space, um, vividity, you know, he's got a little bit of a gap here before we get to vividity Pro. But vividity Pro, I think, is going to find its way into much better near Vision than anything else out there in that space. And again, I think that's what people are looking for. They're looking for, you know, um, a better use of visual, uh, of the amount of light. So I think,

David Endicott: With multiple platforms across dailies and reusables, we believe we are well-positioned to continue capturing share and pursuing attractive growth opportunities across the contact lens market. Finally, in ocular health, execution remains strong across both our prescription and consumer dry eye franchises. TRYPTYR, our novel prescription treatment for dry eye disease, continues to gain momentum. Market access now includes nearly two-thirds of commercial lives and more than 20% of Medicare lives, including the recent addition of Humana Medicare Part D. Less than a year post-launch, TRYPTYR has already captured approximately 5% market share, reflecting strong early adoption in a market that is growing double digits. On the OTC side, Systane continues to perform well, delivering another quarter of double-digit growth and share gains, further strengthening its leadership position in artificial tears.

Speaker #8: It'd be great if you can talk about that ex equipment growth in the four to five percent range maybe reflect on the LRP and then I guess the heart of my question would be why won't 2027 sales growth decelerate from 2026 levels as you lap Unity?

Speaker #8: Thanks, guys.

Speaker #2: Well, I mean, the easy answer is new product flow. So just hang in there. We've got lots coming. So you don't get a full year of trip care, for example.

That will play well. And then we've got a, you know, and then we've got a monopoly Plus, for those folks who you really are looking for a better monofocal and that market in Europe has been, you know, fairly positive. So we got a little bit of everything for everybody. And I think, you know, going forward, uh, I don't know that anybody can match what we've got on a Cadence level, going forward after that. So, we're we're excited about where we're headed. Um, but I would give ourselves some time here to, to weather the storm of many, many people entering this market, so be patient with it, but I think it's in its head of the right direction.

Speaker #2: We're still fighting the reimbursement battle on trip care. We've got another OTC product coming. We've got two new pieces of equipment. We've got another couple of IOLs.

Yeah, got it. And then my follow-up. Um.

Speaker #2: We've got Valeta. Which is continuing to grow. We kind of I would just hang tight till we get to February. We'll lay it out for you.

Speaker #2: But I think what you're going to hear is we've got good transition from old products to new products. All of them are getting better ASPs.

David Endicott: Given the strength of the franchise and the opportunities we see ahead, we believe Systane remains well positioned on this path towards becoming a billion-dollar brand in the coming years. As we look ahead, we see a robust pipeline of growth catalysts across both our surgical and our vision care franchises. Beyond the positive contributions from our recent launches, we are preparing for the introductions of Vivity Pro, as well as the planned launch of our new eye whitener, among others. In addition, I am pleased to report that we recently made our first sale of UNITY M, our new microscope, and are beginning to ramp up our commercialization efforts. Together, these near-term opportunities are expected to support steady future growth across our portfolio and further strengthen our market positions. We are also excited about the potential of our recently announced collaboration with RxSight.

Speaker #2: Getting good lift year on year. And then we got additional new products coming along.

Speaker #8: Great. Thanks, guys.

Speaker #1: The next question, this from the line of Susanna Ludwig with Bernstein. Please receive their question.

Speaker #3: Good afternoon. Thanks for taking my questions. I have two please. I guess first on ocular health, Sistine has been a key contributor to growth there with the multiple multidose preservative-free Unity driver.

Maybe just on kind of constant currency growth ex equipment. You know, when I look at that number, I'm arriving at, I think, around 5% constant currency in the first half, with the two-year CAGR closer to 4%. So, David, I'll stick with you. How do we think about this 4 to 5% ex equipment growth, moving forward? Particularly in 2027, when you really fully lap Unity, and especially relative to your 6 to 8% long-term target that you laid out last year. It'd be great if you can talk about that ex equipment growth in the 4 to 5% range, maybe reflect on the LRP. And then I guess the heart of my question would be: why won't 2027 sales growth decelerate from 2026 levels as you lap Unity? Thanks, guys.

Well, I mean, the easy answer is new product flow.

Speaker #3: I guess, could you share roughly what percent of the Sistine business is now that multidose preservative-free? And how sustainable do you see the broader Sistine growth is?

Operator: Greetings. Welcome to Alcon's Q2 2026 earnings call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Dan Cravens, Vice President and Global Head of Investor Relations. Thank you. You may begin.

David Endicott: While still in the early stages, the collaboration combines Alcon's expertise in advanced optics and lens architecture with RxSight's adjustability platform. Together, we aim to develop a next-generation lens designed specifically for the platform with the potential to further enhance visual performance and refractive precision. Before discussing the individual markets, it is worth highlighting the attractiveness of Alcon's portfolio. We participate across a variety of surgical and vision care markets, including cataract, vitreoretinal, refractive, contact lenses, ocular health, and dry eye, among others. Each of these markets is supported by unique growth drivers ranging from procedural growth to innovation, premiumization, and increasing adoption of advanced technologies. Taken together, we estimate these aggregated markets grew approximately 3% to 4% in Q2. Within cataract, we estimate global procedure volumes grew low single digits in the quarter, led by strength in international, while the US was flat.

Speaker #3: And then after that, would just be helpful to have you a little bit more in-depth thoughts on the US cataract market conditions and whether this is just still surging capacity or if there's anything else going on there.

Speaker #2: On ocular health, we're scrambling to find the numbers. On ocular health, I think I'll just tell you that it's roughly 15% of ocular health is the MDPF.

And then, you know, we've got additional new products coming along.

Speaker #2: Is that right, guys? Is that what you said?

Speaker #1: Yeah. Keep going, Will.

Great. Thanks guys.

Speaker #2: They're working on it. So Sistine has been a double-digit grower for us. And 15% is about the MDPF level. So I think we got that for you.

The next question is from the line of Susanna Ludwig with Bernstein. Please proceed with your question.

Speaker #2: The category for us has been exciting. And I would say that what you should see in the back half is also some increased promotion around this area.

Speaker #2: It seems like the more we talk about MDPF, the better it goes. And I think the market wants it. I'll just remind people too that the international markets are dominantly MDPF.

David Endicott: This was a sequential improvement compared to Q1. Importantly, AT-IOL penetration increased by approximately 110 basis points globally and 180 basis points in the US. In contact lenses, we estimate the global market remained healthy and grew mid-single digits, led primarily by strength in the US. This was moderated by international markets, where prices contributed less to growth. In summary, our focus remains on disciplined execution of a steady flow of new product launches. Combined with our leading positions in a broad range of attractive eye care markets, we believe Alcon is well positioned to extend its leadership, capitalize on future growth opportunities, and create long-term shareholder value. With that, I will turn the call over to Tim, who will walk you through the financials.

Speaker #2: And the US market is not. It's moving that way directionally. But we had known that for some time. And that's really the trend we're playing is the rest of the world is been on the multidose preservative-free bandwagon for a while.

Dan Cravens: Important factors that could cause actual results to differ materially are included in our Form 20-F, earnings press release, and interim financial report, each of which is available on file with the Securities and Exchange Commission and available on their website at sec.gov. We'll also discuss certain non-IFRS financial measures. These measures may be calculated differently from, and may not be comparable to, similar measures used by other companies. They should be considered in addition to, and not as a substitute for, IFRS-prescribed performance measures. Reconciliation between our non-IFRS measures and the most directly comparable IFRS measures can be found in our earnings press release. For discussion purposes, our comments on growth rates are expressed in constant currency. In a moment, David will begin with highlights from the Q2. After his remarks, Tim will walk through our financial performance and outlook for the remainder of 2026.

Uh good afternoon. Thanks for taking my questions. I have 2. Please, I guess first 1 uh ocular health 15 has been a key contributor to growth there with the multiple multi uh preservative free you a key driver. I guess could you share you know roughly what percent of the sustained business is now that multi-dose preservative free and has sustainable. You see the broader sustaining growth is and then after that would just be helpful to have you a little bit more in depth about some of the US cataract market conditions and whether this is just still searching capacity or if there is anything else going on there.

Speaker #2: We're just getting on there in the US. So it's a good opportunity for us. On the other question you had was on the market.

Speaker #2: And if you're talking about the cataract market, I'll just make this point. The cataract market is certainly part of our business. And we talk about aggregate markets as growing 3 to 4 percent in the quarter.

Speaker #2: And that was pretty much where we were certainly what we forecasted. Most of our markets though are growing in the mid-single digits. So if you take artificial tears like we were talking or dry IRX or contact lenses or retina procedures or surgical equipment, all that stuff basically we've had pretty solid mid-single digit growth, which is or higher.

Tim Stonesifer: Thanks, David. Beginning with the top line, our Q2 sales were $2.8 billion, up 7% versus prior year. In our surgical franchise, sales were up 7% year over year to $1.6 billion. Implantable sales were $466 million in the quarter, up 1% versus the prior year period. Within this, IOLs were up 2%, partially offset by lower sales in surgical glaucoma. As David mentioned, Clareon PanOptix Pro continued to perform well, growing nicely in the US and Japan. Strong customer interest and continued commercial execution supported growth despite increased competitive activity. In consumables, Q2 sales of $825 million were up 5%. This growth was driven by strong vitreoretinal market trends, healthy international cataract procedural volumes, and favorable pricing, and reflects softer US cataract procedure volumes.

Um, on ocular health. We're, we're scrambling to find the numbers on ocular health, I think. Um, I'll just tell you that this roughly 15% of ocular health is, is the mdps. Uh, is that right guys? Keep going. Well, you're working. They're working on it. Um, so you know sustain has been a double digit grower for us, 15%. Um, and 15% is about the mdpp level. So I think we got that for you. The um,

Speaker #2: What we continue to believe though is that the US is going to remain relatively flat to slightly up in the cataract market. And that's largely because what's going on is surgeons are incorporating optometrists and other professionals into their workflows to get them more surgical time.

Dan Cravens: David will then return with closing comments before we open the line for Q&A. With that, I'll turn the call over to our CEO, David Endicott.

Speaker #2: And as we do that, it's going to take them some time to do that. But that allows them then to find more time for more cataracts.

Speaker #2: Because the demand is certainly there. It is just a matter of retirement. Too many surgeons retiring. And too many young folks picking their place that aren't as productive as the ones retiring.

Speaker #2: So that will change over time. But we see it pretty much as kind of these trends take some time to manage. They should recover to their historical rates at some point.

Tim Stonesifer: For reference, 1 point of growth of the global cataract market, including IOLs and consumables, is worth approximately $10 million per quarter to Alcon, while 1 point of AT-IOL penetration is worth approximately $15 million. In equipment, solid performance from our recent product launches, including UNITY, drove sales of $279 million, which were up 25% versus prior year. UNITY adoption was strong throughout the quarter, underscoring the commercial traction we are seeing across markets. Turning to vision care, Q2 sales of $1.2 billion were up 7%. Contact lens sales were up 5% to $726 million, lapping a strong prior year period with 7% growth. Positive trends from our innovative product portfolio, including share gains and pricing, were partially offset by declines in legacy products. In ocular health, Q2 sales of $486 million were up 12%, as TRYPTYR and Systane continue to drive meaningful growth in the category.

Speaker #2: We're not calling that this year we'll update it obviously for next year when we get there. But the general trend underneath that for IOLs as I just mentioned was that ATIOLs are up.

That category for us has been exciting. And I and I would say that, um, what you should see in the back half is also some increased promotion around this area. It seems like, um, the more we talk about mdp F the, the, the better it goes, and I think the market wants it. Um, I I'll just remind people too that the international markets are dominantly mdp f. Um, and the US market is not, it's moving that way directionally, but we had known that for some time and that's really the the, the trend we're playing is, is the rest of the world is been on the multi-dose preservative free bandwagon for a while. Um, we're just getting on there in the US. So it's a, it's a good opportunity for us on the, um, the other question you had was on the market. Um, and you know, if you're talking about the Cataract market, I'll just make this point. You know, our the County Market is certainly part of our business and, you know, but we we talk about aggregate markets as growing 3 to 4% in the quarter. And that was pretty much, you know, where we were uh certainly what we forecasted. Uh, most of our markets are growing in the mid single digit.

Speaker #2: International markets are healthy. And I think we feel pretty good about where we're doing with our product lines.

Speaker #3: Great. Thanks. And if I can maybe sneak in just a quick follow-up is do you think the increase in ATIOL adoption is having any effect on volumes just given that's more time intensive?

Speaker #2: Well, it could. But we trade actually in our world economically, you'd make that trade, right? If you traded one monofocal surgery for one ATIOL surgery, Alcon would make more money as would most people.

David Endicott: Turning to implantables, as we highlighted in our earnings release, we made the decision to discontinue our work on the PowerVision IOL programs following the analysis of the latest clinical study data. This data demonstrated persistent, unpredictable shifts in postoperative distance vision in a subset of patients that remain unresolved after multiple developmental efforts. As a result, the programs did not meet our standards for visual performance and patient outcomes. Although we are disappointed that the programs ultimately did not advance, they generated valuable insights into accommodation, tunability, and long-term visual outcomes that will inform future innovation efforts. Looking at our performance in the quarter, implantables grew 1%, with IOLs up 2% despite new competitive launches. The PanOptix family grew double digits in the quarter, driven by strong adoption of PanOptix Pro.

Digit. So if you take Artificial Tears like we were talking or dry irx or contact lenses or retina procedures or surgical equipment, all that stuff basically. You know, we've had, you know, pretty solid, you know, mid single digit growth, which is which or or higher. Um, what we continue to believe, though is the us is going to remain relatively flat to slightly up in the Cataract market. And, and that's largely because the what's going on is surgeons are incorporating optometrists and other professionals into their workflows to get them.

Speaker #2: So you could actually make that trade successfully on an economic basis even though that's not great for patients. So I would say that maybe it has some effect.

Speaker #2: But I think really especially with the new equipment and certainly one of the reasons we're working on Unity DX is to make this a faster workup.

Tim Stonesifer: TRYPTYR continues to perform well, with prescription demand growing steadily and high refill rates. We have made meaningful progress on market access, positioning us to increase investment behind the brand in the H2 of the year. We believe the combination of improved access, growing awareness, expanded commercial efforts will support continued TRX growth while driving a more favorable payer mix over time. Systane delivered another strong quarter with double-digit growth and remains a key contributor to ocular health. Growth was driven by continued share gains and strong momentum in our multi-dose preservative-free portfolio, which grew more than 40% during the quarter. Q2 core gross margin was 64.7%, up 250 basis points year-over-year. This improvement reflected price increases and manufacturing efficiencies, as well as $15 million in other revenue from a licensee. The prior year period also included higher inventory-related costs.

Speaker #2: And make it an easier workup for people and a more automated digitized one. As we get down that path, I think these things will kind of equilibrate in terms of time spent.

More surgical time, and as we do that, you know, it's going to take them some time to do that. But that allows them then, um, to find more—um—more time for more cataracts because the demand is certainly there. It is just a matter of too many surgeons retiring, and too many young folks in particular places that aren't as productive as the ones retiring. So, um, that will change over time, but we see it pretty much as kind of these trends, you know, take some time to manage. They should recover to their historical rates at some point. We're not going that—

Speaker #2: Certainly by the surgeon. But you remember that a lot of the workup too needs to be moved to paraprofessionals people around the surgeon who can do that work for them.

The general Trend underneath that for iOS because I just mentioned, was that? Yeah, um, International markets are healthy and I think we should be good about what we deal with.

David Endicott: Building on the foundation of PanOptix, the world’s most implanted trifocal IOL, PanOptix Pro enhances quality of vision through its advanced optical design and continues to gain traction with surgeons globally. In the US, adoption has exceeded expectations. Nearly all PanOptix accounts have been converted to PanOptix Pro, with the platform now representing approximately 90% of PanOptix implants. Feedback on visual performance and reduced light scatter remains very encouraging. We expect this momentum to extend internationally as we roll out PanOptix Pro and continue to build on the strength of Clareon Toric. Early launches in Japan, Canada, Australia, and more recently in Europe, have been well-received, supporting our confidence in share stabilization and long-term growth. We are also excited about the acceleration of our pipeline of new IOLs. We have begun a KOL launch of Clareon TruPlus in the US and recently received CE mark for Europe.

Speaker #2: And then check it obviously. Obviously do a good job with it. But that's what the I think that's the most productive way most practices can run.

Just a quick follow-up: do you need to increase the ETI? Is adoption having any effect on volume, just given that it's so time intensive?

Speaker #3: Great. Thank you.

Speaker #1: Thank you. Our final question is from the line of Isi Kirby with Redburn. Please receive their questions.

Good. But, you know, we actually, you know, in our world, economically and in trade, you'd make that trade, right? If you traded one mono FOC for one—

Speaker #5: Hi guys. Thanks for sitting in. I wanted to ask about the eyewhitener product that's been mentioned a couple of times. I'm not sure if you've given any timeline around that.

Most people so you know, to make that trade successfully on an economic basis even though that's not great for patients.

Speaker #5: That would be helpful to know if you have. And then what's going to differentiate this product versus competitors in the field given this could be quite a meaningful category to you guys.

Tim Stonesifer: Moving to operating expenses, as noted on our Q1 call, we are investing behind new product launches, including TRYPTYR, UNITY, and others, and will continue to prioritize investments that support near and long-term growth. Our resulting core operating income was $574 million and 20.6% of sales, up 160 basis points versus the prior year on a constant currency basis. This improvement was driven by our strong revenue performance net of our targeted commercial investments, and also benefited from the timing of the $15 million in other revenue that I referred to earlier. Below the operating line, interest expense was $53 million during the quarter, broadly in line with the prior year. Turning to taxes, our core effective tax rate was 20.7% in the Q2, which was broadly in line with our guidance.

Speaker #5: Thank you.

Speaker #2: Yeah. We really haven't spent much time on it. But I would say that we're excited about it. It's just it's a next-year product. So we should get a we should have an approval late this year when we do have an approval, we'll look at the label and we obviously have an idea as to why this is better.

I would say that maybe it has some effect on really um, to do equipment and certainly 1 of the reasons we're working on a d access to make this a faster work up um and different people in a in a more, a digitized.

David Endicott: This lens is an important addition to our portfolio and provides an entry point into the monofocal plus segment. We intend to phase these launches deliberately as we continue to prioritize the scale-up of PanOptix Pro in international markets and prepare for the introduction of Vivity Pro. Expected to launch with KOLs late this year, Vivity Pro builds on the success of the Vivity platform through a next-generation lens that is designed to extend the range of vision and enhances near performance. The new lens is designed to deliver up to one additional line of near vision while maintaining Vivity's strong distance and intermediate vision performance, and its clinically proven low visual disturbance profile. Importantly, Clareon TruPlus and Vivity Pro represent only the next wave of innovation from our IOL portfolio.

Speaker #2: We think it will be better than the market-leading competitor. But until we get our labeling, we'll need to keep that a dark secret. And we'll relay it to you next time hopefully.

Get down that path. I think these things will kind of great in terms of time. But you remember there's a lot of work with 2 needs to be moved to the fair professionals um around the the surgeons who can do that work for them. And then checking obviously obviously do a job with it but um that's that's what

Speaker #5: Okay. Thank you.

A practice run.

Speaker #1: Thank you. At this time, we've reached the end of our question-answer session. I'll hand the floor back to Dan Cravens for closing comments.

Great. Thank you.

Speaker #6: Great. Thanks, everybody. And thanks for joining us again this morning. If you have any follow-up questions, certainly reach out to Richard Born or myself.

No questions. Kirby with Redbarn, please. Just use your questions.

Tim Stonesifer: Finally, core diluted earnings were $0.84 per share in the quarter, up 9% versus prior year. Turning to cash, we generated $693 million of free cash flow in the H1 of the year, allowing us to return $538 million to shareholders through dividends and share repurchases over the same period. Moving to our outlook for 2026, we continue to assume that aggregate eye care markets grow 3% to 4% for the year, and exchange rates as of the end of July hold through year-end. We also assume the tariffs currently applicable to Alcon's business remain in effect through year-end, including US import tariff rates of approximately 10% to 12.5%. This guidance also reflects an anticipated refund of approximately $60 million from the US government in the Q3, of which we plan to reinvest approximately two-thirds back into the business.

Speaker #6: And for media questions, reach out to our corp comm team. Thanks. And have a great rest of your day.

Hey guys, thanks for setting me in. I wanted to ask about the eye white and the product that's been mentioned a couple of times. Not sure if you've given any timeline around that—if we can help, you know,

Speaker #1: Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines at this time and have a wonderful day.

And then, we're going to differentiate this product versus send the sales. Given, this could be quite a number.

David Endicott: Our pipeline remains robust, and we expect to continue to deliver a steady cadence of new technologies and product enhancements in the years ahead. Beyond cataract surgery, we continue to see enthusiasm for Valeda, our first-of-its-kind treatment for dry AMD. This technology uses three specific wavelengths of light to improve mitochondrial activity and retinal health. Importantly, clinical studies showed that more than 80% of patients maintained or improved their vision at approximately two years. Adoption accelerated during the quarter as we expanded the installed base and increased utilization across existing accounts. We were also encouraged by continued progress with the Medicare administrative contractors, which we believe will further support access to this therapy. Based on current adoption trends, clinical experience, and reimbursement progress, we continue to believe the platform has the potential to generate sales of between $100 million and $150 million over time.

So that, um, we're excited about it. It's just, uh, it's a next year product. So we should get a, we should have an approval later. When we do have an approval work, the label and we obviously have an idea. So as to why this is better, we think it will be better to the market leader competitor, but until we get our lab, you know, we'll we'll need a dark secret and we'll, we'll relate it to you next time. Hopefully,

Okay, thank you.

Speaker #3: comments.

the end of our question and answer session, I'll hand the floor back to

Speaker #1: Great. Thanks, everybody. And thanks for joining us again this morning. If you have any follow-up questions, certainly reach out to Richard Bourne or myself.

Closing comments.

Tim Stonesifer: Based on these assumptions and our performance through the H1 of the year, our guidance is as follows. We continue to expect constant currency sales growth of between 5% and 7%. For the H2 of the year, we expect tougher equipment comparisons, partially offset by easier comparisons in contact lenses, particularly in the Q4. We also expect launch contributions from TRYPTYR, Valeda, UNITY CS, as well as PanOptix Pro in Europe to become more meaningful as we move through the balance of the year. Turning to profitability, we are increasing our expected core operating margin expansion to a range of 90 to 190 basis points in constant currency, reflecting the strong H1 operating performance. Gross margin will also benefit from the tariff refund of approximately $60 million.

Speaker #1: Media questions, reach out to our thanks and have a great rest of your day.

Tim Stonesifer: On SG&A, given the favorable response to our recent launches, we intend to reinvest a portion of the tariff refund to support growth. As such, we expect SG&A spending for the H2 to be consistent with last year on a percentage of sales basis. Lastly, we are increasing our core diluted EPS growth outlook to a range of 12% to 15% in constant currency. This reflects our strong operational performance as well as the benefit from our share repurchase program. In summary, we delivered another quarter of solid financial results. Sales grew 7%, earnings increased meaningfully, free cash flow remained healthy, and we returned significant capital to shareholders. These results reflect the strength of our portfolio, the impact of recent launches, and the dedication of more than 25,000 associates around the world. With that, I will turn it back to David.

David Endicott: With multiple platforms across dailies and reusables, we believe we are well positioned to continue capturing share and pursuing attractive growth opportunities across the contact lens market. Finally, in ocular health, execution remains strong across both our prescription and consumer dry eye franchises. TRYPTYR, our novel prescription treatment for dry eye disease, continues to gain momentum. Market access now includes nearly two-thirds of commercial lives and more than 20% of Medicare lives, including the recent addition of Humana Medicare Part D. Less than a year post-launch, TRYPTYR has already captured approximately 5% market share, reflecting strong early adoption in a market that is growing double digits. On the OTC side, SYSTANE continues to perform well, delivering another quarter of double-digit growth and share gains, further strengthening its leadership position in artificial tears.

David Endicott: Thanks, Tim. In closing, our recent launches are performing well. Our pipeline continues to progress, and we remain focused on executing against the opportunities in front of us. While we continue to operate in an evolving environment, we believe our portfolio, innovation pipeline, and disciplined execution position Alcon well for long-term growth. With that, operator, please open the line for questions.

David Endicott: Given the strength of the franchise and the opportunities we see ahead, we believe SYSTANE remains well positioned on this path towards becoming a billion-dollar brand in the coming years. As we look ahead, we see a robust pipeline of growth catalysts across both our surgical and our vision care franchises. Beyond the positive contributions from our recent launches, we are preparing for the introductions of Vivity Pro, as well as the planned launch of our new iWhitener, among others. In addition, I am pleased to report that we recently made our first sale of UNITY M, our new microscope, and are beginning to ramp up our commercialization efforts. Together, these near-term opportunities are expected to support steady future growth across our portfolio and further strengthen our market positions. We are also excited about the potential of our recently announced collaboration with RxSight.

Operator: Thank you. We will now be conducting a question and answer session. In the interest of time, we ask you please limit yourself to one question and one follow-up. If you would like to ask a question at this time, you may press *1 from your telephone keypad and a confirmation tone indicate your line is in the question queue. You may press *2 if you would 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. Thank you. Our first question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your questions.

Anthony Petrone (Mizuho Gro: Thank you, and good morning, everyone. Congratulations on a nice print here. I will have one on equipment and one on IOLs. Dave, on equipment here, obviously mid-20s, you are holding better price than you had expected at the onset of the launch, and the funnel looks good in the back half. Maybe you gave some data at the beginning of this cycle, 30,000 pieces of equipment. By the end of this year, what percent will have upgraded to UNITY VCS? What will the cycle look like over the next two to three years, let us say? Then I will have a follow-up on IOL.

Anthony Petrone: Thank you, and good morning, everyone. Congratulations on a nice print here. I will have one on equipment and one on IOLs. Dave, on equipment here, obviously mid-20s, you are holding better price than you had expected at the onset of the launch, and the funnel looks good in the back half. Maybe you gave some data at the beginning of this cycle, 30,000 pieces of equipment. By the end of this year, what percent will have upgraded to UNITY VCS? What will the cycle look like over the next two to three years, let us say? Then I will have a follow-up on IOL.

David Endicott: While still in the early stages, the collaboration combines Alcon's expertise in advanced optics and lens architecture with RxSight's adjustability platform. Together, we aim to develop a next-generation lens designed specifically for the platform, with the potential to further enhance visual performance and refractive precision. Before discussing the individual markets, it is worth highlighting the attractiveness of Alcon's portfolio. We participate across a variety of surgical and vision care markets, including cataract, vitreoretinal, refractive, contact lenses, ocular health, and dry eye, among others. Each of these markets is supported by unique growth drivers ranging from procedural growth to innovation, premiumization, and increasing adoption of advanced technologies. Taken together, we estimate these aggregated markets grew approximately 3% to 4% in Q2. Within cataract, we estimate global procedure volumes grew low single digits in the quarter, led by strength in international, while the US was flat.

David Endicott: Yeah, Anthony, we have been pleased with the response that we have gotten out of UNITY Vitreoretinal Cataract System in particular. The ASPs have been solid, and I think that reflects customers' view that this is really a step change in what they can do in retina in particular, but also cataract. We are on track with our funnel. We are on track with what we have given to you in the past in terms of the movement of the base of product. We have actually gained some share in this market as well. I think all things are kind of green light on the unit movement. I think what I would tell you is that there hardly is not a change in the way in which we thought about it.

David Endicott: This was a sequential improvement compared to Q1. Importantly, AT IOL penetration increased by approximately 110 basis points globally and 180 basis points in the US. In contact lenses, we estimate the global market remained healthy and grew mid-single digits, led primarily by strength in the US. This was moderated by international markets, where prices contributed less to growth. In summary, our focus remains on disciplined execution of a steady flow of new product launches. Combined with our leading positions in a broad range of attractive eye care markets, we believe Alcon is well-positioned to extend its leadership, capitalize on future growth opportunities, and create long-term shareholder value. With that, I will turn the call over to Tim, who will walk you through the financials.

David Endicott: Over the 10 years, I would divide it by 10 at 30,000, add a little more upfront, take a little away on the back end, and then you are going to be kind of close to where we have always expected this to be. So in these first couple of years of launch, we will do a little better, it will settle down a little bit, and then we will replace on a kind of steady replacement basis. That is probably the main thing. You had an IOL question too.

Anthony Petrone (Mizuho Gro: Yeah, IOLs are a little bit of improvement sequentially. PanOptix Pro is helping, but it is still lower than the historical growth rate. Maybe just the outlook on IOLs as it relates to surgeon capacity in the US and where you think that business could trend to, let us say, in the 2027 timeframe. Thanks.

Anthony Petrone: Yeah, IOLs are a little bit of improvement sequentially. PanOptix Pro is helping, but it is still lower than the historical growth rate. Maybe just the outlook on IOLs as it relates to surgeon capacity in the US and where you think that business could trend to, let us say, in the 2027 timeframe. Thanks.

Tim Stonesifer: Thanks, David. Beginning with the top line, our Q2 sales were $2.8 billion, up 7% versus prior year. In our Surgical franchise, sales were up 7% year over year to $1.6 billion. Implantable sales were $466 million in the quarter, up 1% versus the prior year period. Within this, IOLs were up 2%, partially offset by lower sales in surgical glaucoma. As David mentioned, PanOptix Pro continued to perform well, growing nicely in the US and Japan. Strong customer interest and continued commercial execution supported growth despite increased competitive activity. In consumables, Q2 sales of $825 million were up 5%. This growth was driven by strong vitreoretinal market trends, healthy international cataract procedural volumes, and favorable pricing, and reflects softer US cataract procedure volumes.

David Endicott: Sure. Yeah. Look, we are very pleased with PanOptix Pro. The response to that product has been outstanding. I think we made a comment around 90% of our folks that used to use PanOptix are now using Pro, and that probably tells you all you need to know. That is inside of a year. So the use of light in that lens is superior to just about everything out there. We are getting, I think, 93% of the light being used in productive ways, which creates less scatter. That has made a big difference, and I think it also shrinks the market for things like Vivity penetration. We know Vivity is a good lens. We also know there is competitors to it. Again, we are chasing a new Vivity which does even more than what Vivity did on its own.

David Endicott: We are looking for another line of vision at near out of Vivity. We get that done. I think, again, we continue to push our lenses out in front of competitive lenses. We are very confident in our long-term share stabilization. I would say that we are getting towards the end of it, but we are not there. It is still a very competitive market out there. We have seen now, I think, in most of the rest of the world and in the US, pretty much the most difficult competitors we are going to face. I feel pretty good about where we are headed. I think the only other thing I would tell you is that relative to penetration and movement in implantables themselves, penetration matters a lot, and we are seeing a very positive trend right now in the United States.

Tim Stonesifer: For reference, one point of growth of the global cataract market, including IOLs and consumables, is worth approximately $10 million per quarter to Alcon, while one point of AT IOL penetration is worth approximately $15 million. In equipment, solid performance from our recent product launches, including UNITY, drove sales of $279 million, which were up 25% versus prior year. UNITY adoption was strong throughout the quarter, underscoring the commercial traction we are seeing across markets. Turning to Vision Care, Q2 sales of $1.2 billion were up 7%. Contact lens sales were up 5% to $726 million, lapping a strong prior year period with 7% growth. Positive trends from our innovative product portfolio, including share gains and pricing, were partially offset by declines in legacy products. In ocular health, Q2 sales of $486 million were up 12%, as TRYPTYR and SYSTANE continue to drive meaningful growth in the category.

David Endicott: I think this is the second quarter in a row we have seen more than 150 basis points in the US move up. I do think that for some surgeons, doing more AT-IOLs is a very productive thing. They are kind of getting used to it. They are getting better at the diagnostics, and there is just a lot of promotion out there on this. I think that is moving the market, and that does help. As we kind of settle out on share, and I think we will settle out on share, we benefit a lot from penetration. I would just keep that in mind.

Tim Stonesifer: TRYPTYR continues to perform well, with prescription demand growing steadily and high refill rates. We have made meaningful progress on market access, positioning us to increase investment behind the brand in the H2 of the year. We believe the combination of improved access, growing awareness, and expanded commercial efforts will support continued TRX growth while driving a more favorable payer mix over time. SYSTANE delivered another strong quarter with double-digit growth and remains a key contributor to ocular health. Growth was driven by continued share gains and strong momentum in our multi-dose preservative-free portfolio, which grew more than 40% during the quarter. Q2 core gross margin was 64.7%, up 250 basis points year-over-year. This improvement reflected price increases in manufacturing efficiencies, as well as $15 million in other revenue from a licensee. The prior year period also included higher inventory-related costs.

Anthony Petrone (Mizuho Gro: Thank you.

Anthony Petrone: Thank you.

Operator: Our next question is in the line of Brett Fishbin with KeyBanc. Please proceed with your question.

Brett Fishbin: Hey, guys. Thank you so much for taking the questions. I will just ask two. First on the tariff refund and reinvestment plans. I was just curious if you could give a little bit more color on where you are driving that incremental investment into the business in H2. Do we think of this step-up in investment activity as a little bit more one-time in nature, given the fact that it is tied to the tariff refund?

David Endicott: Yeah, sure. Great question. We are reinvesting back in the business. I would say that now that we have a better view on the new product launches, we are going to double down in a couple of the areas that we think that there is more opportunity. We are also going to look at other OTC products. If you think about the ocular health business, we may have some opportunities there. We are going to put the money to work. USD 40 million is relatively small if you look at our total marketing and sales spend. Nonetheless, we are going to put the money to work, and some of that will drive some near-term revenue, and then some of it will obviously drive long-term revenue.

Tim Stonesifer: Moving to operating expenses, as noted on our Q1 call, we are investing behind new product launches, including TRYPTYR, UNITY, and others, and will continue to prioritize investments that support near and long-term growth. Our resulting core operating income was $574 million and 20.6% of sales, up 160 basis points versus the prior year on a constant currency basis. This improvement was driven by our strong revenue performance net of our targeted commercial investments and also benefited from the timing of the $15 million in other revenue that I referred to earlier. Below the operating line, interest expense was $53 million during the quarter, broadly in line with the prior year. Turning to taxes, our core effective tax rate was 20.7% in the Q2, which was broadly in line with our guidance. Finally, core diluted earnings were $0.84 per share in the quarter, up 9% versus prior year.

Brett Fishbin: All right, and then second question, just on the contact lens market. I think you might have used the word healthy describing the market in Q2. So curious if there is any signals that things are picking up a little bit, maybe closer to the mid-single digit or mid to high end of the typical 4% to 6% range after what we viewed as some softer quarters. Thank you so much.

David Endicott: Yeah. I think the vision care business on contact lenses was a bit mixed. US had a very strong quarter. I think it was like 8%. International was more like 3%. So in aggregate, it was 6%. I would say six is very healthy globally. What you are really seeing is the US is bouncing some price. I think it is lapping two price increases. International is much more difficult to get price, so you are seeing much more mix there. I would just say that in aggregate, it looks pretty normal in that 4% to 6% range. It is really on the high end of it.

Tim Stonesifer: Turning to cash, we generated $693 million of free cash flow in the H1 of the year, allowing us to return $538 million to shareholders through dividends and share repurchases over the same period. Moving to our outlook for 2026, we continue to assume that aggregate eye care markets grow 3% to 4% for the year, and exchange rates as of the end of July hold through year-end. We also assume the tariffs currently applicable to Alcon's business remain in effect through year-end, including US import tariff rates of approximately 10% to 12.5%. This guidance also reflects an anticipated refund of approximately $60 million from the US government in the Q3, of which we plan to reinvest approximately two-thirds back into the business. Based on these assumptions and our performance through the H1 of the year, our guidance is as follows.

Operator: Our next question is from the line of Ryan Zimmerman with U.S. Bancorp. Please proceed with your questions.

Ryan Zimmerman: Good morning, David, Tim, Dan. Thanks for taking the questions. With the write-down of PowerVision and the RxSight collaboration agreement, David, I want to get your thoughts on what you hope to achieve now that you have made that decision to go purely an adjustable route versus maybe an adjustable and accommodative route and how you think, when it is available, how you think it impacts your core franchise. Then I have a follow-up question.

David Endicott: Well, I would maybe change the premise a little bit. I do not think we have made a decision to do one or the other. I think we still think that adjustable accommodating is the best long-term answer. We just could not get there with this particular technology. I think I would describe these as two different ideas. RxSight really is an idea about how do we take a step forward in tunability with an optic that we already have or one that we could design for it. I would call that an intermediate step towards where I think we need to go, which is long-term into an accommodating lens. PowerVision was always a big idea. We learned a ton from it.

Tim Stonesifer: We continue to expect constant currency sales growth of between 5% and 7%. For the H2 of the year, we expect tougher equipment comparisons, partially offset by easier comparisons in contact lenses, particularly in the Q4. We also expect launch contributions from TRYPTYR, Valeda, UNITY CS, as well as PanOptix Pro in Europe to become more meaningful as we move through the balance of the year. Turning to profitability, we are increasing our expected core operating margin expansion to a range of 90 to 190 basis points in constant currency, reflecting the strong H1 operating performance. Gross margin will also benefit from the tariff refund of approximately $60 million. On SG&A, given the favorable response to our recent launches, we intend to reinvest a portion of the tariff refund to support growth.

David Endicott: We have got a lot of really great science and a lot of great scientists who I think have a better informed, probably the world's best informed vision of how it is that we could get to an accommodating lens. I just do not know that we have the technology yet. But we have probably been through, I would say, a number of accommodating ideas over the last four or five years, including PowerVision, and we will continue to look at them. There is still more out there. Somebody has got to figure this out. I suspect it will be us, but we are watching very carefully. I would think about accommodating and tunable as the end game. It is just further out than we wish it was.

Tim Stonesifer: As such, we expect SG&A spending for the H2 to be consistent with last year on a percentage of sales basis. Lastly, we are increasing our core diluted EPS growth outlook to a range of 12% to 15% in constant currency. This reflects our strong operational performance as well as the benefit from our share repurchase program. In summary, we delivered another quarter of solid financial results. Sales grew 7%, earnings increased meaningfully, free cash flow remained healthy, and we returned significant capital to shareholders. These results reflect the strength of our portfolio, the impact of recent launches, and the dedication of more than 25,000 associates around the world. With that, I will turn it back to David.

Ryan Zimmerman: Helpful. Turning to surgical glaucoma, we have seen the changes you have made in Hydrus over the last year or so, continues to be a drag on the business. You have done a ton in terms of pharmaceuticals and glaucoma. What are your thoughts at this point and what are your plans potentially with surgical glaucoma? What do you want to do? Do you feel like you still need to be in that market? Just be good to kind of get your high-level thoughts there, David.

Operator: Thank you. We will now be conducting a question-and-answer session. In the interest of time, we ask that you please limit yourself to one question and one follow-up. If you would like to ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would 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. Thank you. Our first question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your questions.

Anthony Petrone: Thank you, and good morning, everyone. Congratulations on the nice print here. I will have one on equipment and one on IOLs. Dave, just on equipment here, obviously mid-20s, you are holding better price than you had expected at the onset of the launch, and the funnel looks good in the back half. Maybe you gave some data at the beginning of this cycle, 30,000 pieces of equipment. By the end of this year, what percent will have upgraded to UNITY VCS? What will the cycle look like over the next two to three years, let us say? Then I will have a follow-up on IOL.

David Endicott: Again, Voyager has moved a little slower than we had hoped for because of the kind of frequency that people use their own current argon lasers. But as people really understand that product, I think we are going to get better and better traction on it. So we are optimistic there. I think there are other technologies out there as well that we keep an eye on that I think could do some things in glaucoma interventions that are also maybe a little bit more on the horizon. But in terms of stents, stenting generally, I think is pretty stable right now and is likely to kind of stay that way.

Ryan Zimmerman: Thank you.

Operator: The next question is from the line of Graham Doyle with UBS. Please proceed with your questions.

David Endicott: Yeah, Anthony, we have been pleased with the response that we've gotten out of UNITY VCS in particular. The ASPs have been solid, and I think that reflects customers' view that this is really a step change in what they can do in retina in particular, but also cataract. We are on track with our funnel. We are on track with what we've given to you in the past in terms of the movement of the base of product. We've actually gained some share in this market as well. I think all things are kind of green light on the unit movement. I think what I would tell you is that there hardly isn't a change in the way in which we thought about it.

Graham Doyle: Yep. Morning. Thanks, guys, for taking my questions. Just a couple from me. Just firstly, on the top line guide, Tim, the 5% to 7%, is it still reasonable to think the 7% is plausible and a reasonable case rather than best case for the full year? Obviously, the comps get a bit tougher. Just to get your thoughts on where you see that in terms of probability. Then it is a good point on IOL. Another way of looking at this is when do you think you will have PanOptix Pro, Vivity Pro, and TruPlus approved in US and Europe? Just in terms of competitive dynamics, it would be good to get that sense.

David Endicott: Over the 10 years, I divide it by 10 at 30,000, add a little more up front, take a little away on the back end, and then you're going to be kind of close to where we've always expected this to be. So in these first couple of years of launch, we'll do a little better. It'll settle down a little bit, and then we'll replace on a kind of a steady replacement basis. So that's probably the main thing. You had an IOL question too.

Tim Stonesifer: Yeah, Graham, thanks for the question. Listen, I will leave it to you as to what you think is plausible. We give a range of 5% to 7%. Historically, we have been kind of a midpoint type of company is what we try to say. I will say at the beginning of the year, we stated that the revenue would be relatively level loaded. I think that is still going to be the case. We get a lot of questions on the comps, to your point. The way I think about it, just to give you a little more color, there will be a tougher comp in equipment with UNITY VCS for sure, right? Because we launched that sort of at the beginning of the H2 of last year.

Anthony Petrone: Yeah, IOLs are a little bit of improvement sequentially. PanOptix Pro is helping, but it's still lower than the historical growth rate. Maybe just the outlook on IOLs as it relates to surgeon capacity in the US and where you think that business could trend to, let's say, in the 2027 timeframe. Thanks.

Tim Stonesifer: When you look at some of the other launches, like UNITY CS as an example, that was launched this year. So we should get some benefit there. If you look at SYSTANE, that is accelerating. We continue to improve our market access, so that should be helpful. Valeda continues to do well. So we did not really kick that off until, call it, mid-Q2 of last year. So we do feel like the new product launches will carry us through and that 5% to 7% guide, again, that assumes aggregate markets grow at 3% to 4%.

David Endicott: Sure. Yeah. Look, we're very pleased with PanOptix Pro. The response to that product has been outstanding. I think we made a comment around 90% of our folks that used to use PanOptix are now using Pro, and that probably tells you all you need to know. That's inside of a year. So the use of light in that lens is superior to just about everything out there. We're getting, I think, 93% of the light being used in productive ways, which creates less scatter. That has made a big difference, and I think it also shrinks the market for things like Vivity penetration. We know Vivity is a good lens. We also know there's competitors to it. Again, we are chasing a new Vivity, which does even more than what Vivity did on its own.

David Endicott: Yeah. Graham, on the approvable front, PanOptix Pro is approved now in both US and Europe. We are just launching it. I think we launched it in June in Europe, and we are still getting it out in major markets. So look for the back half to be a meaningful impact on Europe. Vivity Pro, I would expect that late this year, maybe early next. It just kind of depends. Neither the US nor Europe have that yet, but it has been submitted to both. On TruPlus, both the US and CE mark. We have CE mark approval. We just received it, I think, recently. But again, I would be careful with that one because we are managing that rollout carefully to not interfere with the PanOptix Pro and Vivity Pro. We have got a lot to do right now, which is kind of exciting.

David Endicott: So again, we are looking for another line of vision at near out of Vivity. So we get that done, I think again, we continue to push our lenses out in front of competitive lenses. We are very confident in our long-term share of stabilization. I would say that we are getting towards the end of it, but we are not there. It is still a very competitive market out there. But we have seen now, I think in most of the rest of the world and in the US, pretty much the most difficult competitors we are going to face. I feel pretty good about where we are headed. I think the only other thing I would tell you is that relative to penetration and movement in implantables themselves, penetration matters a lot, and we are seeing a very positive trend right now in the United States.

David Endicott: But we are going to manage all three of those carefully to prioritize Vivity and PanOptix.

David Endicott: I think this is the second quarter in a row we have seen more than 150 basis points in the U.S. move up. I do think that for some surgeons, doing more AT IOLs is a very productive thing. They are kind of getting used to it, they are getting better at the diagnostics, and there is just a lot of promotion out there on this. I think that is moving the market, and that does help. As we kind of settle out on share—and I think we will settle out on share—we benefit a lot from penetration. So I would just keep that in mind.

Operator: The next question is in the line of Veronika Dubajova with Citi. Please proceed with your question.

Veronika Dubajova: Hi, guys. Good afternoon. Thank you for taking my questions, please. I have two. One is on equipment, and the second one is on the gross margin. On equipment, Tim, David, just curious if you could provide a little bit more color what the contribution from Valeda was in the quarter, and to what extent it is actually visibly driving an acceleration in the equipment growth rate. I have not heard you guys articulate the peak sales potential before today, so it would be really good to understand what has gotten you there and how much of a contributor it is already being. My second question is, Tim, for you. On the gross margin, really, really strong improvement year-on-year, and also sequentially appreciate, obviously, the color on Q2 margins last year being very depressed.

Anthony Petrone: Thank you.

Operator: Our next question is from the line of Brett Finnschreiber with KeyBanc. Please proceed with your question.

Brett Finnschreiber: Hey, guys. Thank you so much for taking the questions. I will just ask two. First, on the tariff refund and reinvestment plans. Was just curious if you could give a little bit more color on where you are driving that incremental investment into the business in H2. Should we think of this step up in investment activity as a little bit more one-time in nature, given the fact that it is tied to the tariff refund?

Veronika Dubajova: But just curious if you kind of feel the 64%ish level once we strip out the licensing income as a reasonable proxy for the remainder of the year, or are there other things we have to bear in mind as we look into the back half of the year? Obviously, I'm excluding the tariff refunds because we all can do the math on that. Thanks, guys.

Tim Stonesifer: Yeah, sure. Great question. We are reinvesting back in the business. I would say that now that we have a better view on the new product launches, we are going to double down in a couple of the areas that we think that there is more opportunity. We are also going to look at other OTC products. If you think about the ocular health business, we may have some opportunities there. We are going to put the money to work. USD 40 million is relatively small if you look at our total marketing and sales spend. Nonetheless, we are going to put the money to work, and some of that will drive some near-term revenue, and then some of it will obviously drive long-term revenue.

David Endicott: Yeah. Veronika, on Valeda, we haven't really called out individual products. As you know, we tend not to do that. I would say that it contributed several points of growth in the quarter. But we're doing really well with a number of pieces of equipment. Obviously, the main driver in equipment right now is UNITY CS and UNITY VCS. I think, over time, we were trying to make sure we gave everybody some sense of what this product actually is. So I think, 100 to 150 was a nice number that we could kind of get to in that, let's call it 3 to 5 year frame. So maybe think about it as a typical J-shaped new product curve.

Brett Finnschreiber: All right, and then second question, just on the contact lens market. I think you might have used the word healthy describing the market in Q2. So curious if there is any signals that things are picking up a little bit, maybe closer to the mid-single digit or mid to high end of the typical 4% to 6% range after what we viewed as some softer quarters. Thank you so much.

Tim Stonesifer: Yeah. As far as the gross margin goes, listen, we exited last year at roughly 63%. I'd say the first half of this year is probably in the 64% range. The tariff is a one-time benefit, so I would strip that out. But I would think that we're going to have probably a higher gross margin in Q3, assuming that the tariffs come in, and then that'll probably dip down in Q4 to give you kind of a normalized rate.

David Endicott: Yeah, I think the vision care business on contact lenses was a bit mixed. US had a very strong quarter. I think it was like 8%. International was more like 3%. In aggregate, it was 6%. I would say, 6% is very healthy globally. What you are really seeing is the US is bouncing some price. I think it is slapping two price increases. International is much more difficult to get price, so you are seeing much more mix there. I would just say that in aggregate, it looks pretty normal in that 4% to 6% range. It is really on the high end of it.

Operator: The next question is in the line of David Saxon with Needham & Company. Please proceed with your question.

Operator: Our next question's from the line of Ryan Zimmerman with U.S. Bancorp. Please proceed with your questions.

David Saxon: Great. Thanks for taking my questions and congrats on the quarter here. Maybe two product-related questions. First on contact lenses. Maybe if you could peel back the onion there, how much of contact lens growth was price versus volume? Any way to break out the legacy volume decline versus the core volume growth, and how you are just thinking about the market's ability to take price in the back half and into 2027.

Ryan Zimmerman: Good morning, David, Tim, Dan. Thanks for taking the questions. With the write-down of PowerVision and the RxSight collaboration agreement, David, want to get your thoughts on what you hope to achieve now that you've made that decision to go purely an adjustable route versus maybe an adjustable and accommodative route. And how you think, when it is available, how you think it impacts your core franchise. And then I have a follow-up question.

David Endicott: Let me try and get at that a little bit. Price was about 4% in Q2. I think, of the five, it was significant. I think our view on price in the US in particular, was that we were wrapping around, I think, two price increases. So we had a couple there that were meaningful. The important part of the US, I think, was that the share performance was outstanding. I think we had almost a 1.5 share point gain. That is, I think, largely a function of continued promotion around our DAILIES TOTAL1, our PRECISION1, and categories that are growing very nicely. We continue to see legacy value decline. We have had a very large legacy business, and it has always been a challenge for us to kind of manage that decline against that growth.

David Endicott: Well, I would maybe change the premise a little bit. I don't think we've made a decision to do one or the other. We still think that adjustable accommodating is the best long-term answer. We just couldn't get there with this particular technology. So I think I would describe these as two different ideas. RxSight really is an idea about how do we take a step forward in tunability with an optic that we already have or one that we could design for it. I would call that an intermediate step towards where I think we need to go, which is long term into an accommodating lens. PowerVision was always a big idea. We learned a ton from it.

David Endicott: We've got a lot of really great science and a lot of great scientists who I think have a better informed, probably the world's best informed vision of how it is that we could get to an accommodating lens. I just don't know that we have the technology yet. But we've probably been through, I would say, a number of accommodating ideas over the last four or five years, including PowerVision, and we'll continue to look at them. There's still more out there. Somebody's going to figure this out. I suspect it'll be us, but we're watching very carefully. So I would think about accommodating and tunable as the end game. It's just further out than we wish it was.

David Endicott: Ultimately, as that goes away, you will see more and more of growth come to the surface. But I do think that that was meaningful, and I would hesitate to answer your question directly because I am not clear on exactly what that contribution was. However, I would say broadly that what we are excited about is the breadth of what we have got going on. We have got reusables in categories now like PRECISION7 that creates a new avenue for growth. We have got data in multifocal astigmatic lenses, which I think makes TOTAL30 a very unique lens and completes that family. We have got a product in every category, in almost every need. I think we are, as a consequence of that, very effective on the ground growing share. So I think we are in a pretty good place. As I said to you earlier, I think the US market looked healthy.

Ryan Zimmerman: Hopefully. Turning to surgical glaucoma, we have seen the changes you have made in Hydrus over the last year or so, it continues to be a drag on the business. You have done a ton in terms of pharmaceuticals and glaucoma. What are your thoughts at this point and what are your plans potentially with surgical glaucoma? What do you want to do? Do you feel like you still need to be in that market? It would be good to get your high-level thoughts there, David.

David Endicott: As I said to you earlier, I think the US market looked healthy. International, yeah, pretty good, but maybe a little softer than normal, but I think it will be fine.

David Endicott: International, yeah, pretty good, but maybe a little softer than normal, but I think it will be fine.

David Saxon: Okay. That was helpful. Thanks for that. On TRYPTYR, any way to qualitatively talk about the contribution either, I guess, sequentially? I know you said IQVIA is not that accurate, but directionally it looks like trends have been picking up. Going from here, how should we think about TRYPTYR's trajectory going forward? Thanks so much.

David Endicott: Well, obviously the reimbursement arena there has changed the dynamic quite substantially. I think we are obviously working on that dynamic, but I do not know that that changes anytime soon, so I would not count on that. I think from our point of view, Hydrus still is the most effective implant out there, but it is used by a select group of folks who really understand that point of view. I think what we believe is that there are other parts of the glaucoma therapy in the algorithm of treatment that probably have more accessibility. So think about Voyager. We think that is a really good idea. We think everybody should be starting with SLT. I think that is a broadly accepted idea. I think we are excited about what we could do there.</seg <seg id="2">Again, Voyager has moved a little slower than we had hoped for because of the kind of frequency that people use their own current argon lasers. But as people really understand that product, I think we are going to get better and better traction on it. So we are optimistic there. I think there are other technologies out there as well that we keep an eye on that I think could do some things in glaucoma interventions that are also maybe a little bit more on the horizon. But in terms of stents, stenting generally, I think is pretty stable right now and is likely to stay that way.

David Endicott: Yeah, I think the one thing I'm going to look to. TRYPTYR, I think, is going into IQVIA.

David Endicott: Yeah, I think the one thing I'm going to look to. TRYPTYR, I think, is going into IQVIA. End of 10 July.

Operator: End of 10 July.

David Endicott: 10 July. So you can actually get the data now. I think we're giving them the data that we've got from the third party that we use. I think they should have relatively accurate data for you to use on this one. Again, I think we're excited about it because of the share movement and also the refill rates. I think probably the thing that we were probably interested in, and we got a lot of feedback on, was how will the patients like this? The refill rates seem to indicate that patients are getting great relief out of this and are happy to refill it. So we're very positive about where TRYPTYR is headed.

David Endicott: Again, Voyager's moved a little slower than we had hoped for because of the kind of frequency that people use their own current argon lasers. But as people really understand that product, I think we are going to get better and better traction on it, so we are optimistic there. I think there are other technologies out there as well that we keep an eye on, that I think could do some things in glaucoma interventions that are also maybe a little bit more on the horizon. But in terms of stents, stenting generally I think is pretty stable right now and is likely to stay that way.

David Saxon: Great. Thanks so much.

Operator: The next questions are from the line of Larry Biegelsen with Wells Fargo. Please proceed with your questions.

Larry Biegelsen: Good morning. Thanks for taking the question. David, I haven't seen or heard about any update on UNITY DX in a while. I actually think you got it cleared in the US a while ago, and that seemed like a good opportunity for you. Just love to hear an update on the DX timeline, and I have one follow-up.

Ryan Zimmerman: Thank you.

Operator: The next question is from the line of Graham Doyle with UBS. Please proceed with your questions.

Graham Doyle: Yep. Morning. Thanks, guys, for taking my questions. Just a couple from me. Firstly, on the top line guide, Tim, the 5% to 7%, is it still reasonable to think the 7% is plausible and a reasonable case rather than best case for the full year? Obviously, the comps get a bit tougher. Just to get your thoughts on where you see that in terms of probability. Then it's a good point on IOL. Another way of looking at this is when do you think you'll have PanOptix Pro, Vivity Pro, and TruPlus approved in US and Europe? Just in terms of competitive dynamics, it'd be good to get that sense.

David Endicott: Yeah, you're right, Larry. We had an approval on DX, I think, early in maybe this year or maybe it was a little bit last year. We've had the product for a while. We believe that it's a great product. It was not in a scalable manufacturable condition when we got it. We've been working very diligently to make this a product that will have the kind of durability that our customers expect. That means it isn't going to break inside of a year. It really has got reusable pieces. It's serviceable on the ground. All of that stuff that is, I'll call it, made for manufacturability, that stuff was really not done in a way that we were comfortable with to launch it. We've been working backwards from what is an excellent design and an excellent technology.

Tim Stonesifer: Yeah, Graham, thanks for the question. Listen, I'll leave it to you as to what you think is plausible. We give a range of 5% to 7%. Historically, we have been kind of a midpoint type of company, is what we try to say. I will say, at the beginning of the year, we stated that the revenue would be relatively level-loaded. I think that's still going to be the case. We get a lot of questions on the comps, to your point. The way I think about it, just to give you a little more color, there will be a tougher comp in equipment with UNITY VCS, for sure, right? Because we launched that sort of at the beginning of the second half of last year.

David Endicott: It's hyper parallel OCT, which I think is going to be really great for pre-op cataract use. That should be out later this year in a, I would say, pilot form. I think we've got a number of folks that we're going to put it in play with, along with our Adi platform. We've got a lot going on with the ecosystem around the microscope, which again, we just talked about today for the first time. Our new microscope is also approved, and we just sold one. We're not going to sell a ton of them this year, but we are going to get a few of them out there with DX and with UNITY VCS. So the UNITY platform wrapped around with the Adi system is now kind of complete.

Tim Stonesifer: When you look at some of the other launches, like UNITY CS as an example, that was launched this year. So we should get some benefit there. If you look at Simbrinza, that's accelerating. We continue to improve our market access, so that should be helpful. Valeda continues to do well. So, we didn't really kick that off until, call it, mid-Q2 of last year. So, we do feel like the new product launches will carry us through. That 5% to 7% guide, again, that assumes aggregate markets grow at 3% to 4%.

David Endicott: As we learn through that, and it's going to take us a while, I think what people are going to see is how exciting it is to work in a next century kind of idea, which is digitizing the whole of the ecosystem and really seeing what that can do in the OR to speed things up and create new efficiencies. Very exciting stuff, and DX plays a big role in that. I would expect revenue from that middle of next year kind of thing.

David Endicott: Yeah. Graham, on the approvable front, PanOptix Pro is approved now in both the US and Europe. We are just launching it. I think we launched it in June in Europe, and we are still getting it out in major markets. Look for the back half to be a meaningful impact on Europe. Vivity Pro, I would expect that late this year, maybe early next. It just kind of depends. Neither the US nor Europe have that yet, but it has been submitted to both. On TruPlus, both the US and CE Mark—we have CE Mark approval. We just received it, I think, recently. Again, I would be careful with that one because we are managing that rollout carefully to not interfere with PanOptix Pro and Vivity Pro. We've got a lot to do right now, which is kind of exciting.

Larry Biegelsen: That's helpful. Just one follow-up on Valeda. The USD 100, 150 million peak sales, are you feeling better about the high end there? I think when you bought it, the contribution was about USD 10 to 15 million a year. Just where is that? What's the run rate now? Thanks.

David Endicott: Yeah. We like the USD 100 to 150 million range. It's a brand-new product, and we've been selling it now for all of about nine months. So I think we're comfortable with that range. We have been very pleased with the uptake. I think it makes sense, right? There's very little for these patients that really improves vision. If you can improve them by a line and you can do that in a very kind of non-invasive way, this is an exciting idea. So I think we'll see where this takes off. I think it's probably too early to give much more color than we think three to five years is peak revenue and USD 100, 150 million seems like the trajectory it's on.

David Endicott: We are going to manage all three of those kind of carefully, to prioritize Vivity and PanOptix.

Operator: The next question is in the line of Veronika Dubajova with Citi. Please proceed with your questions.

Veronika Dubajova: Hi, guys. Good afternoon. Thank you for taking my questions, please. I have two. One is on equipment, and the second one is on the gross margin. On equipment, Tim, David, just curious if you could provide a little bit more color as of what the contribution from Valeda was in the quarter, and to what extent it is actually visibly driving an acceleration in the equipment growth rate. I have not heard you guys articulate the peak sales potential before today, so it would be really good to understand kind of what has gotten you there and how much of a contributor it is already being. My second question is, Tim, for you, on the gross margin, really, really strong improvement year-on-year, and also sequentially appreciate, obviously, the color on Q2 margins last year being very depressed.

Larry Biegelsen: Thank you.

Operator: The next question is from the line of Steve Lichtman with William Blair. Please proceed with your questions.

Steve Lichtman: Thank you. Good morning, everyone. David, coming back to end market health, are there any changes that you are seeing in US consumer sentiment on the IOL side or within contact lenses? You mentioned premium IOL up year-over-year, so I assume that is okay. But any color on anything we should be keeping an eye on for the higher-end products in either category?

David Endicott: Not really. We have been surprised, I think, both in terms of positive. We have always known that the eye care business was relatively independent of consumer confidence. The contact lens business sometimes, I think historically, has had some stall out in trade up. So if you are in your pair of reusable lenses and you can wait and you can put those dailies in on some other month, that is probably been the only sensitivity that we have seen. We saw mostly trade up internationally that drove the market. In the US, we saw really steady trade up and actual price went up meaningfully in the United States. On the contact lens business, I would say relatively normal. On IOLs, I think you would have to say, particularly the US with the penetration rate up 180 basis points or whatever it was, we have said this for a long time.

Veronika Dubajova: But just curious if you kind of feel the 64%ish level once we strip out all the licensing income as a reasonable proxy for the remainder of the year, or are there other things we have to bear in mind as we look into the back half of the year? Obviously, I am excluding the tariff refunds because we all can do the math on that. Thanks, guys.

David Endicott: Veronika, on Valeda, we have not really called out individual products. As you know, we tend not to do that. I would say that it contributed several points of growth in the quarter. But we are doing really well with a number of pieces of equipment. Obviously, the main driver in equipment right now is UNITY CS and UNITY VCS. I think over time, we were trying to make sure we gave everybody some sense of what this product actually is. I think 100 to 150 was a nice number that we could kind of get to in that, let us call it three to five-year frame. So maybe think about it as a typical R-shape new product curve.

David Endicott: On IOLs, I think you would have to say, particularly the US with the penetration rate up 180 basis points or whatever it was, we have said this for a long time. The peak on the penetration should be somewhere in the high 30s, and we are still down in the 20s. So I think there is plenty of room to grow. We think consumers will pay for this. It is a great value long-term, and I think surgeons know that.

David Endicott: The peak on the penetration should be somewhere in the high 30s, and we are still down in the 20s. So I think there is plenty of room to grow. We think consumers will pay for this. It is a great value long-term, and I think surgeons know that.

Tim Stonesifer: Yeah, as far as the gross margin goes, listen, we exited last year at roughly 63%. I would say the H1 of this year is probably in the 64% range. The tariff is a one-time benefit. So I would strip that out, but I would think that we are going to have probably a higher gross margin in Q3, assuming that the tariffs come in, and then that will probably dip down in Q4 to give you kind of a normalized rate.

Steve Lichtman: That is helpful. Tim, just following up, some moving parts with operating expenses this year, including the reinvestment you talked about today from tariffs. Where does the new cost efficiency program stand that you talked about heading into the year? You are still expecting $50 million in savings and $150 million in charges associated with that program overall?

Tim Stonesifer: Yeah, we feel really good about it. In fact, a majority of the actions have already been taken. So we feel good about the $100 million run rate, $50 million this year. I would say a vast majority of that, just due of the timing of the exits, will occur in the H2 of the year. So that is all on track, and the $150 million looks good from what we see so far.

Operator: The next question is from the line of David Saxon with Needham & Company. Please proceed with your question.

David Saxon: Great, thanks for taking my questions, and congrats on the quarter here. Maybe two product-related questions. First, on contact lenses—maybe if you could peel back the onion there—how much of contact lens growth was price versus volume? Any way to break out the legacy volume decline versus the core volume growth, and how you are just thinking about the market's ability to take price in the back half, into 2027?

Steve Lichtman: Yeah. Thanks, guys.

David Endicott: Thanks.

Operator: The next question is in the line of Young Lee with Jefferies. Please proceed with your question.

Young Lee: All right, great. Thanks for taking the questions. Can I maybe double-click on the strong UNITY upgrade and adoption a little bit? It has been a little bit more than a year since the launch. Wanted to hear some of the key drivers for this adoption. Is it mostly converting older equipment? Is it the efficiency benefits? Are UNITY accounts experiencing, I guess, more procedures and shorter wait lists from these efficiencies?

David Endicott: Let me try and get at that a little bit. Price was about 4% in Q2. I think, of the five, it was significant. I think our view on price in the US in particular, was that we were wrapping around, I think, two price increases. So we had a couple there that were meaningful. The important part of the US, I think, was that the share performance was outstanding. I think we had almost 1.5 share point gain. That is, I think, largely a function of continued promotion around our DAILIES TOTAL1, our PRECISION1, and categories that are growing very nicely. We continue to see legacy value decline. We have had a very large legacy business and it has always been a challenge for us to kind of manage that decline against that growth.

David Endicott: Young, yeah. You have got most of it right there. The big idea here has been conversion on retina procedures in the near frame. In the first year, we spent a lot of time on the retina guys, because it was a much different procedure than what we do with CONSTELLATION. So we changed almost everything. We changed the cut speed, we changed the entry system, we changed the gauge of the instrumentation. We changed the fluidics. And as a consequence, we also changed the speed and the safety of what was going on. It is much safer. If you were doing four or five vitrectomies in a day, you could probably do another one. That matters a lot. You are talking about a saving kind of 20% to 30% time.

David Endicott: Ultimately, as that goes away, you will see more and more of growth come to the surface. But I do think that that was meaningful and I would hesitate to answer your question directly because I am not clear on exactly what that contribution was. However, I would say broadly that what we are excited about is the breadth of what we have got going on. We have got reusables in categories now, like PRECISION7, that creates a new avenue for growth. We have got data in multifocal astigmatic lenses, which I think makes TOTAL30 a very unique lens and completes that family. We have got a product in every category, in almost every need. I think we are, as a consequence of that, very effective on the ground growing share. So I think we are in a pretty good place. As I said to you earlier, I think the US market looked healthy.

David Endicott: That effect, when we got people really wrapped their heads around the retina benefit that we had, mattered a lot, and I think that has been a real positive halo going forward. In fact, I think that accounts for a lot of the reason we have gotten such a nice mix right now of more VCS probably than we had expected. CS is coming up the curve, but people are also electing to buy VCS because it is handy, and particularly in the international markets where ORs are shared by the retina folks and the cataract guys. You do not have to move one machine over, pull the other one in. It is just a better buy. So if you are in the market for it, I think it is very plausible and efficient to buy this one machine. On the cataract side, I think equal story, same story, really.

David Endicott: International, pretty good, but maybe a little softer than normal, but I think it will be fine.

David Endicott: It is just different in that the cataract surgery already today is a very efficient surgery, but what you are seeing is the elegance of UNITY 4D Phaco. When you see the nucleus just kind of stay in the center of the eye and not move and not get shoved away from the tip, and you see how easily the cut moves and how elegant the fluid stays in place, it is a beautiful thing to watch. Surgeons feel super comfortable with it because it looks and feels safer than just about anything they could be doing, yet it is a good bit faster. If you can imagine doing 20 cataracts in a day, you can probably do 21.

David Endicott: Yeah, I think the one thing I am going to look to TRYPTYR, I think, is going into IQVIA.

Tim Stonesifer: in July 10th.

David Endicott: On July 10th, you can actually get the data now. I think we are giving them the data that we have got from the third party that we use. I think they should have relatively accurate data for you to use on this one. Again, I think we are excited about it because of the share movement and also the refill rates. I think probably the thing that we were most interested in, and we got a lot of feedback on, was how will the patients like this, and the refill rates seem to indicate that patients are getting great relief out of this and are happy to refill it. We are very positive about where TRYPTYR is headed.

David Endicott: You guys can do the math on all those. I think we do the math for everybody who says, "Look, how do I pay for this?" It does not take very long if you schedule correctly. We are certainly replacing older machines that are going out of warranty and out of service. We will continue to do that, but we are also getting some modest share. We have got a lot of share, so I would not say we are getting a huge bunch of new share, but we are very competitive with this machine. It is doing what we hoped it would do.

David Saxon: Great. Thanks so much.

Operator: The next questions are from the line of Larry Biegelsen with Wells Fargo. Please proceed with your questions.

Young Lee: Great. Really helpful. Then maybe one more just on the RxSight partnership. Why do you think the LAL shares have been kind of hovering around the 10% penetration rate in the US? What are some of the ways and opportunities that Alcon can potentially introduce down the line to increase this adjustable lens category penetration?

Larry Biegelsen: Good morning. Thanks for taking the question. David, I have not seen or heard about any update on Unity DX in a while. I actually think you got it cleared in the U.S. a while ago, and that seemed like a good opportunity for you. So I would just love to hear an update on the DX timeline, and I have one follow-up.

David Endicott: Yeah, you are right, Larry. We had an approval on DX, I think, early in maybe this year or maybe it was a little bit last year. We have had the product for a while. We believe that it is a great product. It was not in a scalable manufactural condition when we got it. We have been working very diligently to make this a product that will have the kind of durability that our customers expect. That means it is not going to break inside of a year. It really has got reusable pieces. It is serviceable on the ground. All of that stuff that is, I will call it made for manufacturability, that stuff was really not done in a way that we were comfortable with to launch it. We have been working backwards from what is an excellent design and an excellent technology.

David Endicott: I would redirect that question to Aziz over at RxSight. He has got the new position over there. He is a terrific guy. I think he will do great there, and he is going to have a much better answer than I will have for that one. Let me send it that way for you.

Young Lee: All right. Fair enough. Thank you.

Operator: The next question's from the line of Jeff Johnson with Baird. Please proceed with your question.

Jeff Johnson: Yeah. Thanks. Good morning, guys. David, I just wanted to follow up on your comments. It sounds like you have great visibility in the H2 here on the UNITY order book. That's encouraging. Kind of locks that number in, it sounds like, which is good. How do we think about the size of the backlog? Obviously, Q2 delivered above, I think, what most of us were thinking about. But as you look forward, is the order book bigger, smaller today than it was maybe six months ago, and how to think about that backlog going into 2027? Then I have one follow-up. Thanks.

David Endicott: It's hyper parallel OCT, which I think is going to be really great for pre-op cataract use. That should be out later this year in a, I would say, pilot form. I think we've got a number of folks that we're going to put it in play with, along with our Adi platform. We've got a lot going on with the ecosystem around the microscope, which again, we just talked about today for the first time. Our new microscope is also approved, and we just sold one. We're not going to sell a ton of them this year, but we are going to get a few of them out there with Unity DX and with Unity VCS. The UNITY platform wrapped around with the ORA system is now kind of complete.

David Endicott: I think we're just working through the demand that we see out there. I'm not sure it's bigger than it was in the H1. I think there was a fairly large bolus of people waiting actually, as we kind of anticipated the product and talked about it before it was launched. So we've worked our way through that part of it. I think now I would just describe it as relatively uniform opportunity, and uniform around the world. I think we're in every market now. We're in with CS and VCS. We've got demo units everywhere. We're demoing them every day. And we've got a lot of good programs out there to make it easy for people to try and use and buy. So, I would just call this business as usual at this point, and we feel pretty good about it.

Jeff Johnson: Fair enough. Tim, maybe a guidance question for you, just on the EPS guidance change. You raised by a few pennies at the midpoint there on a constant currency basis. I think about the tariff refund, obviously you are reinvesting two thirds of that, so we can do the math on that. Share count now expected to be lower. You have been buying back aggressively there. That licensing fee in Q2 helps maybe a little bit on the year. Just help us maybe bridge the change in the EPS guidance change that you made today. Do you feel fundamentally on the core underlying operational side of the business that has held in steady and the EPS guidance change was just for those other factors?

Larry Biegelsen: That's helpful. Just one follow-up on Valeda. The $100 million to $150 million peak sales, are you feeling better about the high end there? I think when you bought it, the contribution was about $10 million to $15 million a year. Just where is that? What's the run rate now? Thanks.

David Endicott: Yeah, we like the $100 million to $150 million range. It's a brand-new product, and we've been selling it now for all of about 9 months. So I think we're comfortable with that range. We have been very pleased with the uptake. I think it makes sense. There's very little for these patients that really improves vision. If you can improve them by a line, and you can do that in a very kind of non-invasive way, this is an exciting idea. So I think we'll see where this takes off. I think it's probably too early to give much more color than we think 3 to 5 years is peak revenue, and $100 million to $150 million seems like the trajectory it's on.

Jeff Johnson: Or did those other factors outweigh maybe a little bit the size of the change, and the core profitability maybe coming down a little bit as you maybe reinvest in some of these product launches or anything like that? Just help us bridge kind of that change. Thank you.

Tim Stonesifer: Well, we feel pretty good about the investments and the underlying core operating margin. I think you have most of the components. If you do the math on the buyback and the refund, that will pretty much get you there. Throw in the one-timer as well. But again, every year we have one-timers, so that one I would be a little careful with. But, for sure the refund and the share buyback is flowing through. But overall, we think that we continue to manage the cost with a lot of discipline. We are making the appropriate trade-offs. Again, as we get that revenue growth, that gives you a little bit more operating leverage. So the fundamentals seem to be working right now.

Larry Biegelsen: Thank you.

Operator: The next question is from Steven Lichtman with William Blair. This is Steve. Your questions.

Steven Lichtman: Thank you. Morning, everyone. David, coming back to end-market health, are there any changes that you are seeing in U.S. consumer sentiment on the IOL side or within contact lenses? You mentioned premium IOL up year over year, so I assume that is okay. Any color on anything we should be keeping an eye on for the higher-end products in either category?

Jeff Johnson: Understood. Thank you.

Operator: Our next question is from the line of Thomas Stephan with Stifel. Please proceed with your question.

Thomas Stephan: Great. Hey, guys. Thanks for taking the questions. First one from me on Implantables. Pro doing well, but growth in the segment a little subdued again this quarter against an easy comp. As we think about competition accelerating from here, you are lapping the US Pro contribution, China VBP may be delayed a bit. David, maybe for you, can you help us think about H2 growth in Implantables? With Vivity Pro, what is your confidence 2027 Implantables can maybe get back to market growth? Then I will have a follow-up.

David Endicott: Not really. We have been surprised, I think, both in terms of positive. We have always known that the eye care business was relatively independent of consumer confidence. But the contact lens business sometimes, I think, historically has had some stall out in trade up. If you are in a pair of reusable lenses and you can wait, and you can put those dailies in on some other month, that has probably been the only sensitivity that we have seen. We saw mostly trade up internationally that drove the market. In the US, we saw really steady trade up and actual price went up meaningfully in the United States. On the contact lens business, I would say relatively normal. On IOLs, I think you would have to say, particularly in the US, with the penetration rate up 180 basis points or whatever it was. We said this for a long time.

David Endicott: Well, the Implantables growth is a function of three different things, right? If you look at our share all in, we were flat in shares, so we were already stable. The problem was it was not AT-IOLs that we were flat in. We were losing in AT-IOLs and gaining in monofocal. I think there are three pieces. One is market growth, one is penetration, one is share. I think you have to take those three kind of independently. I think market growth in the US has been below what we would normally expect, but again, we have forecasted that most of the year, so I do not think that was a surprise to us. I think on that one, we will have to see where we sit next year. I think as we get into next year, we will take a position on that.

David Endicott: The peak on the penetration should be somewhere in the high 30s, and we are still down in the 20s.

David Endicott: But for now, we do not anticipate any change for the rest of the year in the US. I think the other one that is a little bit more positive is the penetration, and that was, in the US, 180 basis points. Around the world, 110. That is probably 50 basis points higher than what we think the historical average has been. So people with promotion have obviously decided to use more AT-IOLs. We like that move because I think, as Tim said, one point of market growth for us affects us about $10 million, but a point of penetration is about $15 million. If you had to trade one of those for the other, you would trade it that way. Now, we will see where penetration goes, but we have had a couple of quarters now that look pretty good. I would be generally on the positive side of that number.

David Endicott: If you had to trade one of those for the other, you would trade it that way. Now, we will see where penetration goes, but we have had a couple of quarters now that look pretty good. I would be generally on the positive side of that number.

David Endicott: And then share is a bit of a wild card. I think this is a very competitive market and people are trying lenses, and surgeons like to try lenses, and there's some good ones out there. So, I think what we'll see is continued trial for the new lenses that come in. But I think the difference between today and maybe 2 years ago is, I think everybody knows we've got a steady lens cadence now of advances against the market leading lenses, and those are very positive. So I would say PanOptix Pro is a significant improvement on PanOptix. It's doing really well for trifocals. I think it actually gained share if we're looking in the trifocal space. Vivity has got a little bit of a gap here before we get to Vivity Pro.

David Endicott: But Vivity Pro, I think is going to find its way into much better near vision than anything else out there in that space. And again, I think that's what people are looking for. They're looking for a better use of visual of the amount of light. So I think that will play well. And then we've got a monofocal plus for those folks who really are looking for a better monofocal, and that market in Europe has been fairly positive. So we got a little bit of everything for everybody, and I think going forward, I don't know that anybody can match what we've got on a cadence level going forward after that. So we're excited about where we're headed. But I would give ourselves some time here to weather the storm of many people entering this market.

David Endicott: So be patient with it, but I think it's headed in the right direction.

Thomas Stephan: Got it. And then my follow-up, maybe just on kind of constant currency growth, ex equipment. When I look at that number, I'm arriving at, I think around 5% constant currency in the H1 with the 2-year CAGR closer to 4%. So David, I'll stick with you. How do we think about this 4% to 5% ex equipment growth moving forward, particularly in 2027 when you really fully lap UNITY and especially relative to your 6% to 8% long-term target that you laid out last year? It'd be great if you can talk about that ex equipment growth in the 4% to 5% range, maybe reflect on the LRP, and then I guess the heart of my question would be like, why won't 2027 sales growth decelerate from 2026 levels as you lap UNITY? Thanks, guys.

David Endicott: Well, the easy answer is new product flow. Just hang in there. We got lots coming. You do not get a full year of TRYPTYR, for example. We are still fighting the reimbursement battle on TRYPTYR. We have got another OTC product coming. We have got two new pieces of equipment. We have got another couple of IOLs.

Thomas Stephan: VILEYTA.

David Endicott: We have got Vivity, which is continuing to grow. I would just hang tight until we get to February. We will lay it out for you. I think what you are going to hear is, we have got good transition from old products to new products. All of them are getting better ASPs, getting good lift year-on-year, and then we got additional new products coming along.

Thomas Stephan: Great. Thanks, guys.

Operator: The next question is from the line of Susannah Ludwig with Bernstein. Please proceed with your question.

Susannah Ludwig: Good afternoon, and thanks for taking my questions. I have two, please. I guess first on ocular health. Systane has been a key contributor to growth there with the multi-dose preservative-free being a key driver. I guess, could you share roughly what percentage of the Systane business is now that multi-dose preservative-free, and how sustainable you see the broader Systane growth is? Then after that, would just be helpful to have a little bit more in-depth thoughts on the US cataract market conditions and whether this is just still surging capacity or if there is anything else going on there.

David Endicott: On ocular health, we are scrambling to find some numbers. On ocular health, I think I will just tell you that it is roughly 15% of ocular health is the MDPF. Is that right, guys? Is that what you said?

[Company Representative] (Alcon): Yeah. Keep going, Will.

Dan Cravens: Yeah. Keep going, Will.

David Endicott: They are working on it. Systane has been a double-digit grower for us.

[Company Representative] (Alcon): Yeah, 15%.

Dan Cravens: Yeah, 15%.

David Endicott: 15% is about the MDPF level. I think we got that for you. That category for us has been exciting, and I would say that what you should see in the back half is also some increased promotion around this area. It seems like the more we talk about MDPF, the better it goes, and I think the market wants it. I will just remind people, too, that the international markets are dominantly MDPF, and the US market is not. It is moving that way directionally. But we had known that for some time, and that is really the trend we are playing is the rest of world has been on the multi-dose preservative-free bandwagon for a while. We are just getting on there in the US, so it is a good opportunity for us. On the other question you had was on the market.

David Endicott: If you are talking about the cataract market, I will just make this point. The cataract market is certainly part of our business, but we talk about aggregate markets as growing 3% to 4% in the quarter, and that was pretty much where we were. It is certainly what we forecasted. Most of our markets, though, are growing in the mid-single digits. So if you take artificial tears, like we were talking, or dry eye Rx or contact lenses or retina procedures or surgical equipment, all that stuff, basically, we have had pretty solid mid-single digit growth or higher. What we continue to believe, though, is the US is going to remain relatively flat to slightly up in the cataract market. That is largely because what is going on is surgeons are incorporating optometrists and other professionals into their workflows to get them more surgical time.

David Endicott: As we do that, it is going to take them some time to do that, but that allows them then to find more time for more cataracts because the demand is certainly there. It is just a matter of too many surgeons retiring and too many young folks taking their place that are not as productive as the ones retiring. So that will change over time, but we see it pretty much as kind of these trends take some time to manage. They should recover to their historical rates at some point. We are not calling that this year. We will update it obviously for next year when we get there. But the general trend underneath that for IOLs, as I just mentioned, was that AT-IOLs are up, international markets are healthy, and I think we feel pretty good about where we are doing with our product lines.

Susannah Ludwig: Great. Thanks. If I can maybe sneak in just a quick follow-up is, do you think the increase in AT-IOL adoption is having any effect on volumes, just given that is more time intensive?

David Endicott: Well, it could, but actually in our world, economically, you would make that trade, right? If you traded one monofocal surgery for one AT-IOL surgery, Alcon would make more money, as would most people. So you could actually make that trade successfully on an economic basis, even though that is not great for patients. So I would say that maybe it has some effect, but I think really, especially with the new equipment, and certainly one of the reasons we are working on UNITY DX is to make this a faster workup, and make it an easier workup for people and a more automated digitized one.

David Endicott: As we get down that path, I think these things will kind of equilibrate in terms of time spent, certainly by the surgeon. But you remember that a lot of the workup too needs to be moved to paraprofessionals, people around the surgeon who can do that work for them, and then check it obviously do a good job with it. But I think that is the most productive way most practices can run.

Susannah Ludwig: Great. Thank you.

Operator: Thank you. Our final question is from the line of Issie Kirby with Redburn. Please proceed with your question.

Issie Kirby: Hey, guys. Thanks for fitting me in. I wanted to ask about the eye whitener product that has been mentioned a couple of times. I am not sure if you have given any timeline around that. That would be helpful to know if you have. What is going to differentiate this product versus competitors in the sales, given this could be quite a meaningful category to you guys? Thank you.

David Endicott: Yeah, we really have not spent much time on it, but I would say that we are excited about it. It is a next year product. So we should have an approval late this year. When we do have an approval, we will look at the label, and we obviously have an idea as to why this is better. We think it will be better than the market leading competitor. But until we get our labeling, we will need to keep that a dark secret, and we will relay it to you next time, hopefully.

Issie Kirby: Okay. Thank you.

Operator: Thank you. At this time, we have reached the end of our question answer session. I hand the floor back to Dan Cravens for closing comments.

Dan Cravens: Great. Thanks, everybody, and thanks for joining us again this morning. If you have any follow-up questions, certainly reach out to Richard Bourdon or myself. For media questions, reach out to our corp comm team. Thanks, and have a great rest of your day.

Operator: Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines at this time, and have a wonderful day.