ALC

Image source: The Motley Fool. Tuesday, Aug. 11, 2026 at 8 a.m. ET Vice President and Global Head, Investor Relations - Daniel Cravens Chief Executive Officer - David Endicott Chief Financial Officer - Timothy Stonesifer Operator: Greetings. Welcome to Alcon's Second Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Dan Cravens, Vice President and Global Head, Investor Relations. Thank you. You may begin. Daniel Cravens: 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. 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. 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 will 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 second quarter. After his remarks, Tim will walk through our financial performance and outlook for the remainder of 2026. Dave 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. David Endicott: 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. 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. Surgeons are experiencing firsthand the benefits of UNITY CS, including its advanced energy delivery 4D phaco, improved fluidics and streamlined workflow. Now 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 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. 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. 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 U.S., 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. And we're also excited about the acceleration of our pipeline of new IOLs. We've begun a KOL launch of TruPlus in the U.S. 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. 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. 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 3 specific wavelengths of light to improve mitochondrial activity in 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 $100 million and $150 million over time. 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. 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. In dailies, TOTAL1 and PRECISION1 remain important growth drivers and continue to gain share in one of the largest, fastest-growing market segments. We're 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. 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. And 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 2/3 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's 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. Given the strength of the franchise and the opportunities we see ahead, we believe Systane remains well positioned on its path towards becoming a $1 billion 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're preparing for the introductions of Vivity Pro as well as the planned launch of our new eye whitener, among others. 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. 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 RxSight. 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'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. 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 the second quarter. Within cataract, we estimate global procedure volumes grew low single digits in the quarter, led by strength in international, while the U.S. was flat. This was a sequential improvement compared to the first quarter. Importantly, AT-IOL penetration increased by approximately 110 basis points globally and 180 basis points in the U.S. In contact lenses, we estimate the global market remained healthy and grew mid-single digits, led primarily by strength in the U.S. This was moderated by international markets where price has contributed less to growth. In summary, our focus remains on disciplined execution of the 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. And with that, I'll turn the call over to Tim, who will walk you through the financials. Timothy Stonesifer: Thanks, David. Beginning with the top line, our second quarter 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 U.S. and Japan. Strong customer interest and continued commercial execution supported growth despite increased competitive activity. 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. 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're seeing across markets. 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. 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 TRYPTYR and Systane continued to drive meaningful growth in the category. TRYPTYR 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. 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. 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 in other revenue from a licensee. 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 TRYPTYR, UNITY and others, and we'll continue to prioritize investments to 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 second quarter, 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. 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. 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 U.S. import tariff rates of approximately 10% to 12.5%. This guidance also reflects an anticipated refund of approximately $60 million from the U.S. government in the third quarter, of which we plan to reinvest approximately 2/3 back into the business. 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%. 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. 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 first half 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. 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. 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. And with that, I'll turn it back to David. 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. Operator: [Operator Instructions] And our first question is from the line of Anthony Petrone with Mizuho Group. Anthony Petrone: Congratulations on the 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 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? And what will the cycle look like over the next 2 to 3 years, let's say? And then I'll have a follow-up on IOL. David Endicott: Yes, Anthony, we have been pleased with the response that we've gotten out of VCS in particular, that 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. 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 which we thought about it. Of the 10 years, I divide it by 10, the 30,000, add a little more upfront, take a little way 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 will 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 got an IOL question, too. Anthony Petrone: Yes, IOLs, 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 U.S. and where you think that business could trend to, let's say, in the 2027 time frame? David Endicott: Sure. Yes. I think -- look, we're very pleased with PanOptix Pro. I mean 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's 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. And again, we are chasing a new Vivity, which does even more than what Vivity did on its own. 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. 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. 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 U.S. pretty much the most difficult competitors we're going to face. 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 in implantables themselves, penetration matters a lot, and we're seeing a very positive trend right now in the United States. I think this is the second quarter in a row, we've seen more than 150 basis points in the U.S. move up. And I do think that for some surgeons doing more AT-IOLs is a very productive thing. 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. 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. Operator: Our next question is from the line of Brett Fishbin with KeyBanc. Brett Fishbin: I'll just ask 2. First on the tariff refund and reinvestment plans. I was just curious if you could give a little bit more color on where you're driving that incremental investment into the business in 2H. And should we think of this step-up in investment activity as a little bit more onetime in nature, given the fact that it's tied to the tariff refund? Timothy Stonesifer: Yes, 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. 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. $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. 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 2Q. 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 4% to 6% range after what we viewed as some softer quarters. David Endicott: Yes. I mean I think the Vision Care business on contact lenses was a bit mixed. U.S. 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 6% is very healthy globally. So what you're really seeing is the U.S. is bouncing some price. I think you're lapping 2 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 4% to 6% range. It's really on the high end of it. Operator: Our next question is from the line of Brian Zimmerman with U.S. Bancorp. Ryan Zimmerman: With the write-down of PowerVision and the RxSight collaboration agreement, David, I want to get your thoughts on kind of 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: 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're -- 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 2 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. And that's -- I would call that an intermediate step towards where I think we need to go, which is long term into an accommodating lens. 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. 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 4, 5 years, including PowerVision. And we'll continue to look at them. There's still more out there. Somebody is going to figure this out. I suspect it will be us, but we're watching very carefully that. So I would think about accommodating and tunable as the end game. It's just further out than we wish it was. Ryan Zimmerman: Helpful. And turning to 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. 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? What do you want to do? Do you feel like you still need to be in that market? Just would be good to kind of get your high-level thoughts there, David. David Endicott: 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. 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. 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. 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. 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 that people use their own current argon lasers. 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. But in terms of stents, stenting generally, I think, is pretty stable right now and is likely to kind of stay that way. Operator: The next question is from the line of Graham Doyle with UBS. Graham Doyle: 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. So just to get your thoughts on where you see that in terms of probability. And then it's another point on IOL. So another way of looking at this is, when do you think you'll have PanOptix Pro, Vivity Pro and TruPlus approved in U.S. and Europe, just in terms of competitive dynamics, it would be good to get that sense. Timothy Stonesifer: Yes, 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 at the beginning of the year, we thought we stated that the revenue would be relatively level loaded. 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 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. But -- and then 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 TRYPTYR, that's accelerating. We continue to improve our market access, so that should be helpful. And Valeda 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%. David Endicott: Yes. Graham, on the approvable front, PanOptix Pro is approved now in both U.S. 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. 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. It just kind of depends. Neither the U.S. nor Europe have that yet, but it's been submitted to both. And on TruPlus, both the U.S. 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're managing that rollout carefully to not interfere with the PanOptix Pro and Vivity Pro. We've got a lot to do right now, which is kind of exciting. But we're going to manage all 3 of those kind of carefully to prioritize Vivity and PanOptix. Operator: The next question is from the line of Veronika Dubajova with Citi. Veronika Dubajova: One is on equipment and the second one is on the gross margin. Just on equipment, Tim, David, just curious if you could provide a little bit more color as to what the contribution from Valeda was in the quarter and to kind of to what extent is actually visibly driving an acceleration in the equipment growth rate. I've not heard you guys articulate the peak sales potential before today. So it would be really good to understand kind of what's got you there and how much of a contributor is already being? And then my second question is Tim, for you. Just on the gross margins, really, really strong improvement year-on-year and also sequentially. I appreciate, obviously, the color on Q2 margins last year being very depressed. 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 refund because we all can do the math on that. David Endicott: Yes. 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 VCS. 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. And so I think $100 million to $150 million was a nice number that we can kind of get to in that, let's call it, 3- to 5-year frame. So maybe think about it as a typical R-shaped new product curve. Timothy Stonesifer: Yes. 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. The tariff is a onetime 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 the -- assuming that the tariffs come in, and then that will probably dip down in Q4 to give you kind of a normalized rate. Operator: The next question is from the line of David Saxon with Needham & Company. David Saxon: On the quarter here. Maybe 2 product-related questions. First on contact lenses. Maybe if you could peel back the onion there, like how much of contact lens growth was price versus volume? 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 in the back half and into '27? David Endicott: 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 U.S. in particular was that we were wrapping around, I think, 2 price increases. So we had a couple there that were meaningful. The important part in the U.S., I think, was that the share performance was outstanding. I think we had almost 1.5 share point gain. And that is, I think, largely a function of continued promotion around our DAILIES TOTAL1, our P1 in categories that are growing very nicely. 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. 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. 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. 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. So I think we're in a pretty good place. As I said to you earlier, I think the U.S. market looked healthy. International may have pretty good, but maybe a little softer than normal, but I think it will be fine. David Saxon: Okay. That was helpful. And then just on TRYPTYR, any way to qualitatively talk about the contribution either, I guess, sequentially? And then I know you said IQVIA is not that accurate. But directionally, it looks like trends have been kind of picking up. So going from here, like how should we think about TRYPTYR's kind of trajectory going forward? David Endicott: Yes. I think the one thing I'm going to look to -- TRYPTYR, I think, is going into IQVIA July 10. So you can actually get the data now. 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. 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 have -- are getting great relief out of this and are happy to refill it. So we're very positive about where TRYPTYR is headed. Operator: The next questions are from the line of Larry Biegelsen with Wells Fargo. Larry Biegelsen: David, I haven't seen and heard about any update on UNITY DX in a while. Actually, I think you got it cleared in the U.S. a while ago, and that seemed like a good opportunity for you. So just love to hear an update on the DX time line. And I have one follow-up. David Endicott: Yes, 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 just -- it was not in a manufacturable -- a scalable manufacturing 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. And 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. So we've been working backwards from what is an excellent design and an excellent technology. 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, 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. 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 could 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. Larry Biegelsen: That's helpful. And just one follow-up on Valeda. I mean the $100 million, $150 million peak sales, are you feeling better about like the high end there? And 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? David Endicott: Yes. We like the 100 to 150 range. I mean 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. And I think it makes sense, right? I mean there's very little for these patients that really improves vision. And so if you can improve them by a line and you can do that in a very kind of noninvasive 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. Operator: The next question is from the line of Steve Lichtman with William Blair. Steven Lichtman: David, coming back to end market health, are there any changes that you're 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's 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. 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 and trade up. So if you pair of reusable lenses and you can you can wait and you can put those dailies in some other month. That's probably been the only sensitivity that we've seen. We saw mostly trade-up internationally that drove the market. And then in the U.S., we saw really steady trade-up and actual price went up meaningfully in the United States. So on the contact lens business, I would say, relatively normal. And on IOLs, I think you'd have to say, particularly in the U.S., with the penetration rate up 180 basis points or whatever it was, it's really -- we've said this for a long time. 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. We think consumers will pay for this. It's a great value long term, and I think surgeons know that. Steven Lichtman: That's helpful. And then, 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? Are you still expecting $50 million in savings and $150 million in charges associated with that program overall? Timothy Stonesifer: Yes, 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 to the timing of the exits will occur in the second half of the year. So that's all on track, and the $150 million looks good from what we see so far. Operator: The next question is from the line of Young Lee with Jefferies. Young Li: Can I maybe double-click on the strong UNITY upgrade and adoption a little bit? It's been a little bit more than a year since the launch. I 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 list from these efficiencies? David Endicott: Yes, yes, you've got most of it right there. I mean the big idea here has been conversion on retina procedures in the near frame. 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. 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's much safer. And it's also -- we could -- if you were doing 4 or 5 vitrectomies in a day, you could probably do another one. That matters a lot. I mean you're talking about a saving kind of 20% to 30% in time. That effect when we got kind of people really wrapped their heads around the retina benefit that we had mattered a lot. 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 got such a nice mix right now of more VCS probably than we expected. 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. 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. 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. But what you're seeing is the elegance of 4D 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 and you see how easily the cut moves and how elegant the fluid stays in place, it's really -- that'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. 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. And I think we do the math for everybody who says, look, how do I pay for this? And it does not take very long if you schedule correctly. So we're certainly replacing older machines that are going out of warranty and out of service, and we'll continue to do that, but we're also getting some modest share. We've got a lot of share. So it's -- I wouldn't say we're getting huge much of new share, but we're very competitive with this machine. And again, it's doing what we hoped it would do. Young Li: Great. Really helpful. And then maybe one more just on the Rx partnership. Why do you think the LAL shares have been kind of hovering around the 10% penetration rate in the U.S. What are some of the ways and opportunities that Alcon can potentially introduce down the line to increase this adjustable category penetration? David Endicott: I'd redirect that question to Aziz over at RxSight. He's got the new position over there. He's a terrific guy. I think he'll do great there, 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. Operator: Next question is from the line of Jeff Johnson with Baird. Jeffrey Johnson: 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. That's encouraging kind of lock that number in, it sounds like, which is good. How do we think about the size of the backlog? Obviously, 2Q 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 6 months ago? And how to think about that backlog going into 2027? And then I have one follow-up. David Endicott: 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 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 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. Jeffrey 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're reinvesting 2/3 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 2Q 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. 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? 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. Timothy Stonesifer: No. We feel pretty good about the investments in 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 will pretty much get you there. I 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 is flowing through. 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. So the fundamentals seem to be working right now. Operator: Our next question is from the line of Tom Stephan with Stifel. Thomas Stephan: First one for 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're lapping the U.S. Pro contribution, China VBP maybe delayed a bit. So David, maybe for you, can you help us think about 2H growth in implantables? 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. David Endicott: Well, I mean, the implantables growth is a function of 3 different things, right? It's -- if you look at our share all in, we've actually -- we were flat in share. So we were already stable. The problem was in -- it wasn't AT-IOLs that we were flat and we were losing in AT-IOLs and gaining in monofocal. So I think there's 3 pieces. One is market growth, one is penetration, one is share. And I think you got to take those 3 kind of independently. I think market growth in the U.S. has been below what we would normally expect. But again, we have forecasted that most of the year. 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. But for now, we don't anticipate any change for the rest of the year in the U.S. I think the other one that is a little bit more positive is the penetration. And that was in the U.S., 180 basis points and around the world, 110. That's 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, 1 point of market growth for us affects us about $10 million, but a pen of penetration is about $15 million. So we -- if you had to trade one of those for the other, you'd trade it that way. 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. And then share is a bit of a wildcard. 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 at the trifocal space. 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. 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've 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, many people entering this market. 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 first half 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? David Endicott: 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 TRYPTYR, for example. We're still fighting the reimbursement battle on TRYPTYR. We've got another OTC product coming. We've got 2 new pieces of equipment. We've got another couple of IOLs. We've got Valeda, which is continuing to grow. We kind of -- I would just hang tight until we get to February, we'll lay it out for you. 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, getting good lift year-on-year. And then we got additional new products coming along. Operator: The next question is from the line of Susannah Ludwig with Bernstein. Susannah Ludwig: I have 2, please. I guess first on ocular health. Systane has been a key contributor to growth there with the multiple -- multi-dose preservative-free being a key driver. I guess, could you share roughly what percent of the Systane business is now that multi-dose preservative-free? And how sustainable you see the broader Systane growth is? And then after that, it would just be helpful to have a little bit more in-depth thoughts on the U.S. cataract market conditions and whether this is just still surge in capacity or if there's anything else going on there? David Endicott: 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. Is that right, guys? Is that... Timothy Stonesifer: They've gone well. David Endicott: They're working on it. So Systane has been a double-digit grower for us. Timothy Stonesifer: 15%. David Endicott: And 15% is about the MDPF level. So I think we got that for you. The -- 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'll just remind people, too, that the international markets are dominantly MDPF and the U.S. 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 world has been on the multi-dose preservative-free bandwagon for a while. We're just getting on there in the U.S. So it's a good opportunity for us. On the other question you had was on the market. 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 -- but we talk about aggregate markets as growing 3% to 4% in the quarter, and that was pretty much where we were, certainly what we forecasted. Most of our markets are growing in the mid-single digits. So if you take artificial tears like we were talking or dry eyeRX 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. What we continue to believe, though, is the U.S. 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. 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 because the demand is certainly there. It is just a matter of retiring -- too many surgeons retiring and too many young folks taking their place that aren't 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 the historical rates at some point. 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 AT-IOLs are up. International markets are healthy, and I think we feel pretty good about where we're doing with our product lines. Susannah Ludwig: Great. And if I can maybe sneak in a quick follow-up. Do you think the increase in AT-IOL adoption is having any effect on volumes, just given that's more time intensive? David Endicott: Well, it could, but it's -- we -- actually, in our world, economically, you trade -- you'd make that trade, right? If you traded one monofocal surgery for 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's 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're 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. As we get down that path, I think these things will kind of equilibrate in terms of time spent, certainly by the surgeon. But remember that a lot of the workup too needs to be moved to para-professionals, people around the surgeon who can do that work for them and then check it obviously do a good job with it. But that's what the -- I think that's the most productive way most practices can run. Operator: Our final question is from the line of Issie Kirby with Redburn. Issie Kirby: I wanted to ask about the eye whitener product that's been mentioned a couple of times. I'm not sure if you've given any time line around that, but would be helpful to know if you have. And then what's going to differentiate this product versus competitors in the sales given this could be quite a meaningful category for you guys? David Endicott: Yes. 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 -- 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. 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. Operator: At this time, we've reached the end of our question-and-answer session. I'll hand the floor back to Dan Cravens for closing comments. Daniel Cravens: 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. And for media questions, reach out to our Corp Com 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. Before you buy stock in Alcon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alcon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Alcon (ALC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Alcon stock presents a clear valuation split right now. The intrinsic value estimate from a Discounted Cash Flow (DCF) approach points to a large upside gap, while earnings-based market multiples lean expensive and the share price has still delivered a 16.5% decline over the past 5 years. Over the past 5 years, Alcon has delivered a 16.5% decline, which raises the bar for any valuation case that argues the stock is now attractively priced. Recent news around Alcon's partnership with RxSight and its push to expand training for premium cataract surgery can support expectations for future cash flows, but decisions to discontinue certain intraocular lens programs highlight execution and product outcome risks that can weigh on valuation. Alcon scores 3 out of 6 on a broad set of valuation checks, which is a mixed picture rather than a clear bargain or clear overvaluation. The issue now is whether the 42.5% discount implied by the Discounted Cash Flow (DCF) intrinsic value estimate is enough to outweigh the weaker long term share return record and the richer read from earnings multiples. Find out why Alcon's -13.6% return over the last year is lagging behind its peers. The Discounted Cash Flow (DCF) model values Alcon based on the cash the business is expected to generate for shareholders. On this view, the latest twelve-month free cash flow is about US$1.54b, with the model assuming that cash flows continue to grow rather than contract. That stream of cash is projected forward in two stages and discounted back to today. This approach produces an estimated intrinsic value of around CHF105.44 per share. Compared with the current market price, that implies the stock screens about 42.5% undervalued. The decision to discontinue certain intraocular lens programs, as reported in 2024, helps explain why the price may still sit below this cash flow based estimate despite Alcon also highlighting higher 2026 earnings guidance. On the DCF numbers alone, Alcon stock appears undervalued relative to the cash flows implied by the current share price. Our Discounted Cash Flow (DCF) analysis suggests Alcon is undervalued by 42.5%. Track this in your watchlist or portfolio, or discover 257 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Alcon. For a profitable business like Alcon, the P/E ratio is a straightforward way to see what investors are paying for each unit of current earnings. Alcon trades at about 56.1x earnings, which is more than double the Medical Equipment industry average of roughly 24.7x and also well above the peer group average of about 28.6x. The fair P/E for Alcon, based on factors such as its sector, profitability profile, size and risk, is estimated at around 40.5x. That is still a rich multiple, yet it sits well below where the stock currently trades. This points to a significant premium even after accounting for these company specific features. On this P/E yardstick, Alcon stock appears clearly overvalued relative to both its sector and the modelled fair multiple. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the Alcon valuation split leaves off by spelling out the specific growth, margin and earnings paths that would need to hold for the stock to be worth materially more or less than today's price on the Community page. Each narrative ties a fair value estimate to a clear story about Alcon's potential catalysts and risks so you can track over time which version of events is actually unfolding. The community is split on Alcon, with one camp focused on product expansion and capital returns while the other worries about pricing pressure and competition. Bull case: 21% undervalued Read the full Bull Case to see why Alcon could be undervalued Bear case: 10% overvalued Read the full Bear Case to see why Alcon could be overvalued Do you think there's more to the story for Alcon? Head over to our Community to see what others are saying! Alcon sits between two conflicting valuation signals. The Discounted Cash Flow (DCF) intrinsic value estimate points to a meaningful discount to the current share price, while the elevated P/E multiple suggests the stock is overvalued relative to peers and a tailored fair ratio. That gap mainly reflects different views on future cash generation versus what the market is already paying for growth and execution. The key question from here is whether Alcon can deliver the cash flows and profitability that would justify both the current multiple and a potential closing of the DCF discount, or whether the valuation gap will ultimately prove to be a value trap. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ALC.SW. Have feedback on this article? Concerned about the content? Get in touch with us directly. 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This article first appeared on GuruFocus. Net Asset Value (NAV) Growth: The company highlighted that the underlying portfolio companies are expected to compound at a high rate, driving NAV growth over time. Fee and Performance Fee Revenue: Expected to increase as NAV rises, flowing into the company's earnings stream. Portfolio Composition: Includes holdings in high-quality businesses such as Amazon, Meta, Microsoft, Alcon, and Netflix. Leverage: Plans to use investment-grade debt to enhance long-term returns. Warning! GuruFocus has detected 5 Warning Sign with LSE:PSH. Is LSE:PSH fairly valued? Test your thesis with our free DCF calculator. Release Date: August 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Pershing Square Holdings Ltd (LSE:PSH) benefits from a permanent capital structure, allowing it to compound earnings from high-quality businesses without needing to raise new funds. The portfolio holds a dozen or more high-quality businesses expected to compound at high rates, with potential for rerating to higher valuations, boosting NAV and fee income. The company has a strong pipeline of opportunities, including the potential for significant upside from Fannie Mae and Freddie Mac, which could increase AUM by $8-9 billion if the administration acts favorably. PSH has attractive low-cost financial leverage, with about 18% debt to total assets at an average cost of less than 4%, enhancing returns. The management team is actively addressing the discount to NAV in PSUS, with plans for increased marketing and investor outreach, which could also benefit PSH's perception. Pershing Square Holdings Ltd (LSE:PSH) trades at a wider discount to NAV compared to PSUS, indicating market skepticism or lack of demand. PSH charges an incentive fee, which is a negative for investors compared to PSUS's no-incentive-fee structure. For US investors, PSH is a PFIC, making it tax-inefficient and less attractive, potentially limiting its investor base. The company's performance is subject to high volatility in stock prices, which can lead to significant NAV fluctuations in the short term. The management acknowledges that the trading of PSUS is 'absurd' and has been poor, reflecting broader issues with investor demand and market perception that could also affect PSH. Q: Can you update us on the timing and size of future fundraises, including asymmetric, crossover and opportunistic?A: Bill Ackman (Trades, Portfolio), CEO and Chairman, stated that future fund launches will be episodic and depend on market conditions and business needs. The first new launch will be Pershing Square Ventures, targeted for fall/end of year. He emphasized that the primary driver of growth will be the underlying performance of existing entities, citing the example of Fannie Mae and Freddie Mac, where a successful outcome could increase fee-paying assets by 30% overnight. The venture vehicle will start small but is strategically valuable for identifying disruptive trends and offering retail investors access to pre-IPO companies like SpaceX at lower valuations. Q: How should we think about the timing and size of the investment-grade leverage you plan to add to PSUS?A: Bill Ackman (Trades, Portfolio) explained that the plan is to add 15% to 20% debt to total assets for PSUS, a very conservative approach compared to typical hedge fund leverage. The process is a "full court press," with rating agency meetings beginning in early September, followed by a bond offering. He noted that if the incremental capital were available today, they have places to deploy it. Q: Given the low equity risk premium in the market, how do you account for that in your risk management and investment expectations?A: Bill Ackman (Trades, Portfolio) and Ryan Israel, CIO, responded that they focus on individual securities rather than broad market metrics. Ryan Israel highlighted that the equity risk premium calculation often misses the growth profile of equities. He noted that their portfolio has a higher earnings yield and nearly double the earnings per share growth compared to the market. Bill Ackman (Trades, Portfolio) added a comparison: owning a 5% earnings yield on businesses compounding earnings in the mid-to-high teens is more attractive than a 5% fixed coupon bond. Q: Can you provide more color on the venture strategy? Is it more of a late-stage growth equity bent, and what happens after a portfolio company goes public?A: Bill Ackman (Trades, Portfolio) described Pershing Square Ventures as a broad spectrum vehicle, ranging from companies with several hundred million market caps to decacorns. Unlike traditional venture funds with long lockups and high fees, this will be a permanent capital vehicle. They plan to help companies through their full lifecycle, including going public, and retain the option to hold long-term. The vehicle will be seeded with investments so investors know what they're buying, and they expect it to trade well due to the scarcity of such opportunities in public markets. Q: What are your specific plans to address the trading discount of PSUS to NAV?A: Bill Ackman (Trades, Portfolio) acknowledged the discount is "absurd" and a solvable problem. He attributed it to IPO allocation mistakes and a lack of demand creation. Plans include more aggressive marketing to financial advisers, highlighting that PSUS is the lowest-cost hedge fund in the world in a liquid NYSE format, now available at a 20% discount. He emphasized that future vehicles will be sufficiently differentiated (like Ventures) so investors can't replicate the portfolio themselves, which should support better trading values. Q: Is there anything from a tail risk perspective that the portfolio is looking out for as a broader hedge currently?A: Ryan Israel explained that the asymmetric hedging strategy is episodic by design, targeting "black swan" events rather than short-term market declines. They spend several hours daily monitoring potential risks and have a library of several dozen hedge instruments. Currently, they have no hedges on, but are watching certain risks. Bill Ackman (Trades, Portfolio) clarified they are not trying to hedge a 10% market decline but rather fundamental factors like COVID or a financial crisis. They look for hedges that can return 5 to 10 times their money, ideally 20 to 100 times. Q: Any updated outlook around capital returns and more specifically dividends over the near term?A: Bill Ackman (Trades, Portfolio) stated the dividend policy is to return substantially all free cash flow quarterly. The business requires minimal CapEx, with the main capital need being new fund launches. They plan to finance these commitments with investment-grade debt rather than building cash. Ryan Israel added that dividend distribution is the most likely form of capital return for the foreseeable future, given current market dynamics. Bill Ackman (Trades, Portfolio) noted that buybacks are not practical at this scale but wouldn't be shy if it were the best use of capital. Q: How should we think about the resources Mark and David will have at their disposal to accelerate the opportunity set for Vantage, and what disclosure changes will you advise for Howard Hughes?A: Bill Ackman (Trades, Portfolio) expressed excitement about the "dream team" recruited for Vantage, including Mark and David Gansberg. The highest priority is monetizing Howard Hughes' real estate assets to deploy more capital into insurance, transforming it into a "modern-day Berkshire Hathaway." They are exploring transactions to accelerate capital transfer. Ryan Israel added that they created a supplement last quarter for sum-of-the-parts analysis, showing intrinsic value north of $100 per share, potentially exceeding $200 by 2030. They will provide quarterly disclosures for Vantage similar to a publicly traded insurer and annual updates on the business model evolution. Q: How should the general public think about the difference between Pershing Square US and Pershing Square Holdings?A: Bill Ackman (Trades, Portfolio) explained that for US persons, PSH has unfavorable tax characteristics (PFIC status), making it unsuitable. PSUS has lower fees with no incentive fee and is US-listed. PSH trades at a wider discount, has an incentive fee, and lower management fee, with attractive low-cost leverage (~18% debt to assets at under 4% cost). He advised investors to consult tax advisers and make their own analysis, noting both should perform well over time. Q: Can you clarify the current status of SPARC and how it relates to other investment opportunities?A: Bill Ackman (Trades, Portfolio) described SPARC as a Special Purpose Acquisition Rights Company, an efficient way for companies to go public without the negative attributes of a SPAC. Pershing Square backstops the vehicle, guaranteeing a fixed price and minimum capital. They have regular conversations with potential private companies and are seeing increased deal flow. The economics of SPARC are owned by Pershing Square funds, with warrants providing up to 5% of the target company. A successful deal would contribute to AUM growth and fee streams for Pershing Square Inc. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Pershing Square Inc.? Here are five stocks we like better. Pershing Square plans to grow through portfolio compounding and selectively launch new permanent-capital vehicles. Its first planned launch, Pershing Square Ventures, is targeted for late 2026 and may invest across private companies from earlier-stage businesses to firms nearing an IPO. PSUS is approximately 95% invested after raising $5 billion, with holdings including Microsoft, Meta Platforms, Alcon, Netflix, Visa and Mastercard. Pershing Square also plans to pursue investment-grade leverage equal to roughly 15%–20% of total assets. Pershing Square intends to address PSUS’s discount to NAV through expanded marketing, with NAV near $50 per share versus trading in the high-$30s. The company expects to return substantially all quarterly free cash flow through dividends, while continuing to develop Howard Hughes’ insurance business and evaluate SPARC opportunities. Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Pershing Square (NYSE:PS) held its first earnings call as a public company, with Chairman and CEO Bill Ackman emphasizing the firm’s strategy of generating growth through the compounding value of its existing investment portfolios while selectively launching new vehicles. Ackman said the firm’s permanent-capital structure and portfolio of what he characterized as high-quality businesses could support growth even without additional fundraising. He said rising net asset values in the funds Pershing Square manages would increase management and performance fees over time, while cautioning that stock-price multiples can be volatile on a quarterly basis. → Lumentum Just Delivered the AI Growth Investors Wanted Marathon Petroleum Is Back, But Cycles Still Matter “If we never raise another investment vehicle,” Ackman said, Pershing Square expects the underlying companies in its portfolio to compound at a high rate over time. He added that the firm expects portfolio holdings to be volatile in the short term but believes they are attractively valued. Pershing Square’s first planned new fund launch will be Pershing Square Ventures, which Ackman said is targeted for the fall or end of 2026. The firm did not provide a targeted fundraising amount and said future launches would be episodic rather than tied to a set timetable. → Ryman Checks Into a $1.38B Hospitality Upgrade 3 Oil Refiners Built to Cash In on Higher Crack Spreads Ackman said the venture vehicle would invest across a broad range of private companies, from businesses valued in the several-hundred-million-dollar range to companies valued in the tens of billions of dollars. The strategy is expected to include both earlier-stage companies and businesses nearing public offerings. Unlike traditional venture funds, which often sell or distribute positions after portfolio companies go public, Ackman said Pershing Square Ventures would be structured as a permanent-capital vehicle that could remain invested through a company’s public-market life cycle. → Joby’s Defense Pivot Accelerates With $500M Resonant Sciences Deal He said the firm sees strategic value in venture investing beyond returns, including gaining insight into potential technological disruptions that could affect its core public-equity investments. Ackman also said Pershing Square plans to seed the vehicle with investments before raising capital from investors, though he said the firm was limited in what it could disclose until it files relevant documents with the Securities and Exchange Commission. Ackman and Chief Investment Officer Ryan Israel said market volatility around Pershing Square’s U.S. vehicle, PSUS, created an attractive opportunity to deploy capital. Ackman said PSUS is approximately 95% invested after raising $5 billion in a volatile market environment. The executives cited investments including Microsoft, Meta Platforms, Alcon, Netflix, Intercontinental Exchange, Visa and Mastercard as securities that became available at what they viewed as substantial discounts. Israel said Pershing Square maintains a “library” of hundreds of companies that meet its investment standards and evaluates them based on price relative to long-term value. During periods of market volatility, he said, the firm can identify securities that have been sold off despite attractive longer-term prospects. Pershing Square also intends to add investment-grade leverage to PSUS. Ackman said the target capital structure is debt equal to roughly 15% to 20% of total assets, describing the approach as conservative compared with leverage typically used by hedge funds. The firm expects to begin discussions with rating agencies in early September and would pursue a debt offering after obtaining a rating. “If we had the incremental capital today, we have places to put it,” Ackman said. Ackman said Pershing Square is dissatisfied with PSUS’s trading price relative to its net asset value and plans to take steps to improve investor awareness and demand. He said NAV was approximately $50 per share, while PSUS had traded in the high-$30 range, which he attributed in part to the way shares were allocated during the initial public offering and an insufficient base of buyers in the secondary market. The firm plans a broader marketing effort aimed at financial advisors and other investors. Ackman said PSUS faces fewer restrictions on promotion than Pershing Square’s historical public vehicle and can be discussed more actively through media appearances, podcasts and other channels. He said Pershing Square expects future vehicles, including venture, crossover and asymmetric strategies, to be differentiated from portfolios investors could readily replicate in public markets. Israel said Pershing Square currently has no asymmetric hedge in place. The firm said it continuously evaluates potential “black swan” risks but only seeks hedges when they offer the potential for substantial returns, generally at least five to 10 times the amount invested. Ackman said the firm is not trying to hedge ordinary short-term market declines, but rather major developments such as a financial crisis, pandemic or sharp inflationary shock. On capital returns, Ackman said Pershing Square’s policy is to return substantially all quarterly free cash flow to shareholders through dividends. Israel said dividends are the most likely capital-return mechanism in the foreseeable future, though the company could act opportunistically as market conditions change. Ackman said share repurchases are not currently practical given the company’s cash-flow profile and the need for greater share trading volume. The executives also discussed Howard Hughes, where Pershing Square is pursuing a strategy to shift capital from real estate toward insurance through Vantage. Ackman said the company recruited Marc and David Gansberg to lead the insurance operation and is exploring ways to accelerate capital deployment into Vantage. Pershing Square expects to provide more insurance-style disclosures to help investors evaluate Vantage as it becomes a larger component of Howard Hughes. Ackman said the objective is to transform Howard Hughes into what he described as a “modern-day Berkshire Hathaway,” combining its real estate assets with an expanding insurance operation. Finally, Ackman said Pershing Square continues to evaluate opportunities for SPARC, its special purpose acquisition rights company. He said the structure is designed to provide private companies a route to public markets without founder shares, shareholder warrants or underwriting fees, while allowing Pershing Square funds to participate in transactions and associated warrant economics. No SPARC transaction has yet been completed. Pershing Square (NYSE: PS) is a publicly traded investment holding company managed by Pershing Square Capital Management, L.P., the investment firm founded and led by William "Bill" Ackman. The vehicle provides outside investors with exposure to the firm's concentrated, actively managed investment program and is designed to deliver long‑term capital appreciation through a portfolio of equity and related positions. The company's principal activities center on investing in publicly traded companies, typically through concentrated long equity positions and selectively using derivatives or other instruments for hedging or to implement investment views. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Pershing Square Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management successfully transitioned back to independent operations following the termination of the Alcon merger, focusing on rebuilding commercial momentum and long-term sustainability. Revenue growth of 18% was primarily driven by a 23% increase in procedure revenue, reflecting higher utilization of the ALLY system across the expanding installed base. The company achieved its strongest adjusted EBITDA to date, attributed to operating leverage gained as recurring revenue reached 83% of total revenue. U.S. procedure market share expanded to 24.1%, driven by system installations in 'femto-naive' accounts that previously did not perform laser-assisted cataract surgery. The ALLY system now represents nearly half of the global installed base, which management views as a critical milestone for securing high-margin recurring revenue streams. Strategic focus remains consistent, centered on supporting surgeon partners through education and training to drive utilization and expand the installed base. Management expects a seasonal dip in third-quarter procedure volumes due to extended summer holidays in Europe and vacations in the United States. Operating expenses are projected to trend modestly higher toward historical levels as the company reinvests in its commercial organization and growth initiatives. The company is targeting Europe as a key growth market, initiating a direct presence at the ESCRS meeting to drive international interest in the ALLY platform. Future gross margin stability is expected to be supported by the continued shift toward recurring revenue, which carries higher margins than capital equipment sales. Management anticipates a multi-quarter process to fully re-accelerate international distributor relationships that were paused during the merger period. Gross margin of 59% included a $1.1 million one-time benefit from a tariff refund; excluding this, the normalized gross margin was 52%. The company ended the quarter with a backlog of 13 ALLY systems, providing visibility into near-term placements despite construction delays at some customer facilities. High interest rates continue to impact the purchasing behavior of private equity-backed practices, which are often highly leveraged and sensitive to capital costs. The transition of legacy LENSAR Laser System (LLS) users to the ALLY platform may cause temporary fluctuations in capital expenditure revenue. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The backlog consists of a mix of international orders slated for Q4 delivery and U.S. systems awaiting the completion of new surgical facilities. Management noted that construction delays at customer sites in the Western U.S. have impacted the timing of certain installations. Average Selling Prices (ASPs) for procedures are expected to remain steady or increase slightly as more high-volume U.S. systems come online. New 'femto-naive' customers typically require 60 to 90 days to fully ramp up to peak procedure productivity. Management described the international recovery as a 'work in progress' that will take several quarters to reach pre-merger activity levels. The company is using the ESCRS meeting in Q3 to hold high-level meetings and increase meeting presence to educate surgeons and drive interest in the ALLY system to restart the international sales cycle. System pricing remains relatively flat, though volume-based discounts are offered to large private equity groups. Management utilizes tiered pricing structures where higher procedure volumes earn customers better per-use rates, trued up on a quarterly basis.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Broad-based 7% sales growth was fueled by robust demand for the UNITY platform and record global market share in contact lenses. The decision to discontinue the PowerVision IOL program followed clinical data showing unpredictable postoperative vision shifts, though management intends to apply learned insights to future accommodating lens research. Implantable growth of 1% reflects a competitive market, yet the Nearly all PanOptix accounts have converted to PanOptix Pro, with the new platform now accounting for approximately 90% of PanOptix implants., stabilizing share through superior light utilization. Advanced Technology IOL (AT-IOL) penetration increased by 180 basis points in the U.S., significantly offsetting flat procedural volumes by providing higher per-procedure value. Equipment sales surged 25% driven by the UNITY VCS launch, with management noting that surgeons are achieving 20-30% time savings in vitreoretinal procedures. Ocular health performance was bolstered by TRYPTYR's 5% market share capture less than a year post-launch and Systane's double-digit growth in the multi-dose preservative-free segment. Full-year 2026 constant currency sales growth guidance remains at 5% to 7%, assuming aggregate eye care markets grow between 3% and 4%. Management expects a $60 million U.S. tariff refund in Q3, with plans to reinvest approximately two-thirds into commercial support for new launches like TRYPTYR and Valeda. The product pipeline remains the primary growth catalyst for 2027, featuring the upcoming Vivity Pro launch and the introduction of a new eye whitener product. The collaboration with RxSight aims to develop next-generation tunable lenses, serving as an intermediate strategic step toward the long-term goal of an accommodating lens. Core operating margin expansion guidance was raised to 90-190 basis points, reflecting strong first-half execution and ongoing cost-efficiency programs expected to deliver a $100 million run-rate savings. U.S. cataract procedure volumes remained flat, attributed to surgeon capacity constraints and a generational shift in the workforce rather than a lack of patient demand. The discontinuation of PowerVision represents a pivot away from a specific technology path while maintaining the long-term strategic objective of achieving lens accommodation. Surgical glaucoma remains a headwind due to substantial changes in the reimbursement environment, leading Alcon to focus on the Voyager SLT platform as a more accessible intervention. International contact lens growth of 3% lagged the U.S. rate of 8%, primarily due to a more challenging pricing environment and lower contribution from trade-ups abroad. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects the 30,000-unit installed base to be replaced over a 10-year cycle, with higher placement volumes occurring in the initial launch years. Current ASPs for UNITY are exceeding internal expectations, reflecting surgeon recognition of the platform's step-change in fluidics and workflow efficiency. Management expressed confidence in share stabilization, noting that while the market is crowded, Alcon's steady cadence of 'Pro' lens enhancements provides a superior visual performance profile. The launch of TruPlus will be phased deliberately to avoid interfering with the scale-up of higher-margin PanOptix Pro and Vivity Pro lenses. Flat U.S. volumes are driven by high surgeon retirement rates and lower productivity from newer surgeons; Alcon is addressing this through digital ecosystem tools like UNITY Dx to speed up workflows. Economically, the company is successfully trading off volume for value as AT-IOL penetration grows, which is more profitable than monofocal volume growth. A vast majority of planned exits and actions for the $100 million savings program have already been taken, with the bulk of financial benefits expected in the second half of 2026. The raised margin guidance reflects this discipline and the operating leverage gained from high-growth new product revenue.

Alcon has reported Q2 revenues of around $2.8bn, indicative of an 8% uptick year-over-year (YoY), prompting it to revise its 2026 outlook. The Swiss eyecare specialist now expects 2026 earnings growth to land in the 12% to 15% per diluted share range, up from 10% to 13% previously. Alcon is maintaining its YoY sales growth outlook within the 5% to 7% range. The lion’s share of Alcon’s profits came from its surgical segment at around $1.6bn, indicative of an 8% uptick YoY, with vision care in second place with sales of around $1.2bn corresponding to an increase of 8% compared to the same quarter last year. Delving deeper into its Q2 performance, Alcon highlighted that operating income of $11m in Q2 versus $247m YoY was offset by its decision to discontinue the intraocular lens (IOL) programmes it acquired from PowerVision in March 2019. As part of this decision, the company recorded a pre-tax charge of $402m in Q2. Alcon elected to discontinue the PowerVision programmes following analysis of the latest clinical study data, stating that they did not produce “acceptable patient outcomes”, with this conclusion primarily based on “persistent unpredictable post-surgical visual outcomes” reported in a subset of the patients that could not be resolved despite multiple development efforts. Alcon released its financials after markets closed on 10 August. Ahead of market open on 11 August, the company’s shares on the New York Stock Exchange (NYSE) were up by around 2% (correct as of 5:08am ET) at $75.10 versus $73.63 previously. Alcon has a market cap of $30.29bn. Alcon’s CEO, David Endicott, said the company’s Q2 performance was driven by “strong execution” and a raft of recent product launches, including its PanOptix Pro trifocal IOL in April 2025. Endicott said: “Across the portfolio, our innovative products continue to gain traction and expand our market positions, including contact lenses where we are continuing to gain share. “With a robust pipeline and several important launches ahead, we are well positioned to deliver sustainable long-term growth and further strengthen our leadership in eye care." Alcon’s performance follows a Q1 in which its planned acquisition of STAAR Surgical fell through. Originally tabling $1.6bn to acquire the company, the plans were subsequently scrapped following a disputatious period between STAAR and its shareholders. "Alcon raises 2026 earnings growth outlook on positive Q2 results" was originally created and published by Medical Device Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.

Alcon Inc. ALC delivered second-quarter 2026 core earnings per share (EPS) of 84 cents, up 10.5% year over year. The figure beat the Zacks Consensus Estimate by 9.09%. The company reports core results based on non-IFRS (International Financial Reporting Standards) measures. In the second quarter, EPS was nil compared with 35 cents in the year-ago quarter. Net sales of $2.78 billion rose 8% and topped the consensus estimate by 0.58%. Following the announcement, ALC's stock price rose 3.2% during the after-market trading session yesterday. Alcon’s Surgical sales amounted to $1.57 billion, up 8% year over year on a reported basis and 7% at constant currency. Within this, Implantables net sales increased 1% at constant currency to $466 million, primarily driven by strong performance of PanOptix Pro, partially offset by lower sales in surgical glaucoma and competitive pressures. Consumables net sales rose 5% at constant currency to $825 million, driven by procedural growth and price increases despite continued softness in the cataract market. Equipment/Other net sales jumped 25% at constant currency to $279 million, led by recent equipment launches, including the Unity platform. Alcon price-consensus-eps-surprise-chart | Alcon Quote Within Vision Care, total sales came to $1.21 billion, up 8% year over year on a reported basis and 7% at constant currency. Contact Lenses net sales rose 5% to $726 million, reflecting product innovation and price increases, partially offset by declines in legacy products. Ocular Health sales increased 12% at constant currency to $486 million, primarily led by Alcon’s portfolio of dry-eye products, including Tryptyr and Systane. The cost of net sales in the second quarter was $1.13 billion, down 5.5% year over year. Gross profit rose 20.7% to $1.68 billion. The gross margin expanded 630 basis points (bps) to 60.2%. SG&A expenses increased 10.8% year over year, while R&D expenses surged 170.6%, largely reflecting the PowerVision-related impairment charge. The operating margin contracted 920 bps in the second quarter to 0.4%. Alcon exited the second quarter of 2026 with cash and cash equivalents of $1.36 billion compared with $1.58 billion at March-end. The cumulative net cash flow from operating activities at the end of the second quarter was $928 million compared with $889 million in the year-ago period. Free cash flow totaled $693 million compared with $681 million a year ago. Alcon maintained its 2026 constant-currency net sales growth outlook of 5%-7%. The Zacks Consensus Estimate for 2026 revenues is pegged at $11.08 billion, up 7.3% from the 2025 levels. The company lifted core diluted EPS growth guidance to 12%-15% from the previous 10%-13% range. The consensus mark for the company’s 2026 earnings stands at $3.50 per share, indicating 14% growth. Alcon ended the second quarter of 2026 with both earnings and revenues surpassing their respective estimates. Both top and bottom lines improved on a year-over-year basis. Equipment/Other sales benefited from recent launches, including the Unity platform, while Ocular Health growth was driven by the dry-eye portfolio, including Tryptyr and Systane. The raised EPS guidance for the year is also encouraging. However, Implantables continued to face competitive pressures, while softness in the cataract procedure market remained a headwind. Alcon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the broader medical space are Labcorp Holdings LH, Quest Diagnostics DGX and Medpace MEDP. Labcorp, carrying a Zacks Rank #2 (Buy), reported second-quarter 2026 adjusted EPS of $4.99, which surpassed the Zacks Consensus Estimate by 4.18%. Revenues of $3.73 billion beat the Zacks Consensus Estimate by 0.36%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. LH has an earnings yield of 5.9% compared with the industry’s 4.1% yield. The company's earnings beat estimates in each of the trailing four quarters, the average surprise being 3.09%. Quest Diagnostics, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $3.12, exceeding the Zacks Consensus Estimate by 11%. Revenues of $3.04 billion topped the Zacks Consensus Estimate by 2.1%. DGX has an earnings yield of 4.7%, almost in line with the industry’s yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 5.77%. Medpace, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $4.25, exceeding the Zacks Consensus Estimate by 4.17%. Revenues of $707.3 million outperformed the consensus mark by 1.12%. MEDP has a historical five-year earnings growth rate of 30.5% compared with the industry’s 5.6% growth. In the trailing four quarters, the company delivered an average earnings beat of 10.16%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alcon (ALC) : Free Stock Analysis Report Labcorp Holdings Inc. (LH) : Free Stock Analysis Report Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report Medpace Holdings, Inc. (MEDP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Release Date: August 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Alcon Inc (NYSE:ALC) delivered 7% sales growth in Q2 2026, driven by broad-based strength across both surgical and vision care franchises. Unity VCS equipment sales surged 25% year-over-year, with strong demand and higher-than-expected average selling prices, indicating robust commercial traction. Panoptix Pro IOL adoption exceeded expectations, with nearly all US Panoptix accounts converted and the platform representing ~90% of Panoptix implants, supporting share stabilization. The pipeline is advancing with new product launches (e.g., Vivity Pro, True Plus, Unity-M microscope) and a collaboration with RxSight for next-generation adjustable lenses, positioning for future growth. Core operating margin expanded 160 basis points year-over-year to 20.6%, and the company raised its full-year EPS growth outlook to 12%-15% in constant currency. Alcon Inc (NYSE:ALC) discontinued its Power Vision IOL program due to persistent, unpredictable shifts in post-operative distance vision, failing to meet performance standards. Implantables growth remained subdued at 1% in Q2, with IOLs up only 2% amid increased competitive launches and a flat US cataract procedure volume. US cataract procedure volumes were flat, and the company expects continued softness in the US market, which could pressure future growth. The company faces ongoing challenges in surgical glaucoma, with lower sales and a difficult reimbursement environment impacting the Hydrus product. Contact lens growth was partially offset by declines in legacy products, and international markets contributed less to growth due to pricing pressures. Warning! GuruFocus has detected 4 Warning Signs with BOM:543600. Is ALC fairly valued? Test your thesis with our free DCF calculator. Q: On equipment, with Unity VCS holding better pricing than expected and a healthy funnel, what percentage of the 30,000 installed base will have upgraded by year-end, and what will the replacement cycle look like over the next 2-3 years? A: David Endicott (CEO): We are on track with our funnel and the movement of the base. We've actually gained share in this market. Over the 10-year cycle, we expect to replace the 30,000 base, with a little more upfront and a little less on the back end. In the first couple of years of launch, we'll do a bit better, then it will settle into a steady replacement basis. Q: With the write-down of Power Vision and the new RxSight collaboration, what do you hope to achieve by going purely an adjustable route versus an adjustable and accommodative route, and how will it impact your core franchise? A: David Endicott (CEO): We haven't made a decision to do one or the other; we still think adjustable accommodating is the best long-term answer, but we couldn't get there with this technology. RxSight is an intermediate step toward tunability with our existing optics. Power Vision was a big idea that generated valuable insights, but we don't have the technology yet for a fully accommodating lens. Somebody will figure it out, and I suspect it will be us. Q: On the top-line guide of 5% to 7%, is it still reasonable to think the 7% is plausible for the full year given tougher comps? Also, when will Panoptix Pro, Vivity Pro, and True Plus be approved in the US and Europe? A: Tim Stonecipher (CFO): We give a range of 5% to 7% and historically we've been a midpoint type of company. There will be tougher comps in equipment with Unity VCS, but launches like Unity CS, TripTier, and Valaya should carry us through. David Endicott (CEO): Panoptix Pro is approved in both the US and Europe, with Europe launching in June. Vivity Pro is expected late this year or early next, as it's been submitted to both regulators. True Plus has CE Mark approval, but we're managing its rollout carefully to prioritize Panoptix Pro and Vivity Pro. Q: On equipment, what was the contribution from Valeda in the quarter, and what is the peak sales potential? A: David Endicott (CEO): We don't call out individual products, but Valeda contributed several points of growth in the quarter. The main drivers in equipment are Unity CS and VCS. We think Valeda can reach $100 million to $150 million in peak sales within a three-to-five-year frame, following a typical new product curve. Q: On contact lenses, how much of the growth was price versus volume, and how are you thinking about the market's ability to take price in the back half and into 2027? A: David Endicott (CEO): Price was about 4% of the 5% growth in Q2, driven by two price increases in the US. The US share performance was outstanding, with almost 1.5 share points gained, driven by promotion of dailies like Total One and Precision One. We continue to see legacy value decline, but as that goes away, more growth will come to the surface. We have products in every category, including reusables like Precision 7 and Total 30 multifocal for astigmatism, which creates new avenues for growth. Q: On Unity DX, can you provide an update on the timeline and its role in the ecosystem? A: David Endicott (CEO): We received approval for DX earlier this year, but it wasn't in a manufacturable, scalable condition. We've been working on making it durable and serviceable. It uses hyperparallel OCT, which will be great for pre-op cataract use. It should be out in pilot form later this year, and we expect revenue from the middle of next year. It plays a big role in digitizing the entire OR ecosystem, which is very exciting. Q: On the strong Unity upgrade adoption, what are the key drivers? Is it converting older equipment, efficiency benefits, or increased procedures? A: David Endicott (CEO): The big idea has been conversion on retina procedures. We changed almost everythingcut speed, entry system, gauge, and fluidicsmaking it much safer and faster. If you were doing four or five vitrectomies a day, you could probably do another one, saving 20% to 30% time. This has been a positive halo, with more VCS sales than expected. On the cataract side, the elegance of 4D Phaco keeps the nucleus centered, making it safer and faster. If you do 20 cataracts a day, you'd probably do 21. The payback period is short if scheduled correctly. Q: On implantables, growth was subdued again this quarter. With competition accelerating and lapping the US Pro contribution, can you help us think about 2H growth and confidence that 2027 implantables can get back to market growth? A: David Endicott (CEO): Implantables growth is a function of market growth, penetration, and share. Market growth in the US has been below expectations, but we don't anticipate a change for the rest of the year. Penetration is positive, with US ATIOL penetration up 180 basis points, which is worth more to us than market growth. Share is a wild card, but we have a steady cadence of advances. Panoptix Pro is a significant improvement and gaining share in the trifocal space. Vivity Pro will offer better near vision, and True Plus enters the monofocal plus segment. We're excited about the future, but we need time to weather the storm of new entrants. Q: On ocular health, what percentage of the Systane business is now multi-dose preservative-free (MDPF), and how sustainable is the broader Systane growth? A: David Endicott (CEO): MDPF is roughly 15% of the Ocular Health business. Systane has been a double-digit grower, and we expect increased promotion in the back half. The US market is moving toward MDPF, which the rest of the world has already adopted, so it's a good opportunity for us. Q: On the eye whitener product For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Second-quarter 2026 sales of $2.8 billion, up 8% on a reported basis, or up 7% constant currency1 (cc), versus second-quarter 2025 Returned $538 million to shareholders through dividends and share repurchases on a year-to-date basis Updated full-year guidance - raised core operating margin and core diluted EPS growth Ad Hoc Announcement Pursuant to Art. 53 LR GENEVA, August 10, 2026--(BUSINESS WIRE)--Regulatory News: Alcon (SIX/NYSE:ALC), the global leader in eye care, reported its financial results for the three and six month periods ending June 30, 2026. For the second quarter of 2026, sales were $2.8 billion, up 8% on a reported basis and up 7% on a constant currency basis1, as compared to the same quarter of the previous year. Alcon reported diluted earnings per share of $0.00 and core diluted earnings per share2 of $0.84 in the second quarter of 2026. "Our team delivered strong second-quarter results and executed well across the business," said David J. Endicott, Alcon's Chief Executive Officer. "UNITY, PanOptix Pro, TRYPTYR and other recent launches are driving growth and reinforcing the strength of our innovation engine. Across the portfolio, our innovative products continue to gain traction and expand our market positions, including contact lenses where we are continuing to gain share. With a robust pipeline and several important launches ahead, we are well positioned to deliver sustainable long-term growth and further strengthen our leadership in eye care." Second-quarter and first-half 2026 results Reported net sales for the second quarter of 2026 were $2.8 billion, up 8% versus the second quarter of 2025. Excluding favorable currency impacts of 1%, sales were up 7% on a constant currency basis. Reported net sales for the first half of 2026 were $5.5 billion, up 9% versus the first half of 2025. Excluding favorable currency impacts of 2%, sales were up 7% on a constant currency basis. The following table highlights net sales by segment for the second quarter and first half of 2026: Net sales by segment Second quarter Surgical Surgical net sales were $1.6 billion, an increase of 8% on a reported basis and 7% on a constant currency basis versus the second quarter of 2025. Implantables net sales were $466 million, an increase of 2%. Excluding favorable currency impacts of 1%, Implantables net sales increased 1% constant currency. This growth was driven by an increase in IOLs of 2% constant currency, primarily driven by the strong performance of PanOptix Pro and reflecting competitive pressures, partially offset by lower sales in surgical glaucoma. Consumables net sales were $825 million, an increase of 6%. Excluding favorable currency impacts of 1%, Consumables net sales increased 5% constant currency. Growth was driven by procedural growth and price increases with continued softness in the cataract market. Equipment/other net sales were $279 million, an increase of 26%. Excluding favorable currency impacts of 1%, Equipment/other net sales increased 25% constant currency. This growth was led by recent equipment launches, including the Unity platform. Vision Care Vision Care net sales were $1.2 billion, an increase of 8% on a reported basis and 7% on a constant currency basis versus the second quarter of 2025. Contact lenses net sales were $726 million, an increase of 5% on a reported and constant currency basis. This growth reflects product innovation and price increases, partially offset by declines in legacy products. Ocular health net sales were $486 million, an increase of 13%. Excluding favorable currency impacts of 1%, Ocular health net sales increased 12% constant currency. Growth was led by our portfolio of dry eye products, including Tryptyr and Systane. First half Surgical Surgical net sales were $3.0 billion, an increase of 9% on a reported basis and 7% on a constant currency basis versus the first half of 2025. Implantables net sales were $904 million, an increase of 3%. Excluding favorable currency impacts of 2%, Implantables net sales increased 1% constant currency. This growth was driven by an increase in IOLs of 2% constant currency, primarily driven by the strong performance of PanOptix Pro and reflecting competitive pressures, partially offset by lower sales in surgical glaucoma. Consumables net sales were $1.6 billion, an increase of 7%. Excluding favorable currency impacts of 2%, Consumables net sales increased 5% constant currency. Growth was driven by procedural growth and price increases with continued softness in the cataract market. Equipment/other net sales were $532 million, an increase of 26%. Excluding favorable currency impacts of 2%, Equipment/other net sales increased 24% constant currency. This growth was led by recent equipment launches, including the Unity platform. Vision Care Vision Care net sales were $2.4 billion, an increase of 9% on a reported basis and 7% on a constant currency basis versus the first half of 2025. Contact lenses net sales were $1.5 billion, an increase of 6%. Excluding favorable currency impacts of 2%, Contact lenses net sales increased 4% constant currency. This growth reflects product innovation and price increases, partially offset by declines in legacy products. Ocular health net sales were $973 million, an increase of 13%. Excluding favorable currency impacts of 2%, Ocular health net sales increased 11% constant currency. Growth was led by our portfolio of dry eye products, including Tryptyr and Systane. Operating income Second quarter Operating income in the current year period was offset by the decision to discontinue the IOL programs acquired from PowerVision, Inc. in March 2019 ("PowerVision programs") following the analysis of the latest clinical study data. The PowerVision programs did not produce acceptable patient outcomes based principally on persistent unpredictable post-surgical visual outcomes reported in a subset of the patients that could not be resolved despite multiple development efforts. As part of the decision to discontinue the PowerVision programs, the Company recorded a pre-tax, non-cash net charge of $402 million (post-tax of $287 million) in the current year period. The net charge has no impact on the Company's cash position and does not change the Company’s previously communicated long-range financial objectives. Operating income was $11 million (-96%, -97% cc), compared to $247 million in the prior year period. Operating margin decreased 9.2 percentage points on a reported basis and 9.3 percentage points on a constant currency basis. The current year period included a pre-tax, non-cash net charge of $402 million related to the discontinuation of the PowerVision programs discussed above, costs associated with efficiency measures and sales and marketing behind new product launches, partially offset by lower amortization, manufacturing efficiencies and $15 million of other revenue from a licensee. The prior year period included charges related to the discontinued commercialization of a Vision Care product and higher inventory-related costs. Adjustments to arrive at core operating income in the current year period were $563 million, mainly due to a pre-tax, non-cash net charge of $402 million related to the discontinuation of the PowerVision programs, $128 million of amortization and $33 million of costs associated with efficiency measures. Adjustments to arrive at core operating income in the prior year period were $244 million, mainly due to $173 million of amortization and $44 million of product discontinuation charges. Core operating income was $574 million (+17%, +16% cc), compared to $491 million in the prior year period. Core operating margin increased 1.5 percentage points on a reported basis and 1.6 percentage points on a constant currency basis. The current year period included manufacturing efficiencies and $15 million of other revenue from a licensee, partially offset by sales and marketing behind new product launches. The prior year period included higher inventory-related costs. First half Operating income was $303 million (-58%, -61% cc), compared to $715 million in the prior year period. Operating margin decreased 8.7 percentage points on a reported basis and 9.1 percentage points on a constant currency basis. The current year period included a pre-tax, non-cash net charge of $402 million related to the discontinuation of the PowerVision programs, costs associated with efficiency measures, sales and marketing behind new product launches, impairment charges related to a currently marketed product intangible asset and incremental tariffs, partially offset by lower amortization and manufacturing efficiencies. The prior year period included gains on fair value remeasurements of investments in associated companies, partially offset by charges related to the discontinued commercialization of a Vision Care product. Adjustments to arrive at core operating income in the current year period were $840 million, mainly due to a pre-tax, non-cash net charge of $402 million related to the discontinuation of the PowerVision programs, $257 million of amortization, $121 million of costs associated with efficiency measures, $38 million of impairment charges related to a currently marketed product intangible asset and $21 million of acquisition and integration related items. Adjustments to arrive at core operating income in the prior year period were $287 million, mainly due to $345 million of amortization, $44 million of product discontinuation charges and $23 million of acquisition and integration related items, partially offset by gains of $142 million on fair value remeasurements of investments in associated companies. Core operating income was $1.1 billion (+14%, +11% cc), compared to $1.0 billion in the prior year period. Core operating margin increased 1.0 percentage points on a reported basis and 0.9 percentage points on a constant currency basis. The current year period included manufacturing efficiencies, partially offset by sales and marketing behind new product launches and incremental tariffs. Taxes Second quarter There was a reported tax benefit of $46 million in the current year period, compared to a tax expense of $23 million in the prior year period. The current year tax benefit was primarily driven by the reversal of deferred tax liabilities of $115 million related to the discontinuation of the PowerVision programs. The prior year period included a more favorable mix of pre-tax income/(loss) across geographical tax jurisdictions and a net benefit from discrete tax items. Core tax expense was $107 million, compared to $63 million in the prior year period, and the average core tax rate was 20.7%, compared to 14.2% in the prior year period. The increase in the average core tax rate was primarily driven by a more favorable mix of pre-tax income/(loss) across geographical tax jurisdictions and a net benefit from discrete tax items in the prior year period. First half Reported tax expense was $5 million, compared to $87 million in the prior year period, and the average reported tax rate was 2.6%, compared to 14.2% in the prior year period. The average reported tax rate in the current year period was impacted by a $115 million tax benefit from the reversal of deferred tax liabilities related to the discontinuation of the PowerVision programs. The average reported rate in the prior year period included a non-taxable gain on the fair value remeasurement of an investment in an associated company and net benefits from discrete tax items. Core tax expense was $209 million, compared to $160 million in the prior year period, and the average core tax rate was 20.2%, compared to 17.7% in the prior year period. The prior year period included net benefits from discrete tax items. Diluted earnings per share Second quarter Diluted earnings per share of $0.00, compared to $0.35 in the prior year period, primarily as a result of a post-tax, non-cash net charge of approximately $287 million related to the discontinuation of the PowerVision programs. Core diluted earnings per share of $0.84 increased 11%, or 9% on a constant currency basis, versus the prior year period. First half Diluted earnings per share of $0.39 decreased 63%, or 68% on a constant currency basis, versus the prior year period, primarily due to a post-tax, non-cash net charge of approximately $287 million related to the discontinuation of the PowerVision programs and costs associated with efficiency measures. The prior year period included gains of $142 million on fair value remeasurements of investments in associated companies. Core diluted earnings per share of $1.69 increased 13%, or 10% on a constant currency basis, versus the prior year period. Cash flow highlights Net cash flows from operating activities amounted to $928 million for the first six months of 2026, compared to $889 million in the prior year period. Free cash flow was $693 million for the six months of 2026, compared to $681 million in the prior year period. Capital allocation The Company returned $469 million to shareholders in the second quarter, which included $174 million of dividends, and $295 million of share repurchases. As of June 30, 2026, the Company had approximately $1.2 billion remaining of its previously announced $1.5 billion authorization. On a year-to-date basis through the second quarter, the Company has returned $538 million to shareholders through dividends and share repurchases. Alcon continues to expect to fund the program through cash generated from operations. The program is subject to customary safe harbor conditions and authorization of the Swiss Takeover Board. The timing and total amount of share repurchases and cancellations will depend upon a variety of factors. The program is expected to be completed over a three-year period, but may be suspended or discontinued at any time. Further information (including official publications in English, German and French) is available at https://investor.alcon.com/stock-information/share-repurchase-history/default.aspx. 2026 outlook The Company updated its 2026 outlook as per the table below. This outlook assumes the following: Aggregated markets grow approximately 3% to 4% The Company expects a full-year tariff impact, net of mitigating actions and refunds, of approximately $40 million to $90 million, which is expected to pressure cost of net sales. This estimate assumes that 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%. This also reflects an anticipated refund of approximately $60 million from the U.S. government in the third quarter of 2026. Approximately two-thirds of the refund benefit is expected to be reinvested in the business. Exchange rates as of the end of July 2026 prevail through year-end As of the end of July the expected currency impact to: Non-operating expense5 for FY 2026 is expected to be between $200 and $220 million The core effective tax rate6 for FY 2026 is expected to be approximately 20% Capital expenditures are expected to be mid-single digits as a percentage of sales Approximately 488 million weighted-averaged diluted shares7 Other Notable Accomplishments Earned MedTech Breakthrough’s 2026 Best Practice Management Solution award for Alcon’s Adi Digital Ecosystem, recognizing its role in modernizing cataract surgery workflows by connecting inventory management, online ordering and clinic-to-OR coordination. Showcased Alcon’s thought leadership at the 2026 American Society of Cataract and Refractive Surgery (ASCRS) Annual Meeting in Washington, D.C., with more than 60 scientific presentations and peer-to-peer educational symposia highlighting the company’s clinical and technology innovation. Advanced ophthalmic innovation through Alcon’s partnership with ARVO, a global association for eye and vision researchers. The 2026 Live Eye Pitch Event spotlights emerging eye and vision research and connects the winner to Alcon Seed Fund diligence for potential investment. Celebrated more than 30 years of Alcon WaveLight innovation, reinforcing three decades of precision engineering, bold innovation and commitment to advancing quality eye care. Announced a non-exclusive collaboration with RxSight to jointly develop adjustable presbyopia-correcting intraocular lenses, combining Alcon’s PCIOL optical designs with RxSight’s post-operative light-adjustable technology to help surgeons fine-tune visual outcomes after cataract surgery. Engaged nearly 5,200 employees in Alcon in Action, the company’s annual global volunteer initiative, supporting communities across 32 countries through health, nutrition, housing and environmental initiatives. Earned global recognition as an employer of choice, including honors from Forbes, Ethisphere and the Human Rights Campaign. Expanded Alcon Cares' impact through $23.4 million of product donations year-to-date, supporting medical missions, patient assistance and disaster relief programs, while placing donated equipment across 12 charitable care initiatives globally. Webcast and Conference Call Instructions The Company will host a conference call on August 11 2026 at 8:00 a.m. Eastern Time / 2:00 p.m. Central European Time to discuss its second-quarter 2026 earnings results. The webcast can be accessed online through Alcon's Investor Relations website, i.e. investor.alcon.com. Listeners should log on approximately 10 minutes in advance. A replay will be available online within 24 hours after the event. To listen the Company's conference call, click on the link: https://investor.alcon.com/news-and-events/events-and-presentations/event-details/2026/Alcons-Second-Quarter-2026-Earnings-Call-2026-fRS9bIWOaB/default.aspx The Company's second-quarter 2026 press release, interim financial report and supplemental presentation materials can be found online through Alcon's Investor Relations website, or by clicking on the link: https://investor.alcon.com/news-and-events/events-and-presentations/event-details/2026/Alcons-Second-Quarter-2026-Earnings-Call-2026-fRS9bIWOaB/default.aspx Cautionary Note Regarding Forward-Looking Statements This press release contains, and our officers and representatives may from time to time make, certain "forward-looking statements" within the meaning of the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "commitment," "look forward," "maintain," "plan," "goal," "seek," "target," "assume," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our 2026 outlook, liquidity, revenue, revenue growth, gross margin, operating margin, core operating margin, core operating margin growth, effective tax rate, foreign currency exchange movements, tariff impact, nonoperating expenses, earnings per share, earnings per share growth, operating cash flow, free cash flow, our plans and decisions relating to various capital expenditures, capital allocation priorities and other discretionary items such as our market growth assumptions, our social impact and sustainability plans, targets, goals and expectations, and generally, our expectations concerning our future performance. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties and risks that are difficult to predict such as: cybersecurity breaches and technology failures that could disrupt operations; our ability to effectively manage the risks associated with transformational information technology changes such as the ethical use of artificial intelligence and disruptive technologies and the migration to cloud-based platforms; compliance with data privacy, identity protection and information security laws, particularly with the increased use of artificial intelligence; the impact of a disruption in our global supply chain, including the effect of tariffs, or important facilities, particularly when we single-source or rely on limited sources of supply; our reliance on outsourcing key business functions; the increasingly challenging economic, political and legal environment in China; global and regional economic, financial, monetary, legal, tax, political and social change; our ability to comply with anti-corruption, anti-bribery, export control, trade sanction, or similar laws; our ability to attract and retain qualified personnel; our ability to manage the risks associated with operating as a third party contract manufacturer; our success in completing strategic acquisitions, including equity investments in early-stage companies, on favorable terms or at all, and in integrating acquired businesses; the success of our research and development efforts, including our ability to innovate to compete effectively; our ability to manage the rapid evolution and adoption of artificial intelligence; terrorism, war and similar events; our ability to forecast sales demand and manage our inventory levels and the changing buying patterns of our customers; pricing pressure from changes in third party payor coverage and reimbursement methodologies; our ability to comply with all laws to which we may be subject; the ability to obtain regulatory clearance and approval of our products as well as compliance with any post-approval obligations, including quality control of our manufacturing; the effect of product recalls or voluntary market withdrawals; our ability to manage social impact and sustainability matters; our ability to properly educate and train healthcare providers on our products; our ability to protect our intellectual property; the accuracy of our accounting estimates and assumptions, including pension and other post-employment benefit plan obligations and the carrying value of intangible assets, and the adequacy of our financial reporting, accounting practices and internal controls; our ability to service our debt obligations; the need for additional financing through the issuance of debt or equity; the effects of litigation, including product liability lawsuits and governmental investigations; legislative, tax and regulatory reform; the impact of being listed on two stock exchanges; the ability to declare and pay dividends; the different rights afforded to our shareholders as a Swiss corporation compared to a US corporation; the effect of maintaining or losing our foreign private issuer status under US securities laws; and the ability to enforce US judgments against Swiss corporations. Additional factors are discussed in our filings with the United States Securities and Exchange Commission, including our Form 20-F. Should one or more of these uncertainties or risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements in this press release speak only as of the date of its filing, and we assume no obligation to update forward-looking statements as a result of new information, future events or otherwise. We also undertake no obligation to update the 2026 outlook as circumstances evolve. Intellectual Property This report may contain references to our proprietary intellectual property. All product names appearing in italics or ALL CAPS are trademarks owned by or licensed to Alcon Inc. Product names identified by a "®" or a "™" are trademarks that are not owned by or licensed to Alcon or its subsidiaries and are the property of their respective owners. Non-IFRS measures as defined by the Company Alcon uses certain non-IFRS metrics when measuring performance, including when measuring current period results against prior periods, including core results, percentage changes measured in constant currency, EBITDA, free cash flow and net (debt)/liquidity. Because of their non-standardized definitions, the non-IFRS measures (unlike IFRS measures) may not be comparable to the calculation of similar measures of other companies. These supplemental non-IFRS measures are presented solely to permit investors to more fully understand how Alcon management assesses underlying performance. These supplemental non-IFRS measures are not, and should not be viewed as, a substitute for IFRS measures. Core results Alcon core results, including core operating income and core net income, exclude all amortization and impairment charges of intangible assets, excluding software, all fair value adjustments to contingent considerations from acquisitions, other than changes due to the time value of money, product discontinuation charges, net gains and losses on fund investments and equity securities valued at fair value through profit and loss ("FVPL"), fair value adjustments of financial assets in the form of options to acquire a company carried at FVPL, fair value remeasurements of investments in associated companies and certain acquisition related items. The following items that exceed a threshold of $10 million, are not operating expenses necessary to the operation of the business and have costs that will vary over periods and are also excluded from core results: integration and divestment related income and expenses, divestment gains and losses, restructuring charges/releases and related items, legal related items, gains/losses on early extinguishment of debt or debt modifications, past service costs for post-employment benefit plans, impairments of property, plant and equipment and software, as well as income and expense items that management deems exceptional and that are or are expected to accumulate within the year to be over a $10 million threshold. Taxes on the adjustments between IFRS and core results take into account, for each individual item included in the adjustment, the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although this is not always the case for certain items such as legal settlements in certain jurisdictions. Alcon believes that investor understanding of its performance is enhanced by disclosing core measures of performance because, since they exclude items that can vary significantly from period to period, the core measures enable a helpful comparison of business performance across periods. For this same reason, Alcon uses these core measures in addition to IFRS and other measures as important factors in assessing its performance. A limitation of the core measures is that they provide a view of Alcon operations without including all events during a period, such as the effects of an acquisition, divestment, or amortization/impairments of purchased intangible assets and restructurings. Constant currency Changes in the relative values of non-US currencies to the US dollar can affect Alcon's financial results and financial position. To provide additional information that may be useful to investors, including changes in sales volume, we present information about changes in our net sales and various values relating to operating and net income that are adjusted for such foreign currency effects. Constant currency calculations have the goal of eliminating two exchange rate effects so that an estimate can be made of underlying changes in the Consolidated Income Statement excluding: the impact of translating the income statements of consolidated entities from their non-US dollar functional currencies to the US dollar; and the impact of exchange rate movements on the major transactions of consolidated entities performed in currencies other than their functional currency. Alcon calculates constant currency measures by translating the current year's foreign currency values for sales and other income statement items into US dollars, using the average exchange rates from the historical comparative period and comparing them to the values from the historical comparative period in US dollars. EBITDA Alcon defines earnings before interest, tax, depreciation and amortization ("EBITDA") as net income excluding income taxes, depreciation of property, plant and equipment (including any related impairment charges), depreciation of right-of-use assets, amortization of intangible assets (including any related impairment charges), interest expense and other financial income and expense. Alcon management primarily uses EBITDA together with net (debt)/liquidity to monitor leverage associated with financial debts. Free cash flow Alcon defines free cash flow as net cash flows from operating activities less cash flow associated with the purchase or sale of property, plant and equipment. Free cash flow is presented as additional information because Alcon management believes it is a useful supplemental indicator of Alcon's ability to operate without reliance on additional borrowing or use of existing cash. Free cash flow is not intended to be a substitute measure for net cash flows from operating activities as determined under IFRS. Net (debt)/liquidity Alcon defines net (debt)/liquidity as current and non-current financial debt less cash and cash equivalents, current investments, including time deposits, and derivative financial instruments. Net (debt)/liquidity is presented as additional information because management believes it is a useful supplemental indicator of Alcon's ability to pay dividends, to meet financial commitments and to invest in new strategic opportunities, including strengthening its balance sheet. Growth rate and margin calculations For ease of understanding, Alcon uses a sign convention for its growth rates such that a reduction in operating expenses or losses compared to the prior year is shown as a positive growth. Gross margins, core gross margins, operating income margins and core operating income margins are calculated based upon net sales unless otherwise noted. Reconciliation of guidance for forward-looking non-IFRS measures The forward-looking guidance included in this press release cannot be reconciled to the comparable IFRS measures without unreasonable efforts, because we are not able to predict with reasonable certainty the ultimate amount or nature of exceptional items in the fiscal year. These items are uncertain, depend on many factors and could have a material impact on our IFRS results for the guidance period. Financial tables Net sales by region Consolidated Income Statement (unaudited) Segment contribution Operating income Non-operating income & expense Reconciliation of IFRS results to core results (non-IFRS measure) Three months ended June 30, 2026 Three months ended June 30, 2025 Six months ended June 30, 2026 Six months ended June 30, 2025 Explanatory footnotes to IFRS to core reconciliation tables EBITDA (non-IFRS measure) Cash flow and net (debt)/liquidity (non-IFRS measure) Net (debt)/liquidity (non-IFRS measure) Free cash flow (non-IFRS measure) The following is a summary of free cash flow for the six months ended June 30, 2026 and 2025, together with a reconciliation to net cash flows from operating activities, the most directly comparable IFRS measure: About Alcon Alcon helps people see brilliantly. As the global leader in eye care with a heritage spanning over 75 years, we offer the broadest portfolio of products to enhance sight and improve people’s lives. Our Surgical and Vision Care products touch the lives of people in over 140 countries and territories each year living with conditions like cataracts, glaucoma, retinal diseases and refractive errors. Our more than 25,000 associates are enhancing the quality of life through innovative products, partnerships with Eye Care Professionals and programs that advance access to quality eye care. Learn more at www.alcon.com. Connect with us on Facebook LinkedIn View source version on businesswire.com: https://www.businesswire.com/news/home/20260807721702/en/ Contacts Investor Relations Daniel CravensRichard Bourne+ 41 589 112 110 (Geneva)+ 1 817 615 2789 (Fort Worth)[email protected] Media Relations Steven Smith+ 41 589 112 111 (Geneva)+ 1 817 551 8057 (Fort Worth)[email protected]