Alcon Q2 2025 Earnings Report

Alcon EPS Results

• Actual EPS: $0.76
• Consensus EPS: $0.71
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: $0.74

Alcon Revenue Results

• Actual Revenue: $2.62 billion
• Expected Revenue: $2.65 billion
• Beat/Miss: Missed by -$27.42 million
• YoY Revenue Growth: +3.80%

Alcon Announcement Details

• Quarter: Q2 2025
• Date: 8/19/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, August 20, 2025
• Conference Call Time: 8:00AM ET

Alcon (NYSE:ALC) Inc. researches, develops, manufactures, distributes, and sells eye care products for eye care professionals and their patients worldwide. The company's Surgical segment offers equipment, instrumentation and diagnostics, intraocular lenses (IOLs), and other implantables; and consumables, including viscoelastics, surgical solutions, incisional instruments, surgical custom packs, and other products for surgical procedures. Its cataract products include Centurion vision system, LenSx laser system, ARGOS biometer, LuxOR surgical ophthalmic microscope, SMARTCATARACT health platform, NGENUITY 3D visualization system, Verion reference unit and Verion digital marker, and ORA system for intra-operative measurements; custom pak surgical procedure packs; vitreoretinal products comprising constellation vision systems, procedure packs, lasers and hand-held microsurgical instruments, and grieshaber and MIVS instruments, as well as scissors, forceps and micro-instruments, medical grade vitreous tamponades, and Hypervit vitrectomy probes; refractive surgery products, including WaveLight lasers and Contoura Vision used for LASIK treatment; EX-PRESS glaucoma filtration device; and implantable products, including AcrySof IQ products, such as monofocal IOLs and advanced technology IOLs for the correction of presbyopia and astigmatism at the time of cataract surgery. Its Vision Care segment provides daily disposable, reusable, and color-enhancing contact lenses; ocular health products, such as dry eye, glaucoma, contact lens care, and ocular allergies; and ocular vitamins and redness relievers. The company was formerly known as Alcon Universal S.A. and changed its name to Alcon Inc. in December 2001. Alcon Inc. was founded in 1945 and is headquartered in Geneva, Switzerland.

Alcon Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Alcon announced strategic acquisitions including the STAR Surgical EVO ICL platform for $1.5 billion (expected to be accretive in year two), the Lumithera Valletta system for dry AMD, and the Voyager Direct DSLT device to expand its glaucoma, refractive surgery, and retina portfolios.
• Positive Sentiment: Several major product launches gained early traction, notably the Uniti VCS combined vitrectomy-cataract system, the PanOptix Pro trifocal IOL, PRECISION7 weekly silicone hydrogel lenses, and Tripteer prescription drops for dry eye.
• Positive Sentiment: Second quarter sales reached $2.6 billion, up 3% year-over-year (Surgical +1%, Vision Care +5%), with core EPS of $0.76 and $681 million in free cash flow, reflecting solid execution despite softer markets.
• Negative Sentiment: Full-year guidance was revised downward to $10.3–10.4 billion in revenue (4–5% constant-currency growth) and a 19.5–20.5% core operating margin, driven by weaker surgical volumes and currency moves.
• Negative Sentiment: Alcon expects a full-year tariff headwind of approximately $100 million in cost of sales, partially offset by foreign exchange gains and operational measures.

Presentation

[Operator]

Greetings, and welcome the Alcon Second Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Dan Cravens, Vice President, Global Head of Investor Relations. Please go ahead, sir.

[Dan Cravens, VP - IR at Alcon]

Good morning. Welcome to Alcon's second quarter twenty twenty five earnings conference call. Yesterday, we issued a press release, interim financial report and presentation. You can find all these documents on our website @investor.alcon.com. Joining me on today's call are David Endicott, our Chief Executive Officer and Tim Stonesifer, our Chief Financial Officer.

[Dan Cravens, VP - IR at Alcon]

Our press release, presentation and discussion will include forward looking statements, including statements about our future outlook. We undertake no obligation to update forward looking statements. And as a result of new information or future developments, except as required by law. Our actual results may differ materially from those expressed or implied in our forward looking statements. And as such, you should not place undue reliance on any forward looking statement.

[Dan Cravens, VP - IR at Alcon]

Important factors that could cause our actual results to differ materially from those in our forward looking statements are included in our Form 20 F, earnings press release and interim financial report, which are all on file with the Securities and Exchange Commission and available on their website at sec.gov. Non IFRS financial measures used by the company may be calculated differently from and may not be comparable to similar measures used at other companies. These non IFRS financial measures should be considered along with, but not as alternatives to, the operating performance measures as prescribed for IFRS. Please see a reconciliation between our non IFRS measures with directly comparable measures presented in accordance with IFRS in our press release. For discussion purposes, our comments on growth are expressed in constant currency.

[Dan Cravens, VP - IR at Alcon]

In a moment, David will begin by recapping highlights from the second quarter. After his remarks, Tim will discuss our performance and outlook for the remainder of 2025. Then David will wrap up and we'll open the call for Q and A. So with that, I'd like to turn the call over to our CEO, David Endicott.

[David Endicott, Director & CEO at Alcon]

Good morning, everyone, and thank you all for joining us today. We're entering an exciting phase at Alcon. Several major product launches are now underway and beginning to gain traction. Our innovation and commercial teams continue to deliver reinforcing our leadership in eye care and deepening our connection with patients and providers worldwide. While markets in the first half of the year were softer than anticipated primarily in surgical, Vision Care remained solid.

[David Endicott, Director & CEO at Alcon]

And although our second quarter results fell short of our expectations, we remain confident in the long term durability of our end markets, the resilience of our customers and our plan to accelerate growth. Looking ahead, we've never been better positioned for sustained growth. Our teams are executing with focus and agility. And as we discussed at our Capital Markets Day, our robust pipeline and strategic expansion gives us confidence in our growth trajectory into 2026 and beyond. I'll start my remarks today by discussing some of our recent business development transactions.

[David Endicott, Director & CEO at Alcon]

At Alcon, our BD and L strategy is focused on acquiring transformative technologies in attractive white spaces that address unmet needs in eye care. In glaucoma, we recently integrated the Voyager Direct selective laser trabeculoplasty device into our portfolio. This first non contact laser therapy offers a streamlined patient friendly alternative to traditional SLT and positions us to accelerate global adoption of laser first treatments. In refractive surgery, our agreement to acquire STAR will strengthen our offering with implantable columnar lenses, broadening our solution for high myopes. And in retina, we recently announced the acquisition of Lymbothera and its Valletta light delivery system for early and intermediate dry age related macular degeneration.

[David Endicott, Director & CEO at Alcon]

Now, I'll take a few moments to discuss these last two transactions in a little more detail starting with STAAR Surgical. As announced, we've entered into a definitive merger agreement to acquire Star and its market leading EVO family of ICLs for vision correction. The boards of both companies have unanimously approved the transaction, is valued at $1,500,000,000 Upon closing, we expect the merger to be accretive to earnings in year two. ICLs represent one of the few sizable market segments in surgical vision correction in which Alcon does not currently have a presence. And STAR is the leader in this space, but remains underrepresented in several global markets.

[David Endicott, Director & CEO at Alcon]

By combining forces, we could leverage Alcon's broader commercial infrastructure to accelerate adoption of the EVO ICL platform. Furthermore, the EVO family expands our ability to address significant refractive errors, because it can be used to treat high myopes. Evo complements Alcon's laser vision correction platforms, which are typically used for patients requiring correction of six diopters or less. Importantly, this transaction brings Alcon a proven technology upon which to build. And longer term, our internal product development teams will collaborate with Star's experts to explore combining our advanced IOL optical designs with their columnar platform with a goal of developing a presbyopia correcting ICL.

[David Endicott, Director & CEO at Alcon]

We expect this transaction to close in six to twelve months subject to customary closing conditions, including regulatory approvals and Star's approval of shareholders. Until then, Alcon and Star will operate as independent companies. While EVO generates significant revenue in China, we remain confident in the long term opportunity that that market presents. We recognize that there have been recent macroeconomic headwinds in China, but this transaction is about the future. Long term, we expect China to be the largest single eye care market in the world.

[David Endicott, Director & CEO at Alcon]

And as the global leader in eye care, we expect to have a sizable presence there. Lastly, EVO's differentiated clinical profile positions us well to drive penetration and treat the myopia epidemic that's unfolding around the world. I'll now shift to our announced acquisition of Lumithera and the Valletta Light Delivery System. We believe this product is a pivotal shift in the treatment of dry age related macular degeneration or AMD. Dry AMD is a progressive eye disease that leads to irreversible vision loss.

[David Endicott, Director & CEO at Alcon]

It affects nearly two hundred million people globally and that number is expected to rise to over two eighty million by 02/1940. Additionally, there are currently no widely adopted treatments for the early to intermediate stages of dry AMD, which is where the majority of patients sit today. The Valletta system is the first FDA authorized medical device that uses a combination of light known as photobiomodulation to stimulate the retina's natural ability to heal and regenerate. It's a non invasive in office therapy that has been shown in clinical trials to improve visual function and slow the progression of AMD. Most importantly, it's safe, scalable and offers a completely new therapeutic option in an area with major unmet need.

[David Endicott, Director & CEO at Alcon]

The pivotal LIGHT SIGHT three trial showed statistically significant improvements in best corrected visual acuity over a two year period. And based on those results, the product received FDA de novo authorization in 2024, a key milestone that clears the path for U. S. Market adoption. We also plan to pursue CMS reimbursement and recent developments are favorable in terms of gaining coverage.

[David Endicott, Director & CEO at Alcon]

If we're able to secure reimbursement and expand penetration, we estimate the peak recurring revenue could range between 100,000,000 to $150,000,000 by 02/1930. As we continue to strengthen our portfolio through strategic acquisitions, we're equally focused on driving organic growth through our own innovation and execution. Our recent product launches reflect Alcon's commitment to delivering differentiated, high performance technologies that meet the evolving needs of doctors and patients. I'm going to start with equipment where we're encouraged by the initial demand for Unity VCS, our next generation combined vitreoretinal cataract system. This device is the result of years of collaboration with surgeons worldwide.

[David Endicott, Director & CEO at Alcon]

It's a fully integrated platform that unifies both anterior and posterior segment capabilities into a single intelligent console aimed at improving surgical workflow and efficiency. I'm pleased to report that the innovations like 40 Phaco and the HyperVit 30 ks Cutter are resonating well with both cataract and retina specialists. Uniti has received regulatory approval in key markets including The U. S, EU, Japan, Australia and we began shipping in May. And while it's still early in the launch, our order book is strong.

[David Endicott, Director & CEO at Alcon]

We're being deliberate with our installations. We're providing the best possible support to surgeons and clinicians as they adopt the latest advancements in PhacoVit technology. Now turning to implantables, we're very pleased with the early market response to our latest innovation PanOptix Pro. Building on the success of the original PanOptix, our latest advancement represents an important improvement in optical performance and patient outcomes. PanOptix Pro delivers 94% light utilization, which is the highest among trifocal IOLs.

[David Endicott, Director & CEO at Alcon]

It also reduces light scatter by 50% compared to its predecessor. This translates to sharper, clearer vision across all distances with enhanced contrast and reduced visual disturbances. Our surgeon feedback has been highly encouraging and we're seeing solid adoption trends in early launch markets. Importantly, PanOptix Pro is helping stabilize share in The U. S.

[David Endicott, Director & CEO at Alcon]

Premium IOL segment with a modest sequential improvement shown in the second quarter. This is great example of how Alcon continues to leverage our innovation engine, global scale and surgeon input to drive differentiated value driven growth. Now shifting to Vision Care, we continue to see solid performance in our contact lens portfolio fueled by innovation. During the quarter, we continued to advance PRECISION seven sphere and toric lenses in The U. S.

[David Endicott, Director & CEO at Alcon]

These lenses represent a significant step forward in our water innovations portfolio, designed to deliver all day comfort and convenience for patients who prefer a weekly replacement schedule. PRECISION seven is built on a novel silicone hydrogel material and features our proprietary active flow system. This unique technology embeds a water loving moisturizing agent directly into the lens matrix and continuously replenishes that agent over seven days. We're seeing strong feedback from practitioners who appreciate the simplicity of the weekly schedule and the performance of the lens, especially for patients who may not be well suited for daily disposable contact. Turning to Oculo Health, the headline in the second quarter was the FDA approval and subsequent launch of Tripteer, our new prescription eye drop for the treatment of the signs and symptoms of dry eye disease.

[David Endicott, Director & CEO at Alcon]

While most other dry eye treatments simply mask symptoms or supplement the tear film, Tripteer addresses the root cause of dry eye. It's a first in class agonist neuromodulator that stimulates the eyes natural ability to produce tears. It's fast acting and effective with clinical trials showing meaningful improvement as early as day one. Tripteer addresses a major unmet need. Despite over 35,000,000 people in The U.

[David Endicott, Director & CEO at Alcon]

S. Suffering from dry eye, fewer than ten percent are treated with prescription product. We believe Tripteer has the potential to expand the category, not just compete within it. Based on our strong clinical data and market dynamics, we estimate peak sales potentially of approximately $250,000,000 to $400,000,000 And while reimbursement timelines vary, we expect full reimbursement in about eighteen months. We officially launched Triptyr in The U.

[David Endicott, Director & CEO at Alcon]

S. In late July. While it's early days, we are encouraged by the initial feedback from physicians and patients. I look forward to sharing more details about the performance of this innovative therapy in the future. And finally, I'll briefly discuss market dynamics for the second quarter.

[David Endicott, Director & CEO at Alcon]

In cataract, we saw a soft quarter for procedural growth with a modest improvement in The U. S. In total, we estimate that global cataract volumes grew approximately low single digits in the quarter and the first half of the year. For context, this compares to a historical average of approximately four percent. Additionally, global ATIOL penetration was up approximately 120 basis points year over year, equally balanced between The U.

[David Endicott, Director & CEO at Alcon]

S. And international markets. In contact lenses, we estimate that the retail market grew mid single digits. With that, I'll pass it to Tim who will take you through the financial results and discuss our outlook for the remainder of the year.

[Timothy Stonesifer, SVP & CFO at Alcon]

Thanks, David. Our second quarter sales of 2,600,000,000 were up 3% versus prior year. This growth was largely in line with our first quarter and doesn't reflect the full contribution from our recent product launches. In our Surgical franchise, revenue was up 1% year over year to $1,500,000,000 Implantable sales were $456,000,000 in the quarter, down 2% versus the prior year. This result reflects the soft market conditions David just mentioned as well as competitive pressures.

[Timothy Stonesifer, SVP & CFO at Alcon]

In consumables, second quarter sales of $777,000,000 were up 4%. Growth was led by Vipret and cataract consumables as well as price increases. This growth also reflects the soft market conditions we've been discussing. In equipment, sales of $222,000,000 were down slightly as declines in legacy surgical equipment were partially offset by sales of the recently launched Unity VCS and Voyager DSLT systems. Turning to Vision Care, second quarter sales of $1,100,000,000 were up 5%.

[Timothy Stonesifer, SVP & CFO at Alcon]

Contact lens sales were up 7% to $692,000,000 in the quarter, primarily driven by product innovation as well as price increases. In Arthrole Health, second quarter sales of $430,000,000 were up 2% year over year. Growth was led by a portfolio of eye drops partially offset by declines in contact lens care. There was also some pressure resulting from the divestment of certain eye drops Aki mentioned in China, which we expect to continue through the third quarter. Now moving down the income statement.

[Timothy Stonesifer, SVP & CFO at Alcon]

Second quarter core gross margin was 62.2%, broadly in line with the prior year. Core operating margin was 19.1%, down 100 basis points, primarily due to increased investment in R and D. Second quarter interest expense was $51,000,000 broadly in line with last year. Other financial income and expense was a net benefit of $4,000,000 The average core tax rate in the first half of the year was 17.7%, down from 21.2% in the prior year due to discrete tax benefits in the current year compared to discrete tax expenses in the prior year. Core diluted earnings were $0.76 per share in the quarter broadly in line with last year on a constant currency basis.

[Timothy Stonesifer, SVP & CFO at Alcon]

Turning to cash, we generated $681,000,000 of free cash flow in the first half of the year compared to $667,000,000 in 2024. Our robust cash generation enabled us to return $287,000,000 to shareholders during the quarter, comprised of $121,000,000 in share repurchases and $166,000,000 in dividend payments. Regarding tariffs, we incurred $27,000,000 of tariff related charges during the second quarter. Of this amount, 12,000,000 was recognized in cost of sales and $15,000,000 was recorded on the balance sheet for product not yet sold. Based on tariff rates as of August 11, we now expect a full year impact of approximately $100,000,000 to cost of sales.

[Timothy Stonesifer, SVP & CFO at Alcon]

This represents an incremental headwind of approximately $20,000,000 versus the tariff structure in May. Nevertheless, we continue to expect to fully offset the impact through a combination of foreign exchange and operational actions. Now moving to our outlook for the remainder of the year. Our current guidance assumes that the aggregate global eye care market grows low single digits versus a historical average of mid single digits. Exchange rates as of the July hold through year end and that the tariff structure I just described holds for the remainder of the year.

[Timothy Stonesifer, SVP & CFO at Alcon]

Starting with sales, we are updating our full year revenue guidance to 10,300,000,000 to $10,400,000,000 which reflects the soft surgical market and recent moves in the U. S. Dollar versus our basket of currencies. Additionally, given the soft surgical market, we are updating our sales growth rate guidance to between 45% in constant currency. In terms of phasing, we continue to expect sales growth to accelerate in the second half of the year, predominantly in the fourth quarter.

[Timothy Stonesifer, SVP & CFO at Alcon]

We expect full year R and D to come in at the top half of our 8% to 10% of sales range. Turning to profitability, we now expect full year core operating margin to be between 19.520.5%, which reflects the updated sales outlook. Moving down the income statement, we continue to expect non operating income and expense to be between 185,000,000 and $2.00 $5,000,000 Turning to tax, we now expect our full year core average tax rate to be approximately 18%. Based on all these factors, we are maintaining our core diluted earnings guidance range of between $3.05 to $3.15 per share. This range corresponds to a year over year change of between 02% in constant currency.

[Timothy Stonesifer, SVP & CFO at Alcon]

We believe this updated guidance is prudent and reflects the current market conditions. We also remain confident and committed to the long term goals we outlined at Capital Markets Day in March. Despite near term softness, we believe favorable market megatrends will persist and enable healthy long term market growth. And from an operational perspective, we will continue to invest behind innovation, We have a solid plan to grow sales faster than the market and we will continue to be disciplined around cost. And as we said in the past, these activities will drive strong operating leverage and generate significant free cash flow.

[Timothy Stonesifer, SVP & CFO at Alcon]

With that, I want to thank our associates for another quarter of hard work and dedication. And I'll now turn it back to David.

[David Endicott, Director & CEO at Alcon]

Thanks, Tim. To wrap up, we remain focused on executing with discipline, investing behind innovation and supporting our customers and their patients. Most importantly, we've laid the groundwork for an exciting second half driven by numerous new product entries. These products are the result of years of collaboration with our customers and are a testament to our deep market knowledge and commitment to helping the world see brilliantly. Lastly, we're excited to expand our presence in white spaces like refractive surgery, glaucoma and retina through acquisitions.

[David Endicott, Director & CEO at Alcon]

Products like EVO, Voyager and Valletta are each strategic moves in growing markets with unique technologies. Combining these products with Alcon's global reach and operational excellence, we're poised to accelerate growth, expand patient access and deliver long term value to our shareholders. Finally, I'd like to thank our talented teams across the globe for their dedication and passion. With that, I'll open the line for Q and A.

[Operator]

Thank you. We'll now be conducting a question and answer session. Our first question today is coming from Jeff Johnson from Baird. Your line is now live.

[Jeffrey Johnson, Senior Research Analyst at Robert W. Baird & Co]

Thank you, guys. Can you hear me okay?

[David Endicott, Director & CEO at Alcon]

Yes, we got you, Jeff.

[Jeffrey Johnson, Senior Research Analyst at Robert W. Baird & Co]

All right, guys. Thank you. So I guess two questions for me. One, David, I want to understand, I think one of the encouraging points you brought up in the prepared remarks was that your share in PCIOLs was stable in The U. S.

[Jeffrey Johnson, Senior Research Analyst at Robert W. Baird & Co]

And maybe even ticked up sequentially a bit. Could you flesh that out a little bit more and maybe talk about your ATIOL share outside The U. S? You seem to drop some commentary in your slide deck from the first quarter about strength in ATIOL outside The U. S.

[Jeffrey Johnson, Senior Research Analyst at Robert W. Baird & Co]

That didn't that was not included in your slide deck here in the second quarter. Thank you.

[David Endicott, Director & CEO at Alcon]

Yes, Jeff, good question. Let me separate the two. The first one was obviously second quarter for us was sequentially better by about four share points. It was I think obviously PanOptix Pro has been well received for all the reasons I mentioned in the remarks and I'm pleased with the way that we're it's performing right now. There was obviously also a competitive outage during that period too.

[David Endicott, Director & CEO at Alcon]

So you need to be thoughtful about what to attribute that to. But I would say that generally speaking, we've done a really nice job getting the kind of the surgeons what they really want which is less visual disturbance and more light to create contrast. So that's what the design element was. We took the time to kind of choose that element. It plays back really well for us right now.

[David Endicott, Director & CEO at Alcon]

So we're optimistic about I think how that plays out with The U. S. Market. There was pressure in the international markets and I think you see some new products coming from competitors particularly in Europe where we did have some share loss probably a little more than expected. And I do think that you're going to continue to see IOL space pressured globally until you kind of see a stabilization of the number of new products entering.

[David Endicott, Director & CEO at Alcon]

And so I think for a number of years now we've been saying look we were we had a great run for on our own in The U. S. For a while, but the world is complicated. There's lots of products out there. So, we were never going to stay forever at an 80 share in The U.

[David Endicott, Director & CEO at Alcon]

S. I think what we see now is a nice stabilization process coming forward, solid performance with new products and we're starting to get a good sense for what competition is doing. So I think you're seeing at the beginning of a stabilization process, but I'd still think that you're going to see some international pressure coming forward.

[Jeffrey Johnson, Senior Research Analyst at Robert W. Baird & Co]

All right. Fair enough. And Tim, maybe just one quick question for you. I know you're not providing 2026 guidance, and I'm sure you won't even fully address this question. But you guys have done, I think, 2,500,000,000.0, maybe a little bit more than that in deals here in the last six to twelve months.

[Jeffrey Johnson, Senior Research Analyst at Robert W. Baird & Co]

You've got five to six new product sizable new products here that you're launching and trying to build some new markets in dry eye and DSLT, those kind of areas. Obviously, you're going to be working to mitigate the tariff pressures. Just how do we think conceptually about how all that comes together through dis synergies, synergies, maybe some dilution from some of those deals, things like that. Just can next year be a good earnings growth year? Just how to think, again, not putting us on a number for next year, but just how to successfully set up our models for 2026? Thank you.

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes, great question. Again, I'm a little hesitant to talk too much about 2026, but I would say this, we feel great about the deals that we've done. We feel like they add long term strategic value. Keep in mind, the biggest deal obviously being Star, that doesn't close for six to twelve months. So that's probably going to have limited impact on next year, but it depends on when we close the deal.

[Timothy Stonesifer, SVP & CFO at Alcon]

But with regards to the overall philosophy around synergies, obviously, we're a global company. We have a large footprint. We have when you think about it from a functional perspective, we have the resources and shared services in place to support a lot of those activities. So we'll give you more color when we get to the guidance in 2026.

[Operator]

Thank you. Next question is coming from Jack Relles Clark from RBC Capital Markets. Your line is now live.

[Jack Reynolds-Clark, VP - European MedTech Equity Research at RBC Capital Markets]

Hi, there. Thanks for taking the questions. So my first is just on the market weakness that you discussed and was a subscriber of the guidance downgrade. What's driven that weakness? And what's the outlook for that?

[Jack Reynolds-Clark, VP - European MedTech Equity Research at RBC Capital Markets]

What gives you confidence it's going to return? And kind of what kind of timeframes are you looking for for that? That's my first one.

[David Endicott, Director & CEO at Alcon]

Thanks for the question. Look, I mean, the world is aging, cataract prevalence is growing, and treatment access is increasing. So underneath all of this, there is no shortage of cataracts. So I think at the simplest way to think about it is, there aren't fewer cataracts today or tomorrow, there's going to be only an increasing number. And if we look at our procedural volumes, that's what gives us confidence around the treatment in the end.

[David Endicott, Director & CEO at Alcon]

Now, the reason we've been a little bit careful on this one is because frankly the historical surgical procedures volume has been about four percent, but it does have an oscillation around it. Over the last let's call it ten, fifteen years, if you look back, there's a plus or minus a couple of points on that. So if you look at our MAT right now, it's probably two percent on the twelve month, but it was closer to one percent last quarter. So that's a relatively normal oscillation, but on the low end of what the natural historical average should be. So again, I'm going to lean on the math and I'm going to tell you that there's no reason to believe from a fundamentals perspective, there's any fewer cataracts and this is probably much more of a return to the normal version of the mean that will happen.

[David Endicott, Director & CEO at Alcon]

We've got a number of really good years that were above 4% globally. And I think what you're seeing right now is just kind of a normalization that's happening. So look, we're going give it a couple of quarters. We've obviously been careful about the next two. And then we'll give you some more guidance for next year as we see what happens in the next third and fourth quarter.

[Jack Reynolds-Clark, VP - European MedTech Equity Research at RBC Capital Markets]

Okay. Fair enough. Thank you. Then my second question is on Unity. So you mentioned that there's been some kind of pretty good kind of uptake since the launch at the May.

[Jack Reynolds-Clark, VP - European MedTech Equity Research at RBC Capital Markets]

Could you just give a bit more color on your order book here? Kind of how much line of sight do you have on placements through the remainder of the year? Kind of what the placement has been like so far in July and August? Kind of just any color there would be great.

[David Endicott, Director & CEO at Alcon]

Yes, sure. Look, we sold our first VCS I think late May. So again, be careful about your timings on these. We've had probably ten weeks or so and in that ten weeks, we've accumulated over 1,000 kind of qualified or quoted or contracted leads. So our funnel is very solid at this point.

[David Endicott, Director & CEO at Alcon]

I think you need to remember though this launch is going to be deliberate and it will be a ramp, because we're starting principally with the combined console and the most complicated surgeries. This is principally with the retina specialist because Constellation is almost 17 years old. To succeed here, we've got to train the staff, we've to train the surgeon, we've got to ensure the settings transfers occur properly. And so we're moving look, we're moving deliberately and efficiently, but we're creating the experience that these surgeons expect and these are the toughest surgeons in the world. So we're very comfortable with where we are.

[David Endicott, Director & CEO at Alcon]

What we're trying to do is make sure that we handle this thing carefully. And as we launch this thing late like late this year we get CS. The ramp will continue to build. And of course, this is a long game for us. Our replacement cycle is ten years.

[David Endicott, Director & CEO at Alcon]

We've got 30,000 consoles out there. And we are super confident that what we're seeing right now is an efficiency in this machine that we expect to make it a very, very significant part of what happens in the next decade.

[Operator]

Thank you. Next question is coming from Veronica Dubuyova from Citi. Your line is now live. Perhaps your phone is on mute. Veronica, your line is now live.

[Operator]

Our next question today is coming from Anthony Petrone from Mizuho Group. Your line is now live.

[Anthony Petrone, MD - Equity Research at Mizuho Financial Group]

Thanks and good morning everyone. Maybe one on IOLs and one on the Star transaction. IOLs, David, maybe just a little bit on and we've seen this now for a few quarters, converted to low single digit growth rate talking about an end market business on one hand, but also very strong competitive responses here whether it be now in The U. S. Or U.

[Anthony Petrone, MD - Equity Research at Mizuho Financial Group]

S. So what is the timing where you think IOLs in general stabilize? And what does that look like once we get into a stabilization phase on the follow-up on Star?

[David Endicott, Director & CEO at Alcon]

I don't know. I'd have to be thoughtful about that one and I'm not sure I'm able to kind of forecast what everybody is bringing right now. I think the people that we know a lot about who we've seen around the world, I think most of those products get into the market over the next eighteen months. And I do think it will almost every product takes about a year to kind of try it, see it stabilize and then kind of respond. And so I think there's always trial in these categories because it's easy to try these products and almost everybody wants to if you're so I think I guess the things from a visibility level that we have today, I would say it's kind of in that next eighteen months, twenty four months, it's going to be busy in this category.

[David Endicott, Director & CEO at Alcon]

On the other hand, we're also going to be busy in this category. So I would tell you, we've got a couple of things coming with certainly with Pro around the world and we've got a few other things that we'll talk more about later. But I think everybody is going to be busy in this category and I do that it will be competitive. So I'd give you a kind of a non answer there I suppose because I'm not 100% sure who's got what and what's coming next. And I do think that that's going to be busy.

[Anthony Petrone, MD - Equity Research at Mizuho Financial Group]

Fair enough. Just quickly on STAR, you had a twelve month review period at the high end. Why is that extended? And Dave you mentioned the columnar material presbyopia potentially, but is there a potential to leverage columnar for an intraocular lens? Thanks again.

[David Endicott, Director & CEO at Alcon]

Yes. I think conceptually there is. I don't know that we would necessarily see that as a priority whereas I think if you were doing a piggyback lens for a presbyope that's not ready for cataract surgery, let's call that a 45 to 60 year old, that's a pretty interesting space. And so I think, Saar has worked on PCICL before and I think has got some good ideas that material works really well as a secondary lens. And I think we've got a series of optical designs I think that we might be able to incorporate.

[David Endicott, Director & CEO at Alcon]

So again, that's a long term project. I wouldn't get too interested in it per se, but it is a great idea and I think gives us a long term view that we can add some things into that portfolio. On duration of this, I think this is largely around international regulatory review. In particular, has a competitive review that we'll need to go through. We've not been through it before.

[David Endicott, Director & CEO at Alcon]

So again, it's a little bit of a guessing game for us as to how long it takes. But the advice we're getting is it could take that long. Hopefully not, but we'll see.

[Anthony Petrone, MD - Equity Research at Mizuho Financial Group]

Thank you.

[Operator]

Thank you. Next question is coming from Veronica Dubuilva from Citi. Your line is now live.

[Veronika Dubajova, Managing Director at Citi]

Let's see if you guys can hear me okay.

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes, we got you, Veronica.

[David Endicott, Director & CEO at Alcon]

Yes, got you.

[Veronika Dubajova, Managing Director at Citi]

Excellent. Sorry about that. Not sure what happened earlier, but brilliant. Thank you so much guys for taking my question. I'll keep it to two please.

[Veronika Dubajova, Managing Director at Citi]

The first one is just circling back on Unity, I guess, and I think even in the past, you've talked about this idea of kind of 3,000 installations in a year. Can you maybe just give us a little bit of flavor of when you think we can get there? And I guess maybe contextualize the 1,000 leads versus this idea of 3,000 placements, how should we think about it? And from where you guys sit, do you feel Unity is tracking ahead behind or kind of how do we think about that? So that's my first question.

[Veronika Dubajova, Managing Director at Citi]

Then I'll have a follow-up, but maybe we can get this one out of the way first.

[David Endicott, Director & CEO at Alcon]

Yes. No, we're pretty much where we'd expect to be. I mean, I think we've been out there about ten weeks, I think, something like that. We've got all we can handle right now. And I think as we work our way through that and place the units and train the units, again, we'll continue to move.

[David Endicott, Director & CEO at Alcon]

We'll get faster as we go forward. And again, that's a big part of the ramp of this. The reason I say ramp is you these aren't iPhones that we're selling where they turn them on themselves and they fire up. We spent about a week or more in the office, in the OR and that's new for us and it's new for them. And so what we're trying to do is make sure that everybody has a brilliant experience.

[David Endicott, Director & CEO at Alcon]

And to the extent that we get that done, we move on. To the extent we don't, we stay. And I think that's the thing we're learning about and we're getting through it. So I think our as I said last time, the gating factor for this will be our installation capacity. And I think we're working on that right now.

[David Endicott, Director & CEO at Alcon]

I don't believe that that's going to keep us from doing 3,000 at steady state a year. We may do a little bit more than that early on, a little bit less than that in the back piece of it. But I think we still believe that over the next decade, we're going to see this whole console install base turn, because we'll obviously we're going to end of life a lot of these things at some point and we'll push along the way. So in the near term, we're pretty good place probably as expected in terms of demand. And we've and there's not a lot to report here.

[David Endicott, Director & CEO at Alcon]

I think the big thing is perhaps people misunderstood a little bit about when we had CS coming out and what the difference between the VCS is and the CS. Because CS is really opens the cataract market to anybody who wants a cataract machine that's at a price point that's considerably lower than the VCS. And the VCS is really for retina specialists to replace constellation. So that's a very much more complicated world than our cataract business at the core of it. So lots of opportunity here and lots of excitement on the ground.

[Veronika Dubajova, Managing Director at Citi]

Okay. That's really helpful. Then to just maybe follow-up, you think you can hit the 3,000 next year? And then Tim, I don't know if you want to add any color on what you'd expect equipment to do in the back half of the year since it's been so hard us to model from the outside in maybe that would be helpful? Thank you, guys.

[David Endicott, Director & CEO at Alcon]

Yes. Look, I'm not going to get into the numbers exactly for next year. I think the way we've tried to guide everybody has been, look, we've got 30,000 units on the ground between Constellation and Centurion. Over the next ten years, we'll replace that fleet. It's generally you think about it as an even number across that, it should be a little faster in the front because people are excited about the thing.

[David Endicott, Director & CEO at Alcon]

It will be a little slower in the back because people will be waiting for the next one as they have in these last year or so. What you really see in the first and second quarter and late last year was a slowdown in equipment because people are waiting for this. So now it's just a matter of us getting the work done and I think that's underway.

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. I would just say, Ron, I'd give you some color on the new product launches. I mean, with the revenue guide of 4% to 5%, that obviously would imply if you take the midpoint, that would imply, call it, 6% in the back half of the year. New product launches are going to be a significant driver of that. A big piece of that will be coming in the fourth quarter.

[Timothy Stonesifer, SVP & CFO at Alcon]

And if you look at the new product launches, again, we've got six or seven launches coming out this year. Unity VCS is a big piece of that.

[Operator]

Thank you. Next question is coming from Richard Felton from Goldman Sachs. Your line is now live.

[Richard Felton, Equity Research Analyst at Goldman Sachs]

Thanks guys. The first one is on Sustain. Are you interested to know how that's performing in the quarter? Some of the industry data that we get looks like the brand in the overall category slowed a little bit. So I'd be interested to hear if that's what you're seeing and why you think that is? That's the first one.

[David Endicott, Director & CEO at Alcon]

SUSTAIN to SUSTAIN Pro were pretty good. I mean, I think it was kind of mid single digits, high single digit growth somewhere in that zone. I think what we what you saw in the quarter, I think and we saw it too was a real pop up in the category broadly, because there's a significant amount of advertising by some competitors and that's I think good for the category. So it certainly helped us and obviously helped them as well. So we saw a little bit of a tick down in share, but actually the market size grew for us.

[David Endicott, Director & CEO at Alcon]

So perfectly reasonable for us. I think what our category challenge in that area really more about the Ocumension wraparound and some gel stuff that we had some supply issues around. So I wouldn't I would tell you that underlying this is pretty healthy growth and sustain all around the world.

[Richard Felton, Equity Research Analyst at Goldman Sachs]

Great. Thank you. And then the second one is on Star. It's interesting how important the China piece is to the business case for that acquisition. And as you sort of think through the growth outlook in China, but also interested to hear your views on sort of local competitions in the ICL space in that market.

[David Endicott, Director & CEO at Alcon]

Well, look, I mean, I think we expect local competition. We know who they are. We participate in that market in a very significant way. It's our second largest market or second or third depending on where the yen and the Chinese one is. I think the idea for us has been always how do we expand the refractive options for patients.

[David Endicott, Director & CEO at Alcon]

And LASIK for us is a good business and we've got a big chunk of business around the world that is the LASIK business. But in China actually SMILE has done very well. If you look at our Wavelight Plus data right now, we've got one hundred percent of patients came out of our Wavelight plus at 2020 or better and like eighty percent plus came out 2016. So nobody else can do that. And so we're looking to get critical mass in markets like China where the demand for refractive surgery is very high.

[David Endicott, Director & CEO at Alcon]

But that's the same in Korea, it's the same in Japan, it's the same as the rest of Southeast Asia, it's the rest in really in Europe and The U. S. So although I would say China matters a lot, it's not the long term. I mean long term for us, we'll be there. We're going to be it's going to be a huge market for us and we'll be there with both above six diopters for EVO and LASIK for below six diopters.

[David Endicott, Director & CEO at Alcon]

But with that those two products together give us an offering now that I think is very competitive with what everybody else is going to bring. And I think also allows us to move into other markets around the world with greater critical mass and greater effectiveness. We see this myopia epidemic as a real opportunity and to help patients. This product is a really terrific product and I think it just needs a little bit more push in a new markets and I think we give STAR a bit of that critical mass. So that's what we're excited about.

[Richard Felton, Equity Research Analyst at Goldman Sachs]

Great. Thanks very much.

[Operator]

Thank you. Next question today is coming from Chris Pasquale from Nephron Research. Your line is now live.

[Chris Pasquale, Partner & Senior Research Analyst - Medical Devices & Supplies at Nephron Research LLC]

Hey, thanks. One on STAR and then a follow-up on tariffs. So how are you thinking about the sustainable revenue growth rate for the EVO ICL platform once all the noise in China comes down?

[David Endicott, Director & CEO at Alcon]

We think it's solid in China and it's solid everywhere else. I mean the penetration of EVO is so low relative to the high MIOPs that it's just really I think it's a matter of doc training, business model. I think competition is real and I think it's going to I think on its own, I think it would have been difficult road for Star in China in particular. I think with our critical mass, with our folks on the ground and frankly, as we look at the total offer we can bring to bear for some of these customers, I think we give a real opportunity to that brand. So I think that's for us, we see this as a very positive contribution accretive to our normal growth rate.

[Chris Pasquale, Partner & Senior Research Analyst - Medical Devices & Supplies at Nephron Research LLC]

Great. And then the increased tariff headwind you're forecasting makes you a bit of an outlier. Most companies this quarter have been talking about less exposure than they had a few months ago. Is that specifically related to Switzerland and some of the recent developments there? And then can you talk about what you're doing in terms of mitigation?

[Chris Pasquale, Partner & Senior Research Analyst - Medical Devices & Supplies at Nephron Research LLC]

Is the ability to offset this really the weak dollar? Or are you guys actually making substantive changes to your supply chain and distribution channel?

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. I would say for us, I can't talk to other companies, but if you think about the example coming in at 15%, I think what we had at the May timeframe folks were talking about the 10% kind of range. So I would say that's one of the key drivers of it. But the mitigation factors that we have in place, a vast majority right now is the dollar and is the currency. But we are continuing to look at things like moving manufacturing footprint where it makes sense, kind of I'll call it the non regret type of things because again this is a very volatile environment.

[Timothy Stonesifer, SVP & CFO at Alcon]

It takes a lot of thought, money and effort to move manufacturing. So we're really looking for a stable policy before we start making some larger moves like that.

[Operator]

Thank you. Our next question today is coming from Ryan Zimmerman from BTIG. Your line is now live.

[Ryan Zimmerman, MD & Medical Technology Analyst at BTIG]

Good morning. Thanks for taking our questions, Dave and Tim. I want to talk about maybe some of the long term targets that have been out there for some time since the Capital Markets Day in the context of some of these new market growth rates. And you laid out a 5% growth rate kind of in line with market, and there's another 200 basis points of innovation, I think, gets you about 7%. With the new market assumptions this year, does that step down over the long term to maybe 35% on that 200 basis points?

[Ryan Zimmerman, MD & Medical Technology Analyst at BTIG]

Do the long term targets hold in your view? I'm curious if you kind of give us your thoughts on that?

[David Endicott, Director & CEO at Alcon]

Yes. I don't think we feel any differently about the long term. I do obviously, we've called the market off three times now. So I mean, we've missed the surgical market. That's just a fact.

[David Endicott, Director & CEO at Alcon]

But that is not unusual in the context of fifteen years. So, what we if you really look at the market, it's basically a 4% growth market in the surgical procedural growth area. And we don't see any reason why that should change. But I will tell you there is a plus minus of 2% around it. So for it to be 2% right now is not where we thought it would be, but it's also within the range of normality.

[David Endicott, Director & CEO at Alcon]

General view right now is to do nothing other than say, look, there's no fewer cataracts today than there were yesterday. There's not we're graduating more surgeons around the world, particularly outside The U. S. Than we have. I mean, The U.

[David Endicott, Director & CEO at Alcon]

S. Productivity needs to pick up a little bit, but I think at the end of the day, there's no reason to believe that anything other than increased productivity is going to be the answer. That's partly why VCS is so important, because we see that it really does have the opportunity. If you were doing 19 cataracts in a day, you could probably do 20 now. I mean, are the kinds of efficiencies that private equity is looking for, the practices are looking for that helps the procedural growth.

[David Endicott, Director & CEO at Alcon]

But directionally, we don't expect anything other than normal markets in this and very similar to what's gone on for the last ten, fifteen years. And I would also just remind you that that's we're talking often right now about the surgical procedure market, is really cataract procedures. There's a lot more to our business in here than just that element. So remember, our contact lens business, for example, that market growth is typically mid single digits, but on the high end of mid single, we've typically seen that 5% to seven And we don't see any real change in that. You look at our OTC market again, the eye drops business has generally been kind of 4% to 5% grower.

[David Endicott, Director & CEO at Alcon]

So we've got a lot of markets that are all pretty healthy. And that's why even today, we're basically growing with market. We'd like to be growing a little faster than that, but the markets are slow. So that's where we are.

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. I think also to David's point that he alluded to Brad?

[Ryan Zimmerman, MD & Medical Technology Analyst at BTIG]

Go ahead, Go ahead,

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. Again, if you look at the megatrends that underpin when you look at the entire company, the population continues to age, the middle class continues to half the world is going to be myopic by 02/1950, and then the technologies continue to increase access, improve outcomes. So those we don't see those trends really changing. And again, when you're looking at the long term goals, you're talking about sort of a five year time frame or so.

[Ryan Zimmerman, MD & Medical Technology Analyst at BTIG]

Yes. And sorry if I was being a little myopic, I guess, on Surgical. Maybe just on the other kind of long term target, which is, Tim, the impression I got out of the Capital Markets Day was that you felt that margins, specifically your operating margins, were reaching a point where cash would kind of flow through the P and L back to shareholders. You've done a lot of M and A now. But with the step back in op margins, does kind of how you think about cash flow and the ramp in margins change at all?

[Ryan Zimmerman, MD & Medical Technology Analyst at BTIG]

Because arguably, the margin trajectory over the coming years is a bit more elongated. And I ask that also around with the perspective of, well, you've just done all these deals and should we not expect maybe as much robust M and A activity given some of these changing factors? Thanks for taking the questions.

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. I'd say a couple of things. When look at the margin profile, so if you look at this year and you take the midpoint, that would imply or that would be a step back from where we were last year. But when you break that down, this year, we're still going to get roughly 150 or so basis points of operating leverage. The challenge has been what's offsetting that is we've got tariff pressure when you look at the op margin line and you've got the Orion pressure.

[Timothy Stonesifer, SVP & CFO at Alcon]

So as you think about going forward into 2026 and beyond, we should continue to get that same type of operating leverage, 150 basis 200 basis points what we've gotten historically. And you won't have the Orion pressure. You still have a little bit of tariff pressure because some of that's hung up on the balance sheet. So, the fact that the business can continue to generate significant operating leverage, we feel really good about. And when you do that, you obviously generate nice free cash flow.

[Timothy Stonesifer, SVP & CFO at Alcon]

So we feel good about the free cash flow. Our capital allocation philosophy hasn't changed. And again, the balance sheet is very, very healthy. So we've got a lot of capacity and that gives us a lot of financial flexibility.

[David Endicott, Director & CEO at Alcon]

The other thing Ryan, I'd just add for what it's worth is, you got to think about these acquisitions as really product acquisitions. I recognize their companies, but they're almost all one product companies, right? So there's tremendous amount of value in that. So if you think about Aureon, that's a single product company despite the fact that it's got a lot of R and D in front of it. Lumithera was Veletta, LENSAR is a FLACS machine, STAR is EVO and Belkin was the Voyager.

[David Endicott, Director & CEO at Alcon]

So what we're getting is leverage off of our infrastructure, our sales force, our manufacturing, most all of this stuff has great leverage capability. So we actually benefit a great deal from it and we can move those products faster than anybody else can. So that's obviously the idea here.

[Operator]

Thank you. Next question is coming from David Saxon from Needham and Company. Your line is now live.

[David Saxon, Senior Analyst at Needham & Company]

Great. Thanks David and Tim for taking my questions. Maybe one on and then I'll have a pipeline related question. So just on Tripteer, can you talk about the launch strategy since you rolled it out in late July? What's the level of investments baked into guidance?

[David Saxon, Senior Analyst at Needham & Company]

And how should we think about the revenue ramp to peak sales relative to the to getting to full coverage, I think you said at eighteen months or so?

[David Endicott, Director & CEO at Alcon]

Yes. I mean, careful I'd about the revenue ramp in particular because I think it just going to depend on how the reimbursement process works. But let me talk to the launch strategy, because I think it's really interesting and we're excited about it. I mean, this is one of our first core entries back into pharmaceuticals where we've spent a lot of time over the years. We obviously have a good bit of pharmaceutical in the business.

[David Endicott, Director & CEO at Alcon]

This is a new product and we have this is probably the first new launch we've done in a while. And I will tell you that we've done a really nice job at the beginning of really working on professional education for the last year, where it's appropriate, we've been talking to payers to make sure that they were we understood their process that we understood how and when we could get involved with the reimbursement process. I think we understand it pretty well. We've been we've hired a new sales force. That sales force is working both on Tripteer plus our Sustained Pro.

[David Endicott, Director & CEO at Alcon]

So it's really a dry eye focused group. It's calling on a combination of optometry and ophthalmology, but all the highest using folks who we have good pretty good data on. So we've got pretty good targeting there. We have a comprehensive advertising and promotion program that I won't bore you with exactly, but I'll just say that going forward, we've got things like first feel free, which is a program that is instead of sampling the product through the office, we're getting making it very easy for patients to get to the pharmacy with a prescription and get that filled without having to worry exactly about that reimbursement the first time around. That gets us going down the path a little bit faster.

[David Endicott, Director & CEO at Alcon]

We We got a number of other clever ideas I think that are doing a nice job of helping us build this market. And I think we do see this as a blue ocean. I think what we really believe is there are a whole lot of patients in the office. And if you look at the visit data for ophthalmologists in particular, one of the most common, if not the most common presenting patient is a dry eye patient. And often that's a frustrated patient that the ophthalmologist want something new and different for.

[David Endicott, Director & CEO at Alcon]

And I think this product is being received well, but it's early. We'll see and we're all of about three, four, five weeks into this thing. So we're excited about it. We think it will take obviously eighteen months to get as I said to get our full reimbursement in there, but directionally very happy with that we're off to the races.

[David Saxon, Senior Analyst at Needham & Company]

Okay. That's great. And then I wanted to get an update on the Vision trial. What have you seen in the study following the new protocols you talked about at the Capital Markets Day? And then, I guess, what's the timing of when that could wrap up?

[David Saxon, Senior Analyst at Needham & Company]

And when could we see data for that expanded trial? Thanks so much.

[David Endicott, Director & CEO at Alcon]

Yes, you're welcome. The timing on that is end of the year. So we'll have some data. I don't if we'll get it out in the fourth quarter or the third quarter call or whether we'll have it for the February call, but somewhere in that zone we'll have work through the data itself.

[Operator]

Thank you. Next question is coming from Larry Biegelsen from Wells Fargo. Your line is now live.

[Lawrence Biegelsen, Senior Medical Device Equity Research Analyst at Wells Fargo]

Good morning. Thanks for taking the question. Tim, two for you. The implied second half guidance declined from by our math over 9% to about 5% to 7%. How much of the reduction in the implied second half guidance is due to slower market growth and other factors such as the slower ramp of new products? And I have one follow-up for you.

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. I think a majority of it is really the market. Again, the ramps and the launches, we feel pretty good about. There is some share loss in there to be fair. So if you had to split it out maybe call it two thirds market and maybe some share in there.

[Lawrence Biegelsen, Senior Medical Device Equity Research Analyst at Wells Fargo]

That's helpful. Tim, I wanted you got a couple of questions today on 2026 partly because we see the Street at 16% EPS growth which is above your Capital Markets Day goal of 12 to 15. I heard your comments earlier about 150 to 200 basis points leverage underlying. Is there any way you could at least tell us kind of the aggregate dilution from the deals next year, incremental tariff impact and anything else we should contemplate when we kind of calibrate our models for next year?

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. I really can't get too much into the deals, Larry, in 2026 because again, it really depends on when we close them, how we close them and all that. I can't give you a little help on tariffs. Again, tariffs sort of hit, call it, in the April time frame, a lot of that got or some of that's going to get hung up on the balance sheet. So as we roll into 2026, we'll have a full year impact.

[Timothy Stonesifer, SVP & CFO at Alcon]

I would guess maybe 50 basis points of pressure on the tariffs piece depending that's assuming that we don't offset it. So it depends on whether we offset it or not. But if you're looking at just gross tariff impact that's rolling off, that's probably a good number to start with.

[Operator]

Thank you. Next question today is coming from Graham Doyle from UBS. Your line is now live.

[Graham Doyle, Executive Director - Equity Research at UBS Group]

Thanks guys. Just one on the kind of still a follow-up to Larry's question on the sort of mid term guidance there, which effectively is I know you don't want to comment on 2026, but I think, given you gave this guidance only a few months ago and it's being reiterated today, I think it's not unreasonable to ask the question, which is you're not going to do 12% to 15% EPS growth this year. It is a CAGR over not that long periods. Is it reasonable to think that you do 12% to 15% growth next year?

[Timothy Stonesifer, SVP & CFO at Alcon]

Yes. Again, I'm not going to get into 2026. We're sitting here in August and we're in dynamic environment right now. Happy to give you plenty of color to fill all that out in February when we give the guide. But again, I'll just reiterate the guidance that we gave at Capital Markets Day, that 12% to 15%, that's a CAGR over our long term goals and we feel pretty good about that.

[Timothy Stonesifer, SVP & CFO at Alcon]

We feel good that we're going to continue to invest in the business. The markets, again, the megatrends haven't changed, so we would assume that the markets come back. We're going to continue to drive operating margin improvement, and when you do that, that generates nice EPS, it generates good free cash flow, and from a long term goal perspective, we feel pretty good about it.

[David Endicott, Director & CEO at Alcon]

Maybe I'll add this color, Graham, just for what it's worth. I mean, the surgical market moving annual total was about 2%, all right. So, that's the audited data. That should revert north of that. I would think that's what we're that's a belief that we have over the long haul.

[David Endicott, Director & CEO at Alcon]

That should be somewhere around 4% over the long haul. The Vision Care market moving annual right now is about 6%. It's typically been 5% to 7%. So you can pick a number in there. And if those markets hold like that, which is what they should do, and then you lay in VCS, CS, PanOpix Pro, Tripteer, Voyager, Precision seven, Sustain Pro, Arianne, Veletta, LENSAR, STAR and we got lots of stuff going on that we think adds to our base core business.

[David Endicott, Director & CEO at Alcon]

And so look, we're when you get all through this, we've got a tough we got a tough moment here, but this has always been a back loaded year. We've been saying that from the beginning of the year. And next year looks really good to us.

[Graham Doyle, Executive Director - Equity Research at UBS Group]

Okay. Super clear. Thanks guys. Thank

[Operator]

you. Next question is coming from E. C. Carby from Redburn. Your line is now live.

[Issie Kirby, VP - Equity Research, Medical Technology & Life Sciences at Rothschild & Co Redburn]

Hey guys. Thanks for taking my question. I wanted to ask on the contact lens market dynamics that you're seeing. There were some concerns last quarter about a bit of a weaker demand environment within contact lenses. You put up a pretty decent number.

[Issie Kirby, VP - Equity Research, Medical Technology & Life Sciences at Rothschild & Co Redburn]

So I was just wondering what you're seeing there? And then how is PRECISION7 doing versus your expectations? Are you seeing any, I guess, positive cannibalization of some of your monthly wireless there? And then I have a follow-up.

[David Endicott, Director & CEO at Alcon]

Yes. On P7, yes, look, it's doing very well. It's doing what we expected. And obviously, it is cannibalizing some of our product, but it also is taking share. So we expected it to work against the two week market.

[David Endicott, Director & CEO at Alcon]

It seems to be doing that. So we're pleased with that outcome. And I think as we expected, it's a high margin brand for us. So we like the mix shift to P7 to the extent that we get it from our old monthly lenses or from some of our lower cost daily lenses. It's priced in a place which will help us on a margin basis.

[David Endicott, Director & CEO at Alcon]

So I think even if we're trading some of our own product into this, I think we're still doing pretty well with it. And then we are taking share with that particular brand in the reusable category. I would say on the other piece of this, the demand in the second quarter was a little bit more muted. It was on the low end of mid single digits, but it's still mid single digits. And as I just said a minute ago, this contact lens MAT, the twelve month number is about 6%.

[David Endicott, Director & CEO at Alcon]

So I think what you're really seeing right now is a slightly lower amount of price into the market this year. We certainly took a little bit less than we took last year and that's probably the only effect here. What we saw with the consumer was consistent mix up. The price was still pretty solid. And frankly the wearers are about flat, they're usually flat.

[David Endicott, Director & CEO at Alcon]

So I think we're in a pretty good place with contact lens health.

[Issie Kirby, VP - Equity Research, Medical Technology & Life Sciences at Rothschild & Co Redburn]

Great. Thank you. And then just to follow-up on Unity and how revenue is being recognized with this product. Should we think about Unity as really a capital placement? To what extent are you guys leasing or perhaps bundling with your broader portfolio?

[Issie Kirby, VP - Equity Research, Medical Technology & Life Sciences at Rothschild & Co Redburn]

Just trying to get a sense of how these placements really hit the equipment line or if there's anything elsewhere within Surgical that we need to consider? Thanks.

[David Endicott, Director & CEO at Alcon]

Yes. Generally speaking, this is a capital purchase. I mean, I would just I would assume that. I mean, there are some of our customers are going to lease, but they'll use external leasing agencies to do that. For us, will be largely a capital.

[David Endicott, Director & CEO at Alcon]

We don't do any more leasing, I don't think. And there isn't any real volume discounting at this point. So we're early in the cycle. We've got a lot of demand I think from the market. So I think our ASPs are holding nicely kind of through this first ten weeks or so even though it's a bit early.

[Operator]

Thank you. Final question today is coming from Susanna Ludwig from Bernstein. Your line is now live.

[Susannah Ludwig, Director & European Research Analyst at Bernstein]

Hey, good afternoon and thanks for taking my question. Could you guys just go into a bit more granular detail on the lower growth in the consumables business as this is one of the weakest quarters since the pandemic? You've been talking about for a couple of quarters, the softer market, but sort of sequentially which regions were worse and should we expect this more subdued growth to continue in consumables through the rest of H2? And then I guess is there any difference in the price contribution, in consumables in Q2 versus Q1?

[David Endicott, Director & CEO at Alcon]

Yes. The last one, there's no real difference. I mean, what you see I mean, our consumables market and our consumables number is a pretty good proxy for what's going on in the market because our shares are meaningful in that area. And what you did see is I think correctly identified as a slower market and that happened both in The U. S.

[David Endicott, Director & CEO at Alcon]

And the international markets. So I would say that around the world it was a slow quarter for procedures. And I believe that to be kind of temporary. But again, we've called a little bit softer back half of the year, little more consistent with the front half. And so I would expect similar numbers kind of going forward.

[Susannah Ludwig, Director & European Research Analyst at Bernstein]

Great. Thanks.

[Operator]

Thank you. We reached the end of our question and answer session. I'd turn the floor back over to Dan for any further closing comments.

[Dan Cravens, VP - IR at Alcon]

All right. Thanks everybody. Thanks again for joining us. If you have any follow-up questions for investors, reach out to Alan Tringer, myself or for media, reach out to our corporate communications team. Appreciate your time. Thanks. Appreciate the interest.

[Operator]

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Participants

Executives

• Dan Cravens, VP - IR
• David Endicott, Director & CEO
• Timothy Stonesifer, SVP & CFO

Analysts

• Jeffrey Johnson, Senior Research Analyst at Robert W. Baird & Co
• Jack Reynolds-Clark, VP - European MedTech Equity Research at RBC Capital Markets
• Anthony Petrone, MD - Equity Research at Mizuho Financial Group
• Veronika Dubajova, Managing Director at Citi
• Richard Felton, Equity Research Analyst at Goldman Sachs
• Chris Pasquale, Partner & Senior Research Analyst - Medical Devices & Supplies at Nephron Research LLC
• Ryan Zimmerman, MD & Medical Technology Analyst at BTIG
• David Saxon, Senior Analyst at Needham & Company
• Lawrence Biegelsen, Senior Medical Device Equity Research Analyst at Wells Fargo
• Graham Doyle, Executive Director - Equity Research at UBS Group
• Issie Kirby, VP - Equity Research, Medical Technology & Life Sciences at Rothschild & Co Redburn
• Susannah Ludwig, Director & European Research Analyst at Bernstein