Alcon Q2 2026 Earnings Report

Alcon EPS Results

• Actual EPS: $0.84
• Consensus EPS: $0.77
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: $0.76

Alcon Revenue Results

• Actual Revenue: $2.82 billion
• Expected Revenue: $2.72 billion
• Beat/Miss: Beat by +$101.76 million
• YoY Revenue Growth: +8.00%

Alcon Announcement Details

• Quarter: Q2 2026
• Date: 8/10/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, August 11, 2026
• Conference Call Time: 8:00AM ET

Alcon (NYSE:ALC) (NYSE: ALC) is a global eye care company focused on the development, manufacture and commercialization of surgical equipment and vision care products. Founded in 1945, Alcon has built a portfolio that supports ophthalmic surgeons, optometrists and consumers with technologies and consumables used in cataract and retinal surgery as well as daily vision care needs. The company returned to independent public-company status through a corporate separation completed in 2019.

In its surgical business, Alcon provides a range of products and systems for cataract removal, intraocular lens implantation and vitreoretinal procedures, alongside related consumables and instrumentation. The company’s offerings are used in hospital and ambulatory surgical settings and are supported by clinical training, surgical support services and product-related research aimed at improving procedural outcomes and surgical efficiency.

Alcon’s vision care segment supplies contact lenses, lens care solutions and a variety of consumer eye-care products designed for daily wearers and eye-care professionals. These products are distributed through eye-care practices, retail channels and direct partnerships with healthcare providers. The company emphasizes product innovation, quality manufacturing and regulatory compliance to meet the needs of patients and practitioners in diverse clinical and consumer settings.

Operating on a global scale, Alcon markets and sells its products across the Americas, Europe, Asia-Pacific and other regions, collaborating with surgeons, optometrists and distributors worldwide. The company maintains research and development and manufacturing activities to support new product introductions and to respond to evolving standards in ophthalmic care and vision health.

Alcon Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Alcon reported 7% second-quarter sales growth to $2.8 billion, with core diluted EPS up 9% to $0.84 and core operating margin expanding 160 basis points. The company raised its 2026 core EPS growth outlook to 12%-15% and operating-margin expansion outlook to 90-190 basis points.
• Positive Sentiment: UNITY equipment sales increased 25%, supported by strong adoption, higher-than-expected selling prices, and a healthy second-half placement funnel. Management said the platform is gaining share and improving surgical efficiency in both retinal and cataract procedures.
• Positive Sentiment: Recent vision-care launches are gaining traction: PanOptix Pro grew double digits and represents about 90% of PanOptix implants in the U.S., while TRYPTYR reached approximately 5% share less than a year after launch and Systane delivered another quarter of double-digit growth. Contact lenses also reached a record global market-share position, driven by U.S. gains and momentum in daily and reusable products.
• Negative Sentiment: Alcon discontinued its PowerVision accommodating-IOL programs after clinical data showed persistent, unpredictable postoperative distance-vision shifts in some patients. Surgical glaucoma also remained a drag because of reimbursement changes, while U.S. cataract procedure volumes were flat.
• Neutral Sentiment: The company expects a roughly $60 million U.S. tariff refund in the third quarter, with approximately two-thirds reinvested into commercial activities and new-product launches. Alcon maintained its 2026 constant-currency sales-growth guidance at 5%-7%, citing tougher equipment comparisons in the second half but increasing contributions from UNITY, TRYPTYR, Valeda, and PanOptix Pro.

Presentation

[Operator]

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

[Dan Cravens, VP and Global Head Investor Relations at Alcon]

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.

[Dan Cravens, VP and Global Head Investor Relations at Alcon]

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'll also discuss certain non-IFRS financial measures. These measures may be calculated differently from, and may not be comparable to similar measures used by other companies.

[Dan Cravens, VP and Global Head Investor Relations at Alcon]

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

[David Endicott, CEO at Alcon]

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. 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.

[David Endicott, CEO at Alcon]

Surgeons are experiencing firsthand the benefits of UNITY CS, including its advanced energy delivery for phaco, improved fluidics, and streamlined workflow. Encouragingly, UNITY ASPs have exceeded our expectations and underscore our customers' belief in the platform's differentiated value. With strong customer engagement and a healthy sales funnel, we have clear visibility into our second half placements.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

We expect this momentum to extend internationally as we roll out PanOptix Pro and continue to build on the strength of Clareon Toric. Early launches in Japan, Canada, Australia, and more recently in Europe, have been well received, supporting our confidence in share stabilization and long-term growth. We'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.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

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 from Valeda, our first of its kind treatment for dry AMD.

[David Endicott, CEO at Alcon]

This technology uses three specific wavelengths of light to improve mitochondrial activity and retinal health. Importantly, clinical studies showed that more than 80% of patients maintained or improved their vision at approximately two years. Adoption accelerated during the quarter as we expanded the installed base and increased utilization across existing accounts. We were also encouraged by continued progress with the Medicare administrative contractors, which we believe will further support access to this therapy. Based on current adoption trends, clinical experience, and reimbursement progress, we continue to believe the platform has the potential to generate sales of between $100 million and $150 million over time.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

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. 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.

[David Endicott, CEO at Alcon]

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 $1 billion brand in the coming years.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

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.

[David Endicott, CEO at Alcon]

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%-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.

[David Endicott, CEO at Alcon]

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 prices contributed less to growth.

[David Endicott, CEO at Alcon]

In summary, our focus remains on disciplined execution of a steady flow of new product launches. Combined with our leading positions in a broad range of attractive eye care markets, we believe Alcon is well positioned to extend its leadership, capitalize on future growth opportunities, and create long-term shareholder value. With that, I'll turn the call over to Tim, who will walk you through the financials.

[Tim Stonesifer, CFO at Alcon]

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%.

[Tim Stonesifer, CFO at Alcon]

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.

[Tim Stonesifer, CFO at Alcon]

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 continue to drive meaningful growth in the category.

[Tim Stonesifer, CFO at Alcon]

TRYPTYR continues to perform well, with prescription demand growing steadily and high refill rates. We have made meaningful progress on market access, positioning us to increase investment behind the brand in the 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.

[Tim Stonesifer, CFO at Alcon]

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 in manufacturing efficiencies, as well as $15 million in other revenue from a licensee. The prior year period also included higher inventory-related costs.

[Tim Stonesifer, CFO at Alcon]

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

[Tim Stonesifer, CFO at Alcon]

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.

[Tim Stonesifer, CFO at Alcon]

Moving to our outlook for 2026, we continue to assume that aggregate eye care markets grow 3%-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%-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.

[Tim Stonesifer, CFO at Alcon]

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.

[Tim Stonesifer, CFO at Alcon]

Turning to profitability, we are increasing our expected core operating margin expansion to a range of 90 basis points-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.

[Tim Stonesifer, CFO at Alcon]

Lastly, we are increasing our core diluted EPS growth outlook to a range of 12%-15% in constant currency. This reflects our strong operational performance, as well as the benefit from our share repurchase program. In summary, we delivered another quarter of solid financial results. Sales grew 7%, earnings increased meaningfully, free cash flow remained healthy, and we returned significant capital to shareholders. These results reflect the strength of our portfolio, the impact of recent launches, and the dedication of more than 25,000 associates around the world. With that, I will turn it back to David.

[David Endicott, CEO at Alcon]

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]

Thank you. We will now be conducting a question-and-answer session. In the interest of time, we ask you please limit yourself to one question and one follow-up. If you would like to ask a question at this time, you may press star one from your telephone keypad and a confirmation tone indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your questions.

[Anthony Petrone, Analyst at Mizuho Group]

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

[David Endicott, CEO at Alcon]

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

[David Endicott, CEO at Alcon]

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

[Anthony Petrone, Analyst at Mizuho Group]

Yeah, IOLs, sure. 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 timeframe. Thanks.

[David Endicott, CEO at Alcon]

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

[David Endicott, CEO at Alcon]

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. We get that done. I think, again, we continue to push our lenses out in front of competitive lenses. We're very confident in our long-term share of stabilization. I would say that we're getting towards the end of it, but we're not there.

[David Endicott, CEO at Alcon]

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. I feel pretty good about where we're headed. 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.

[David Endicott, CEO at Alcon]

I think this is the second quarter in a row we've seen more than 150 basis points in the U.S. move up. I do think that for some surgeons, doing more AT-IOLs is a very productive thing. They'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. I think that's moving the market, and that does help. As we kind of settle out on share, and I think we will settle out on share, we benefit a lot from penetration. I'd just keep that in mind.

[Anthony Petrone, Analyst at Mizuho Group]

Thank you.

[Operator]

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

[Brett Fishbin, Analyst at KeyBanc]

Hey, guys. Thank you so much for taking the questions. I will just ask two. First on the tariff refund and reinvestment plans. Was just curious if you could give a little bit more color on where you are driving that incremental investment into the business in 2H. Should we think of this step up in investment activity as a little bit more one-time in nature, given the fact that it is tied to the tariff refund?

[Tim Stonesifer, CFO at Alcon]

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

[Brett Fishbin, Analyst at KeyBanc]

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. Curious if there is any signals that things are picking up a little bit, maybe closer to the mid-single digit or mid to high end of the typical 4%-6% range after what we viewed as some softer quarters. Thank you so much.

[David Endicott, CEO at Alcon]

Yeah, 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%. In aggregate, it was 6%. I would say 6% is very healthy globally. What you are really seeing is the U.S. is bouncing some price. I think it is slapping two price increases. International is much more difficult to get price, so you are seeing much more mix there. I would just say that in aggregate, it looks pretty normal in that 4%-6% range. It is really on the high end of it.

[Operator]

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

[Ryan Zimmerman, Analyst at U.S. Bancorp]

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

[David Endicott, CEO at Alcon]

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

[David Endicott, CEO at Alcon]

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. We've probably been through, I would say, a number of accommodating ideas over the last four or five years, including PowerVision, and we'll continue to look at them. There's still more out there. Somebody's got to figure this out. I suspect it'll be us, but we're watching very carefully. I would think about accommodating and tunable as the end game. It's just further out than we wish it was.

[Ryan Zimmerman, Analyst at U.S. Bancorp]

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

[David Endicott, CEO at Alcon]

Well, obviously the reimbursement arena there has changed the dynamic quite substantially, and I think we are obviously working on that dynamic, but I do not know that that changes anytime soon, so I would not count on that. I think from our point of view, Hydrus still is the most effective implant out there. But it is used by a select group of folks who really understand that point of view. I think what we believe is that there are other parts of the glaucoma therapy in the algorithm of treatment that probably have more accessibility. So think about Voyager.

[David Endicott, CEO at Alcon]

We think that is a really good idea. We think everybody should be starting with SLT. I think that is a broadly accepted idea. I think we are excited about what we could do there. 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.

[David Endicott, CEO at Alcon]

But as people really understand that product, I think we are going to get better and better traction on it. So we are 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.

[Ryan Zimmerman, Analyst at U.S. Bancorp]

Thank you.

[Operator]

The next question's from the line of Graham Doyle with UBS. Please proceed with your questions.

[Graham Doyle, Analyst at UBS]

Yep. Morning. Thanks, guys, for taking my questions. Just a couple from me. Just firstly, on the top-line guide, Tim, the 5%-7%, is it still reasonable to think the 7% is plausible and on 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. Then 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'd be good to get that sense.

[Tim Stonesifer, CFO at Alcon]

Yeah, Graham, thanks for the question. Listen, I'll leave it to you as to what you think is plausible. We give a range of 5%-7%. Historically, we have been kind of a midpoint type of company is what we try to say. I will say at the beginning of the year, we stated that the revenue would be relatively level loaded. I think that's still going to be the case. We get a lot of questions on the comps, to your point, 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.

[Tim Stonesifer, CFO at Alcon]

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. 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%-7% guide, again, that assumes aggregate markets grow at 3%-4%.

[David Endicott, CEO at Alcon]

Yeah, 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. Look for the back half to be a meaningful impact on Europe. Vivity Pro, I would expect that late this year, maybe early next.

[David Endicott, CEO at Alcon]

It just kind of depends. Neither the U.S. nor Europe have that yet, but it's been submitted to both. On TruPlus, both the U.S. and CE Mark. We have CE Mark approval. We just received it, I think, recently. Again, I would be careful with that one because we'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 three of those kind of carefully, to prioritize Vivity and PanOptix.

[Operator]

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

[Veronika Dubajova, Analyst at Citi]

Hi, guys. Good afternoon. Thank you for taking my questions, please. I have two. One is on equipment, and the second one is on the gross margin. On equipment, Tim, David, just curious if you could provide a little bit more color on what the contribution from Valeda was in the quarter and to what extent it's actually visibly driving an acceleration in the equipment growth rate. I've not heard you guys articulate the peak sales potential before today, so it'd be really good to understand kind of what's gotten you there and how much of a contributor it's already being.

[Veronika Dubajova, Analyst at Citi]

My second question is, Tim, for you, just on the gross margins, really strong improvement year-on-year, and also sequentially 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. Thanks, guys.

[David Endicott, CEO at Alcon]

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

[Tim Stonesifer, CFO at Alcon]

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

[Operator]

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

[David Saxon, Analyst at Needham & Company]

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

[David Endicott, CEO at Alcon]

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, two price increases. So we had a couple there that were meaningful. The important part of 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 PRECISION1 in categories that are growing very nicely.

[David Endicott, CEO at Alcon]

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. 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.

[David Endicott, CEO at Alcon]

We've got reusables in categories now like PRECISION7 that creates a new avenue for growth. We've got data in multifocal astigmatic lenses, which I think makes TOTAL30 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, yeah, pretty good, but maybe a little softer than normal, but I think it'll be fine.

[David Saxon, Analyst at Needham & Company]

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

[David Endicott, CEO at Alcon]

Yeah. I think the one thing I'm going to look to. TRYPTYR, I think, is going into IQVIA in July 10th. So you can actually get the data now. I think we're giving them the data that we've got from the third party that we use. I think they should have relatively accurate data for you to use on this one. Again, I think we're excited about it because of the share movement and also the refill rates.

[David Endicott, CEO at Alcon]

I think probably the thing that we were probably interested in, and we got a lot of feedback on, was how will the patients like this. The refill rates seem to indicate that patients are getting great relief out of this and are happy to refill it. So we're very positive about where TRYPTYR is headed.

[David Saxon, Analyst at Needham & Company]

Great. Thanks so much.

[Operator]

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

[Larry Biegelsen, Analyst at Wells Fargo]

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

[David Endicott, CEO at Alcon]

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

[David Endicott, CEO at Alcon]

That stuff was really not done in a way that we were comfortable with to launch it. We've been working backwards from what is an excellent design and an excellent technology. It's hyper parallel OCT, which I think is going to be really great for pre-op cataract use. That should be out later this year in a, I would say, pilot form.

[David Endicott, CEO at Alcon]

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. The UNITY platform wrapped around with the Adi system is now kind of complete.

[David Endicott, CEO at Alcon]

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, Analyst at Wells Fargo]

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

[David Endicott, CEO at Alcon]

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

[Larry Biegelsen, Analyst at Wells Fargo]

Thank you.

[Operator]

The next question's in the line of Steve Lichtman with William Blair. Please proceed with your questions.

[Steve Lichtman, Analyst at William Blair]

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

[David Endicott, CEO at Alcon]

Not really. We have been surprised, I think, both in terms of positive. We have always known that the eye care business was relatively independent of consumer confidence. The contact lens business sometimes, I think historically, has had some stall out in trade up. If you are in a pair of reusable lenses and you can wait and you can put those dailies in on some other month, that is probably been the only sensitivity that we have seen. We saw mostly trade up internationally that drove the market. In the U.S., we saw really steady trade up and actual price went up meaningfully in the United States. On the contact lens business, I would say relatively normal.

[David Endicott, CEO at Alcon]

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

[Steve Lichtman, Analyst at William Blair]

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

[Tim Stonesifer, CFO at Alcon]

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

[Steve Lichtman, Analyst at William Blair]

Yeah. Thanks, guys.

[Tim Stonesifer, CFO at Alcon]

Thanks.

[Operator]

The next question is in the line of Young Li with Jefferies. Please proceed with your questions.

[Young Li, Analyst at Jefferies]

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

[David Endicott, CEO at Alcon]

Young, you have got most of it right there. The big idea here has been conversion on retina procedures in the near frame. In the first year, we spent a lot of time on the retina guys because it was a much different procedure than what we do with CONSTELLATION. So we changed almost everything. We changed the cut speed, we changed the entry system, we changed the gauge of the instrumentation. We changed the fluidics. As a consequence, we also changed the speed and the safety of what was going on. It is much safer.

[David Endicott, CEO at Alcon]

If you were doing four or five vitrectomies in a day, you could probably do another one. That matters a lot. You are talking about saving 20%-30% in time. That effect, when we got people really wrapped their heads around the retina benefit that we had, mattered a lot, and I think that has been a real positive halo going forward. In fact, I think that accounts for a lot of the reason we have gotten such a nice mix right now of more UNITY VCS probably than we had expected.

[David Endicott, CEO at Alcon]

UNITY CS is coming up the curve, but people are also electing to buy UNITY VCS because it is handy, and particularly in the international markets where ORs are shared by the retina folks and the cataract guys. You do not have to move one machine over, pull the other one in. It is just a better buy. So if you are in the market for it, I think it is very plausible and efficient to buy this one machine. On the cataract side, I think equal story, same story, really.

[David Endicott, CEO at Alcon]

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

[David Endicott, CEO at Alcon]

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?" It does not take very long if you schedule correctly. So we are certainly replacing older machines that are going out of warranty and out of service. We will continue to do that, but we are also getting some modest share. We have got a lot of shares. So I would not say we are getting a huge bunch of new share, but we are very competitive with this machine. Again, it is doing what we hoped it would do.

[Young Li, Analyst at Jefferies]

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

[David Endicott, CEO at Alcon]

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

[Young Li, Analyst at Jefferies]

All right. Fair enough. Thank you.

[Operator]

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

[Jeff Johnson, Analyst at Baird]

Yeah. Thanks. Good morning, guys. David, I just wanted to follow up on your comments. It sounds like you have great visibility in the second half here on the UNITY order book. That is encouraging, kind of locks 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 or smaller today than it was maybe six months ago? How to think about that backlog going into 2027? Then I have one follow-up. Thanks.

[David Endicott, CEO at Alcon]

I think we are just working through the demand that we see out there, so I am not sure it is 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 have worked our way through that part of it.

[David Endicott, CEO at Alcon]

I think now I would just describe it as relatively uniform opportunity, and uniform around the world. I think we are in every market now. We are in with UNITY CS and UNITY VCS. We have got demo units everywhere. We are demoing them every day. We have got a lot of good programs out there to make it easy for people to try and use and buy. So, I would just call this business as usual at this point, and we feel pretty good about it.

[Jeff Johnson, Analyst at Baird]

Fair enough. Tim, maybe a guidance question for you, just on the EPS guidance change. You raised by a few pennies at the midpoint there on a constant currency basis. I think about the tariff refund. Obviously, you are reinvesting 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. Just help us maybe bridge the change in the EPS guidance change that you made today.

[Jeff Johnson, Analyst at Baird]

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

[Tim Stonesifer, CFO at Alcon]

No, we feel pretty good about the investments and the underlying core operating margin. I think you have most of the components. If you do the math on the buyback and the refund, that will pretty much get you there. Throw in the one-timer as well. But again, every year we have one-timers, so that one I would be a little careful with.

[Tim Stonesifer, CFO at Alcon]

But for sure, the refund and the share buyback is flowing through. But overall, we think that we continue to manage the cost with a lot of discipline. We are making the appropriate trade-offs. Again, as we get that revenue growth, that gives you a little bit more operating leverage. So the fundamentals seem to be working right now.

[Jeff Johnson, Analyst at Baird]

Understood. Thank you.

[Operator]

Our next question is from the line of Tom Stephan with Stifel. Please proceed with your question.

[Tom Stephan, Analyst at Stifel]

Great. Hey, guys. Thanks for taking the questions. First one from me on implantables. Pro doing well, but growth in the segment a little subdued again this quarter against an easy comp. As we think about competition accelerating from here, you are lapping the 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? Then with Vivity Pro, what is your confidence 2027 implantables can maybe get back to market growth? Then I will have a follow-up.

[David Endicott, CEO at Alcon]

Well, the implantables growth is a function of three different things, right? If you look at our share all in, we were flat in share, so we were already stable. The problem was it was not AT-IOLs that we were flat in, and we were losing in AT-IOLs and gaining in monofocal. I think there are three pieces. One is market growth, one is penetration, one is share. I think you have to take those three kind of independently. I think market growth in the U.S. has been below what we would normally expect, but again, we have forecasted that most of the year, so I do not think that was a surprise to us.

[David Endicott, CEO at Alcon]

I think on that one, we will have to see where we sit next year, and I think as we get into next year, we will take a position on that. But for now, we do not 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 basis points. That is probably 50 basis points higher than what we think the historical average has been.

[David Endicott, CEO at Alcon]

So people with promotion have obviously decided to use more AT-IOLs. We like that move because I think, as Tim said, one point of market growth for us affects us about $10 million, but a point of penetration is about $15 million. So if you had to trade one of those for the other, you would trade it that way. Now, we will see where penetration goes, but we have had a couple of quarters now that look pretty good. I would be generally on the positive side of that number.

[David Endicott, CEO at Alcon]

And then share is a bit of a wild card. I think this is a very competitive market and people are trying lenses, and surgeons like to try lenses, and there are some good ones out there. So, I think what we will see is continued trial for the new lenses that come in. But I think the difference between today and maybe two years ago is, I think everybody knows we have 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.

[David Endicott, CEO at Alcon]

It is doing really well for trifocals. I think it actually gained share if we were looking in 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. Again, I think that is what people are looking for. They are looking for a better use of visual of the amount of light. So I think that will play well.

[David Endicott, CEO at Alcon]

And then we have got a monofocal plus for those folks who really are looking for a better monofocal, and that market in Europe has been fairly positive. So we got a little bit of everything for everybody, and I think going forward, I do not know that anybody can match what we have got on a cadence level going forward after that. So we are excited about where we are headed. But I would give ourselves some time here to weather the storm of many people entering this market. Be patient with it, but I think it's headed the right direction.

[Tom Stephan, Analyst at Stifel]

Got it. My follow-up, maybe just on constant currency growth, ex equipment. When I look at that number, I am arriving at, I think around 5% constant currency in the first half. With the two year CAGR closer to 4%. David, I will stick with you. How do we think about this 4%-5% ex-equipment growth moving forward, particularly in 2027 when you really fully lap UNITY and especially relative to your 6%-8% long-term target that you laid out last year?

[Tom Stephan, Analyst at Stifel]

It would be great if you can talk about that ex-equipment growth in the 4%-5% range, maybe reflect on the LRP, and then I guess the heart of my question would be, why won't 2027 sales growth decelerate from 2026 levels as you lap UNITY? Thanks, guys.

[David Endicott, CEO at Alcon]

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

[Tim Stonesifer, CFO at Alcon]

Valeda.

[David Endicott, CEO at Alcon]

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

[Tom Stephan, Analyst at Stifel]

Great. Thanks, guys.

[Operator]

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

[Susannah Ludwig, Analyst at Bernstein]

Good afternoon, and thanks for taking my questions. I have two, please. I guess first on ocular health, Systane has been a key contributor to growth there with the multi-dose preservative-free being a key driver. I guess could you share roughly what percentage of the Systane business is now that multi-dose preservative-free, and how sustainable you see the broader Systane growth is? Then after that, 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 surging capacity or if there is anything else going on there.

[David Endicott, CEO at Alcon]

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

[Tim Stonesifer, CFO at Alcon]

Yeah. [inaudible]

[David Endicott, CEO at Alcon]

They're working on it. Systane has been a double-digit grower for us.

[Tim Stonesifer, CFO at Alcon]

Yeah, 15%.

[David Endicott, CEO at Alcon]

15% is about the MDPF level. I think we got that for you. That category for us has been exciting and I would say that what you should see in the back half is also some increased promotion around this area. It seems like the more we talk about MDPF, the better it goes, and I think the market wants it. I'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.

[David Endicott, CEO at Alcon]

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. The cataract market, I will just make this point. The cataract market is certainly part of our business, but we talk about aggregate markets as growing 3%-4% in the quarter, and that was pretty much where we were. It is certainly what we forecasted. Most of our markets though are growing in the mid-single digits.

[David Endicott, CEO at Alcon]

So if you take artificial tears, like we were talking, or dry eye Rx or contact lenses or retina procedures or surgical equipment, all that stuff, basically, we have had pretty solid mid-single digit growth or higher. What we continue to believe, though, is the U.S. is going to remain relatively flat to slightly up in the cataract market. That is largely because what is going on is surgeons are incorporating optometrists and other professionals into their workflows to get them more surgical time.

[David Endicott, CEO at Alcon]

As we do that, it is going to take them some time to do that, but that allows them then to find more time for more cataracts because the demand is certainly there. It is just a matter of too many surgeons retiring and too many young folks taking their place that are not as productive as the ones retiring. So that will change over time, but we see it pretty much as kind of these trends take some time to manage.

[David Endicott, CEO at Alcon]

They should recover to their historical rates at some point. We are not calling that this year. We will update it obviously for next year when we get there. But the general trend underneath that for IOLs, as I just mentioned, was that AT-IOLs are up, international markets are healthy, and I think we feel pretty good about where we are doing with our product lines.

[Susannah Ludwig, Analyst at Bernstein]

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

[David Endicott, CEO at Alcon]

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

[David Endicott, CEO at Alcon]

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

[Susannah Ludwig, Analyst at Bernstein]

Great. Thank you.

[Operator]

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

[Issie Kirby, Analyst at Redburn]

Hey guys, thanks for fitting me in. 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 timeline around that. That would be helpful to know if you have. What's going to differentiate this product versus competitors in the sales, given this could be quite a meaningful category for you guys? Thank you.

[David Endicott, CEO at Alcon]

Yeah. We really haven't spent much time on it, but I would say that we're excited about it. It's a next year product. 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.

[Issie Kirby, Analyst at Redburn]

Okay. Thank you.

[Operator]

Thank you. 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.

[Dan Cravens, VP and Global Head Investor Relations at Alcon]

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 comm team. Thanks, and have a great rest of your day.

[Operator]

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

Participants

Executives

• Dan Cravens, VP and Global Head Investor Relations
• David Endicott, CEO
• Tim Stonesifer, CFO

Analysts

• Anthony Petrone, Analyst at Mizuho Group
• Brett Fishbin, Analyst at KeyBanc
• Ryan Zimmerman, Analyst at U.S. Bancorp
• Graham Doyle, Analyst at UBS
• Veronika Dubajova, Analyst at Citi
• David Saxon, Analyst at Needham & Company
• Larry Biegelsen, Analyst at Wells Fargo
• Steve Lichtman, Analyst at William Blair
• Young Li, Analyst at Jefferies
• Jeff Johnson, Analyst at Baird
• Tom Stephan, Analyst at Stifel
• Susannah Ludwig, Analyst at Bernstein
• Issie Kirby, Analyst at Redburn