Carl Zeiss Meditec ETR: AFX reported lower revenue and profitability for the first nine months of fiscal 2025/2026, as foreign-exchange effects, weakness in ophthalmology consumables and the suspension of certain bifocal intraocular lens sales in China weighed on results.
Order entry totaled €1.606 billion, down 5.5% from a year earlier, or 3.3% lower at constant currency. Revenue declined 2.2% to €1.554 billion, while constant-currency revenue fell 0.7%. The company said order growth in EMEA helped offset weaker demand in the Americas and Asia-Pacific. Its order backlog stood at €432 million at the end of the third quarter, largely unchanged from the end of the second quarter and above the level at the start of the fiscal year.
Adjusted EBITA was €124.5 million, producing an 8.0% margin, compared with an 11.1% margin in the prior-year period. Reported EBITA was €108.4 million, or 7.0% of revenue. Management cited currency headwinds, an unfavorable mix marked by lower consumables sales, and several one-time items as pressures on earnings.
Ophthalmology remains under pressure
The Ophthalmology segment recorded revenue of €1.191 billion, down 4.8% year over year, or 2.9% lower on a currency-adjusted basis. Equipment sales declined 3%, while consumables revenue fell 5.7%.
Chief Financial Officer Justus Wehmer said the business was affected by foreign exchange, the suspension of bifocal IOL sales in China and weaker sales of refractive treatment packs in Asia. A successor bifocal IOL received its license in the second fiscal quarter but cannot yet be commercialized until it is relisted through China’s next volume-based procurement tender.
The tender process, initially expected earlier, is now anticipated in September or October, with implementation around December, according to Wehmer. He said the postponement has become an additional revenue headwind because the delayed relaunch outweighs the benefit of continued pricing for some existing models.
Refractive procedure volumes in China remained modestly higher year to date, but momentum weakened entering the key summer period. Wehmer said procedure volumes were up about 2% to 3% for the year to date, but declined 8% in June and 5% in July compared with the prior year. He attributed part of the development to a stronger pull-forward of military-related treatments earlier in the year.
Management said it had not seen pricing pressure in Chinese refractive treatment packs and that price realization remained in line with expectations. However, refractive procedure volumes softened in South Korea and Southeast Asia, while equipment sales, particularly cataract and diagnostic equipment, remained sluggish.
Ophthalmology’s margin fell to 5.2%, as gross margin was affected by currency, IOL inventory scrapping, weaker consumables and inventory devaluation tied to the planned wind-down of the CATALYS portfolio. The company said the bifocal IOL revocation represented about €30 million of revenue headwind, with an associated margin above the group average.
Microsurgery grows as EMEA outperforms
Microsurgery revenue increased 3.8% to €362 million, or 7.1% at constant currency. The segment benefited from strong third-quarter growth and delivery of neurosurgical systems. Its margin improved 0.4 percentage points to 12.7%, although gross margin remained below the prior year because of currency effects and higher amortization of capitalized research and development.
Regionally, EMEA revenue increased 5.4% to €509 million, with growth across core European markets. Americas revenue declined 2.6% to €397 million, although it rose 3.6% at constant currency as slight growth in the U.S. was offset by lower Latin American revenue.
Asia-Pacific revenue fell 8.7% to €648 million, or 7.6% at constant currency. The region represented 42% of group revenue, including China at 23%. India grew, while revenue declined in China, Japan and South Korea.
The company received €20.8 million in U.S. tariff refunds during the third quarter. Of that total, €11.5 million related to fiscal 2024/2025 and was excluded from adjusted EBITA, while €9.3 million related to the current fiscal year and was included in the adjusted result. Wehmer said the net impact on the nine-month period and full-year guidance was zero.
Operating cash flow rose to €146 million, helped by lower trade receivables, tariff refunds and lower income-tax payments. Net financial debt declined to €234.8 million as of June 30.
Portfolio changes and new product plans
Chief Executive Officer Andreas Pecher said Andreas Völker will become Head of Ophthalmology effective August 2026. Völker previously held leadership roles at Fresenius Medical Care and Vivonics.
The company also outlined early actions under its ProfitUp program. These include closing DORC’s handpiece-production site in Westerburg, Germany, and transferring handpiece production to Chesterfield, U.S. Carl Zeiss Meditec also plans to establish manufacturing capacity in Bangalore, India, though products to be made at the site have not yet been selected.
The company will combine its anterior- and posterior-segment surgery businesses, wind down the CATALYS portfolio by the end of the fiscal year, and sunset the QUATERA 700 in favor of the EVA NEXUS platform. The CATALYS wind-down is expected to reduce annual revenue by a mid-single-digit million-euro amount.
In Microsurgery, the company presented the ZEISS TORUS Ultrasonic Aspirator, which is awaiting U.S. FDA 510(k) clearance expected toward the end of the calendar year. The device is designed for cranial and spinal procedures and combines soft-tissue ablation, bone cutting and bone dissection capabilities.
Separately, Carl Zeiss Meditec announced an agreement with Aier Eye Hospital Group for the purchase and installation of 25 VISUMAX 800 femtosecond lasers, with rollout expected to begin later in 2026. Pecher said the company has reached 1 million cumulative SMILE pro procedures performed on VISUMAX 800 systems globally.
Outlook maintained, but company sees lower end of range
The company maintained its fiscal 2025/2026 outlook for revenue of approximately €2.2 billion to €2.5 billion and an adjusted EBITA margin of 8% to 10%. Management said the current business trend points toward the lower portion of the margin range, reflecting the softer start to China’s refractive summer season and the importance of fourth-quarter equipment sales.
The outlook excludes special items in the mid-double-digit-million-euro range, including R&D reprioritization, bifocal IOL scrapping, legal expenses and ProfitUp costs. The company also expects a goodwill impairment of about €150 million in the Ophthalmology segment during the fourth quarter, primarily related to the former lantech acquisition. Management said the impairment would not affect adjusted EBITA or cash flow.
For fiscal 2028/2029 and beyond, Carl Zeiss Meditec reiterated its target for at least mid-single-digit organic revenue growth and an adjusted EBITA margin above 15% in the medium term.
About Carl Zeiss Meditec (ETR:AFX)
Carl Zeiss Meditec AG operates as a medical technology company in Germany, rest of Europe, North America, and Asia. It operates in two segments, Ophthalmology and Microsurgery. The Ophthalmology segment offers products and solutions for the diagnosis and treatment of chronic eye diseases, such as ametropia (refraction), cataracts, glaucoma, and renital disorders. This segment also provides devices for general ophthalmological examination and care, including slit lamps, refractometers, tonometers, optical coherence tomography devices, and fundus cameras; and devices for functional diagnostics (perimeters), as well as digital products for storage, evaluation, and sharing of clinical data.
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