Alcon Q3 2026 Earnings Call Transcript

Alcon (NYSE:ALC) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Alcon’s Q3 sales grew 5%, leading to year-to-date growth of 6% and maintaining their full-year guidance of approximately 6% sales growth and double-digit core EPS growth, despite competitive pressures.

The company emphasized robust growth in surgical equipment and consumables, particularly in the U.S., while vision care and contact lenses also showed strong performance driven by innovation and market share gains.

Notable product developments include the FDA approval of Vivity Pro/Vivini Pro IOLs and strategic acquisitions like Neurotech Pharmaceuticals to enhance the portfolio in the retina segment.

The company reported a strong financial position, with core gross margin increasing to 65.7% and core diluted EPS up by 15% year-over-year, alongside significant free cash flow generation and shareholder returns.

Alcon remains confident in sustaining above-market growth through innovation, premiumization and strategic market entries like the launch of Brightly and the acquisition of Neurotech, despite acknowledging some market headwinds into 2027.

Full Transcript

OPERATOR

Greetings. Welcome to the Alcon third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Dan Cravens, VP and Global Head, Investor Relations. Thank you, Dan. You may begin.

Dan Cravens (VP and Global Head, Investor Relations)

Welcome to Alcon’s third 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 today will include forward-looking statements, including statements regarding our future outlook. We undertake no obligation to update these statements as a result of new information or future events, except as required by law. Actual results may differ materially from those expressed or implied in these forward-looking statements. 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 on file with the Securities and Exchange Commission and available on their website at sec.gov. We will also discuss certain non-IFRS financial measures. These measures may be calculated differently from and may not be comparable to similar measures used by other companies. They should be considered in addition to, and not as a substitute for, IFRS-prescribed performance measures. Reconciliations 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 third quarter. After his remarks, Tim will walk through our financial performance in the quarter and outlook for the remainder of the year. 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 (Chief Executive Officer)

Thanks, Dan, and good morning, everyone. In the third quarter we grew sales 5%, bringing year-to-date growth to 6%. We remain on track to deliver on our full-year guidance of approximately 6% sales growth and double-digit core EPS growth, despite some specific areas of competitive pressure. As I reflect on the quarter, we saw good momentum across several parts of the portfolio, and surgical equipment and consumables remained strong, particularly in the U.S., where demand for Unity and Valeda continued to be robust, while implantables continued to grow in our international markets.

But that growth was offset by competitive pressures in the U.S. and in vision care. Contact lenses and ocular health both delivered solid growth, driven by share gains in contact lenses, triptier and sustainable. Now Tim will take you through the detailed financials, so let me focus on what’s driving the business and why we remain confident about the opportunities ahead. Underpinning our conviction that we can continue to grow faster than the market is a steady cadence of innovation, supported by clinical evidence that differentiates our products. At this fall’s major congresses we shared new data demonstrating the benefits of our latest technologies for surgeons, eye care professionals, and patients. At ESCRS we presented new data reinforcing the unsurpassed near vision performance of PanOptix Pro and the surgical efficiency of Unity VCS.

And at the Optometry and Ophthalmology Annual meetings in the U.S., we shared new data showing Systane PRO delivered symptom relief clinically comparable to the prescription product Miebo, with the accessibility and convenience of an over-the-counter option. In addition, new research on Triptyar and dry eye showed clinically meaningful improvements in patients’ ability to work and perform daily activities, with more than 70% reporting satisfaction with digital device use and end-of-day comfort.

We also highlighted Valeda, the first and only FDA approved treatment for early and intermediate dry AMD. We continue to build awareness among ophthalmologists and engage the broader eye care community to identify appropriate patients and broaden access to this important new treatment. Together these data reinforce the differentiation of our newest products and support our efforts to translate that innovation into sustainable revenue growth. Now we’re seeing that innovation translate into commercial momentum in equipment, where Unity VCS and CS, along with the latest, drove double-digit growth in the U.S. Unity continues to gain significant traction at some of the nation’s most prominent academic medical centers, with placements secured in 40% of U.S. teaching hospitals in the past year alone. Importantly, when combined with our legacy platform, our equipment is now available in 98% of ophthalmology teaching programs, providing broad exposure to the next generation of surgeons.

Turning to implantables, sales were down 2%, with IOLs down 1%, driven primarily by competitive launches in the U.S. premium IOL category and continued reimbursement challenges for dual procedures in glaucoma implants. In the U.S., competitive trialing and sampling of IOLs remain significant, and we expect that activity to continue through the early part of next year. At the same time, we are strengthening our competitive position with the next wave of innovation in our IOL portfolio.

Vivity Pro/Vivini Pro received FDA approval in the U.S. in early November, with CE Mark expected soon. This lens was uniquely designed to improve near and intermediate vision without sacrificing distance or contrast. Our clinical data package at launch will include direct comparisons to competitive lenses, and we began the U.S. KOL release last week and look forward to the full launch in January, with expansion into select European markets to follow during the first quarter.

Additionally, TruPlus, our first entrant in the monofocal plus segment, is now broadly available in the U.S. and rolling out across Europe. Looking forward, our experience in Europe gives us confidence in how these competitive dynamics can evolve. Competitive launches there have now been in market for some time, and with PanOptix Pro as our response, we returned to growth and are regaining PCIOL share. That provides an encouraging reference point as we prepare for the full U.S. and European launches of Vivity Pro in January. More broadly, we believe this next wave of innovation can strengthen our performance well beyond the near term.

PanOptix Pro, Vivity Pro, and TruPlus are the beginning of a steady cadence of new IOL technologies that we believe will position us to drive sustainable above-market growth. Turning to contact lenses, we continue to gain share in the U.S. across both dailies and reusables, supported by the breadth of our Water Innovations portfolio. That performance is an important example of our ability to win through differentiated innovation and commercial execution. The underlying market continues to benefit from premiumization as consumers move towards daily disposables and specialty lenses. The Total and Precision families give us premium and high-performance platforms, while innovations such as Total30 Multifocal for Astigmatism expand our reach into higher-value specialty segments.

We remain well positioned to drive continued share and value growth. Finally, in ocular health, execution remains strong across both our prescription and consumer dry eye franchises. Triptyr continues to build momentum, reaching approximately 6% market share as of October. We’ve also recently initiated direct-to-consumer promotion to increase patient awareness and drive demand. We’re making solid progress against our reimbursement objectives, with now more than two-thirds of commercial lives covered. On the consumer side, Systane delivered another quarter of double-digit growth, led by our multi-dose preservative-free formulations, including Systane PRO.

As we continue to gain share in a fast-growing market, we’re also continuing to broaden our consumer eye care portfolio. Just a few weeks ago, the FDA approved Brightly, our new redness reliever eye drop. Brightly works in just one minute and provides up to 12 hours of redness reduction, lasting up to 50% longer than Lumify. We expect Brightly to be available at major retailers and online in the first quarter. Before turning to the market environment, let me highlight an important addition to our Retina portfolio. We recently acquired Neurotech Pharmaceuticals, adding Inselto, the first and only FDA approved treatment for macular telangiectasia type 2, or MacTel. This is a rare and progressive retinal disease that can cause irreversible central vision loss. Inselto is an encapsulated cell therapy that is intended for surgical intravitreal implantation.

Neurotech is strategically compelling because it sits at the intersection of cell therapy, pharmaceuticals, and surgery, and it plays directly to Alcon’s leadership in surgical retina. There are approximately 25,000 diagnosed MacTel patients in the U.S. today, with an additional 2,000 to 3,000 newly diagnosed each year, and coverage is largely established. By combining Neurotech’s differentiated technology and cell therapy capabilities with Alcon’s commercial reach and retina relationships, we believe we can broaden access and build an important new long-term growth platform.

We expect peak sales between 250 to 400 million, with the ultimate trajectory largely dependent on how quickly patients are identified and brought into treatment. We’re excited to welcome the Neurotech team and believe the acquisition strengthens both our retina franchise and the diversification of Alcon’s future growth. Turning briefly to our efforts with Aerie, we’re pleased to report enrollment is complete in our pivotal Phase 3 program, and we remain on track for a 2027 FDA submission and a 2028 FDA approval decision.

Before I close, let me share a few observations about the market environment. Let me start with contact lenses. Globally, the market remains healthy, growing in line with our assumptions at approximately 4% to 5%, with roughly 3 points coming from price and 2 points from mix. The U.S. remains the strongest market, growing approximately 5% to 6%. Growth outside the U.S. is more modest, particularly in Europe, where online channels and private label brands continue to put pressure on pricing.

Although mix remains positive across markets, the important trend is continued premiumization as consumers move toward daily disposables and specialty lenses. That shift supports positive mix and plays directly to the strength of our portfolio in these higher-valued categories. In cataract procedures, growth remains in line with our assumptions and below historical levels, reflecting capacity constraints in the U.S. and reimbursement and hospital economics internationally. At the same time, premiumization remains a meaningful source of value growth, and we believe the strength and breadth of our premium IOL portfolio positions us well to capitalize on this trend. U.S. advanced technology IOL penetration reached 21.9%, up 160 basis points year over year, while international penetration increased 60 basis points to approximately 16%.

And across our other eye care markets, underlying trends remain healthy and in line with our expectations. So we put all that together. We estimate that our aggregate markets grew approximately 3% in the third quarter, at the low end of our assumptions underlying our guidance. Looking ahead, our base case assumes these trends broadly continue into next year. And our focus remains on execution, innovation, and premiumization across the business. The breadth of our portfolio and the impact of our innovation continue to differentiate us, enabling us to grow faster than the market.

So in closing, we remain on track to deliver on our full-year guidance. While our underlying markets are at the low end of our original guidance assumptions, it’s our responsibility to deliver through that environment. We’re doing that by executing our launches, translating innovation into broader adoption and driving premiumization, and entering attractive new white spaces. We have a diversified portfolio that continues to get stronger, including the addition of Neurotech in retinal disease.

This gives us multiple avenues to outgrow our markets and drive durable earnings growth and long-term shareholder value. With that, I’ll turn it over to Tim, who will walk you through the financial details of the quarter.

Tim Stonesifer (Chief Financial Officer)

Thanks, David. Beginning with the top line, our third quarter sales were $2.7 billion, up 5% versus prior year and up 6% on a year-to-date basis. While the cadence of growth was slightly different than we anticipated due to specific areas of competitive pressure, we remain on track with the midpoint of the original guidance provided in February and expect to grow approximately 6% for the year. In our Surgical franchise, sales were up 4% year over year to $1.5 billion. Implantable sales were $422 million in the quarter, down 2% versus the prior year. Within this, IOLs were down 1% primarily due to competitive launches, particularly in the US. As David mentioned, PanOptix continued to perform well and the family was up 9% year over year, growing nicely in all regions. This growth was driven by strong customer demand and continued commercial execution.

In consumables, third quarter sales of $789 million were up 6%. This growth was driven by procedural volumes and price increases, and equipment sales were $269 million in the quarter and up 11%. This growth was driven by continued momentum from our Unity platform and the strength of our Veleda launch, despite now lapping the Unity VCS launch in the prior year. In Vision Care, third quarter sales were $1.2 billion and up 6%. Contact lens sales increased 5% to $737 million. This performance reflects continued premium trade-up, share gains and price increases, partially offset by declines in legacy products. In Ocular Health, third quarter sales were $500 million, up 8% versus prior year. Systane grew double digits supported by share gains and strength across our preservative-free portfolio, with Systane PRO revenue doubling year over year.

This growth was partially offset by continued softness in contact lens care. Moving down the income statement, third quarter core gross margin was 65.7%, up 280 basis points year over year. As we communicated last quarter, the increase was expected and largely driven by tariff refunds along with continued manufacturing efficiencies. Core operating income was $591 million and 21.8% of sales, up 150 basis points versus the prior year. This improvement was largely driven by the tariff refunds I just mentioned and was partially offset by higher sales and marketing spend.

Below the operating line, interest expense was $52 million during the quarter, broadly in line with the prior year. Turning to taxes, our core effective tax rate was 17.8% in the third quarter, up from 16.9% in the prior year. Our year-to-date core effective tax rate was 19.4%, which is broadly in line with our guidance. Finally, core diluted earnings per share were $0.91 in the quarter, up 15% versus prior year. Turning to cash, we generated more than $1.3 billion of free cash flow in the first nine months, which enabled the return of $748 million to shareholders through dividends and share repurchases over the same period. Within the quarter, we returned $210 million to shareholders through our share repurchase program and have now completed more than one third of our $1.5 billion repurchase authorization.

Moving to our outlook for 2026, based on recent market trends, we now assume that aggregate eye care markets grow 3% for the year and exchange rates as of the end of October hold through year end. We also assume the tariffs currently applicable to Alcon’s business remain in effect through year end, including US import tariff rates of approximately 10 to 12.5%. Based on these assumptions and our performance through the first nine months, our guidance for 2026 is as follows.

We expect sales growth of approximately 6%, consistent with the midpoint of our original guidance issued in February. On profitability, we are narrowing our expected core operating margin expansion to a range of 100 to 150 basis points while also narrowing our range on core diluted EPS growth to 12 to 14%. Moving to 2027, we will be issuing formal guidance in February, but I wanted to provide some color on the headwinds and tailwinds we see heading into next year, starting with the underlying market. Our base case assumption is that the current market trends that David referenced persist through next year. On the top line, starting with Surgical, although we expect equipment to grow next year, it will be the primary headwind as we lap the 2026 Unity rollout.

However, the launches of Unity M and Unity DX along with continued expansion of our Veleda installed base will help alleviate some of that pressure. In Implantables, we expect a return to growth given the launches of Vivity Pro and Truplus as well as the continued momentum from PanOptix Pro. At Vision Care, our recent and upcoming launches, including Triptear and Brightly, will continue to contribute to growth, while the addition of Neurotech is expected to add approximately 75 to 100 basis points to the top line.

Overall, we expect another year of above-market sales growth in 2027. Moving down the income statement, historically we’ve been able to get approximately 100 to 150 basis points of operating leverage by growing revenue faster than our cost base. Next year we’d expect to drive roughly 150 to 200 basis points of leverage given the additional efficiency measures we implemented in 2026. However, we will face some headwinds in 2027. First, our 2026 results included $60 million in tariff refunds and a $15 million milestone payment, both of which are non-recurring.

In addition, we expect pressures from incremental inflation related to memory and resins, as well as some near-term pressure from the Neurotech acquisition. Despite these headwinds, we continue to expect margin improvement in 2027 and will give you more color in February when we finalize our budget. Before we wrap up, I want to highlight an upcoming new accounting standard. IFRS 18 becomes effective in January and will introduce changes to the presentation and classification of certain items in our financial statements, including some of our key metrics. We’ll provide more information on the impact of the new standard when we report in February, including select historical financial information reflecting the new presentation to support comparability and modeling.

In conclusion, we are performing in line with the expectations we set at the beginning of the year. Our year-to-date sales are 6%, core diluted EPS is up double digits and we again demonstrated the free cash flow potential of this business while executing on our commitment to meaningful capital returns. These results reflect the durability of our business, our clear market leadership and the efforts of our associates around the world. With that, I’ll turn it back to David.

David Endicott (Chief Executive Officer)

Thanks, Tim. As we approach the end of the year, I remain confident about the trajectory of the business. Our innovation pipeline continues to strengthen, we’re executing with discipline and we’re continuing to modernize our go-to-market approach. We’re on track to complete a restructuring to improve operational efficiency. We’ve strengthened our portfolio with the addition of Neurotech and we have already returned approximately $750 million to shareholders.

And none of this would be possible without the hard work of our more than 25,000 associates around the world who help people see brilliantly every day. With that, operator, please open the line for questions.

OPERATOR

Thank you. We will now be conducting a question and answer session. We ask that you please limit yourself to one question and one follow-up. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary. One moment please while we poll for questions.

Our first question is from Anthony Petrone with Mizuho. Please proceed with your question.

Anthony Petrone (Analyst at Mizuho Securities)

Thanks and good morning, everybody. Maybe, David, one on equipment and then I’ll go to Brightly. When we think about the rate of Unity VCS installs, it looks like it’s tracking on schedule, roughly 3,000 units a year. But I think when you initially put that trajectory out, there was a little bit of a step up in 2027 for installs. So should we be thinking that there’s another bolus that can come in ’27 versus 2026, just in terms of the number of installations?

And then just on Brightly, I know the launch is 1Q, but should we be expecting any kind of big stocking orders in 4Q ahead of that large retail launch in 1Q?

David Endicott (Chief Executive Officer)

Thanks, Anthony. On the equipment piece, I think you should think about it as relatively similar to this year in terms of unit placements. I think maybe this year was a big year for VCS and CS got out the gate, I think probably, you know, full speed maybe second quarter. So I think we’ve got a little bit more step up in CS as opposed to VCS. So remember that the CS market is much bigger. So again, I think there’ll be a bit of a mix shift to CS next year as we sell probably a good bit more of that versus VCS.

But largely I would say the units are similar. I would say on the Brightly launch, we have got retail orders. I don’t think we’re going to ship that until next year, and so I would not count on anything in the fourth quarter. But we are excited about that product. You know, it is kind of a new market area for us and we’ve been looking for white spaces like this. So again, this product lasts longer than the market leader and we’re excited about the potential of that with the consumer.

Anthony Petrone (Analyst at Mizuho Securities)

Thanks, Dave.

OPERATOR

Our next question is from Brett Fisher Fishman with KeyBanc Capital Markets Inc. Please proceed with your question.

Brett Fisher Fishman (Analyst at KeyBanc Capital Markets)

Hey guys, thank you so much for taking the questions. Just wanted to ask one first, just to clarify some of the margin commentary for 2027. I think you mentioned potentially driving 150 to 200 basis points of leverage and then walked through a couple considerations. I wanted to just understand if the 150 to 200 basis points is net of some of those expected headwinds, or if you’re talking about, like, 150 to 200 basis points of underlying improvement before some of those headwinds.

Tim Stonesifer (Chief Financial Officer)

Yeah, I think about that as more of a gross number before the adjustment. So if you look at historically, we’ve always said 100 to 150 basis points of improvement; we think it’ll be higher next year given the efficiency program that we implemented. So if you start with 150 to 200 basis points, I then start subtracting the pressures that we’re going to see from the one-offs in 2026 that don’t recur. We do anticipate seeing a little bit more inflationary pressure and then a little bit of near-term pressure for the Neurotech acquisition.

Brett Fisher Fishman (Analyst at KeyBanc Capital Markets)

All right, super helpful. And then just on implantables, you know, it seemed like growth took a little bit of a step back this quarter. It sounded like it was more specific to the US. Was hoping you could just expand maybe on, you know, what you saw incremental from, you know, 1H levels that caused a little bit of further erosion, and then just level of confidence, you know, in your remarks. Do you expect a return to growth next year with some of the new product launches?

Thank you so much.

David Endicott (Chief Executive Officer)

Yeah, I think you’re right. I mean, actually the step forward was international. So Europe, I think, gained share in the quarter. But there was an extraordinary amount of competitive activity in the third quarter and there will be more in the fourth quarter, I think. So, you know, we’re going to see some continued competitive activity. Surgeons want to try new products, and good companies bring products out; they’re going to try them. And so I think we felt like that was certainly part of the challenge, but it wasn’t way off of where we’d been.

It was a little bit off of where we’ve been in the prior quarters. So I think we’re just kind of working our way through to the next launches. And I think, as I said in my remarks, Vivity Pro is a really exciting product for us. We’ve got it approved now. We’ve got it in the hands of a number of KOLs right now. And we’ve got very good data comparing it to the competitor who’s most active right now. We feel like we’re in a good place with better near vision, better intermediate than the competition, and with very similar contrast in distance. So that data makes us confident that when we get it out full speed next year, we’ll see this thing continue.

I would also point out that TruPlus is just kind of getting its feet around the world, and that’s our new entry into the monofocal-plus space, and PanOptix Pro is still getting going internationally. So if you look around the world at where our portfolio is — and frankly, we’ve got a number of products after that which are on their way — we feel very confident over the next several years that we’re going to be in a solid position for implantables.

OPERATOR

Our next question is from Julian O’Dea with Bank of America. Please proceed with your question.

Julian O’Dea (Analyst at Bank of America)

Hi, thank you very much. So I have one question and one follow-up. So the question: I just want to clarify your comment about Unity, where you expect the same volume next year but the shift to CS, which I believe the ASP is lower. I just want to make sure that you expect the revenue in absolute terminal equipment to grow next year, given the mix shift. And the follow-up — maybe I can ask it right now — could you just help us to disaggregate the growth contribution from Valeda in the quarter?

I mean, how much did Valeda contribute to the 11% growth in equipment and the 6% growth in consumables? Thank you very much.

David Endicott (Chief Executive Officer)

Yeah, Julian, you know, we don’t break out the individual products in the categories, but I would just say that the category growth in equipment we were pleased with. I may have missed — you may have misheard me or I may have misspoken. I think the way to think about Unity is that the mix will shift to CS. In aggregate, the value growth will be greater than it was in the prior year, principally because the CS market is much bigger than the retina market.

So the retina market, I don’t know, is maybe a million and a half procedures, two million procedures. The cataract market’s five or six in the U.S., and around the world it’s much bigger. So I think we have a much bigger market to address with CS, and I suspect we’ll do quite well with CS.

OPERATOR

Our next question is from Larry Biegelsen with Wells Fargo. Please proceed with your question.

Larry Biegelsen (Analyst at Wells Fargo)

Good morning. Thanks for taking the question. I had one on ’27 and one on Neurotech. So, Tim, maybe, what’s the net impact of what you said on revenue? How will growth in ’27 compare to ’26? Are you pointing to basically your core 5% organic growth plus 75 to 100 basis points for Neurotech? And margins — you talked about a lot of headwinds, but you also said some margin improvement. So should we be thinking about 50 basis points of improvement? And I have one follow-up.

Tim Stonesifer (Chief Financial Officer)

Yeah, I’m not going to give guidance here today, Larry. If you’re thinking about it correctly — listen, we think the markets are going to hang in there at about 3%. As David said in the prepared remarks, we don’t anticipate, we’re not expecting any uplift from that. As we’ve always said, we think we can grow faster than the market. We feel very good about the innovation pipeline and the launches that we have coming up and that are in place now. So we’d expect to grow faster than that market, and then to your point, I would add 75 to 100 basis points on that for Neurotech.

As far as the margin expansion, those are the pressure points. I think we hit those. We do expect margin expansion next year, and we’ll give you more color on that. We’re going to continue to get some margin expansion out of our marketing and sales area as we’ve done historically, but you’re not going to see a net number of 100 to 150 basis points like we’ve talked about before. We’ll give you more color in February.

Larry Biegelsen (Analyst at Wells Fargo)

Very helpful. On Neurotech, I mean, Incelto seems like a sleeper based on our checks. So what are 2026 sales and the 75 to 100 basis points for ’27? It sounds like it was — was that Vision Care or total Alcon? But even if it’s total Alcon, I think if I’m doing the math right, it’s 50 million, which seems small. And just lastly, how are you thinking about the ramp to those peak sales of 275 to 400? I mean, even the midpoint there implies only about 750 patients or 1,500 eyes per year.

David Endicott (Chief Executive Officer)

Yeah, Larry, you’re doing the math the same way we are. Let me just tell you the dynamic we’re trying to manage. What we’re trying to manage is, you know, this is new. We’ve been involved in this for now a few months, and trying to understand exactly the pace at which patients can be found and brought into treatment is really the key variable here. And until we get a really clean view of what that looks like, we feel comfortable with the 250 to 400 range.

I do understand the math you’re doing, and I do understand that that could be the case. I think what we’re going to find is that these patients — there’s a certain number of centers that are prepared to do this surgery. These are infrequently found patients, and the pace at which we find them, get them to treatment, get them through the reimbursement system will be the defining factor. Now, you could be right and we could be wrong on this one, but I think we’re going to be careful around this as we go forward.

Tim Stonesifer (Chief Financial Officer)

I’d say, Larry, on 2027 that I would apply that 75 to 100 basis points on the total Alcon revenue.

Larry Biegelsen (Analyst at Wells Fargo)

All right, thank you.

OPERATOR

Our next question is from Veronica Dubajova with Citi. Please proceed with your question.

Veronica Dubajova (Analyst at Citi)

Hi, guys. Good afternoon. Good morning. Thanks for taking my questions. I have two, please. The first was I just want to come back on the moving pieces for margin, Tim. And I guess, you know, this year you stepped up DTC by about 40 million, sort of spending some of the proceeds from the tariff refunds. Just curious if this is something you intend to continue into next year, or should we put that into the tailwind column as we think about the margin piece for 2027?

And then my second question is on contact lenses, and, David, your thoughts on the health of the market and your ability to outgrow it. Obviously the gap between you and the market narrowed pretty substantially this year. I know you’ve had some headwinds in terms of discontinuation of some older product lines, but it would be good to understand, one, how you’re thinking about market growth in contact lenses for next year, and two, your ability to outperform that from a share gain perspective.

Thanks so much, guys.

Tim Stonesifer (Chief Financial Officer)

Hey, Veronica, thanks for the question. Listen, it’s really hard to say if the $40 million of additional spend is recurring, given that our total SG&A base is three and a half billion dollars. But I get your point. I think the way to think about it is: take the 150 to 200 basis points that we talked about, back out the pressures that I just mentioned. Most of that is going to be in the gross margin line if you think about the refunds and the milestone payments and the inflation.

However, we’re still expecting to get margin expansion next year, and most of that will come from, as I said, M&S and a little bit from G&A. So we will continue to expect to get leverage out of the M&S line.

David Endicott (Chief Executive Officer)

And, Veronica, the global contact lens market was probably 4% to 5%. It was healthy in the U.S., probably 5% to 6%, with maybe 3% price and 2% mix. But the international contact market was softer. As a function of online channels and the private label business, it was probably in that 1% to 2% range. We grew roughly a share point in the quarter. We continue to outperform the market in that space, and I think we’re feeling pretty good about it right now, principally because we kind of rotated back towards dailies and specialties, and the reason for that is those are the fastest-growing segments of the market. We had a good run in our reusable market — took some share back there. Those are very profitable businesses for us. And now I think we see the market as growing principally in this premiumization process of putting people up.

That’s been the case for a while, but it continues on very successfully in the U.S. And again, the international business was grown principally by mix — less price there, but more mix — and we’re trying to play that particular trend right now.

OPERATOR

Our next question is from Ryan Zimmerman with BTIG. Please proceed with your question.

Ryan Zimmerman (Analyst at BTIG)

Good morning, and thanks for taking the question, Tim. If we look at ’27, I appreciate all the color, but as I think about kind of the continued double-digit core EPS growth, I’m just curious what’s coming from, say, operating leverage versus revenue growth versus share count reduction. And again, knowing that you didn’t give double-digit core EPS growth as a guide, but assuming that that’s the case…

Tim Stonesifer (Chief Financial Officer)

Yeah, again, as you know, the revenue growth really drives the operating leverage. So, assuming that we can grow faster than the market, we would expect to get the margin expansion that I talked to a little bit earlier, and that will drop down to EPS growth. From a year-over-year basis, from a share count and buyback, I wouldn’t expect anything significantly different than what we did this year. But again, we’ll evaluate that as we do when we look at our capital allocation strategy.

It just really depends on what M&A is out there, how much cash we have. But we will put the cash to work.

Ryan Zimmerman (Analyst at BTIG)

Okay. And then on implantables, down 2% this quarter, flat year to date on a constant currency basis. David, can you help us maybe size the market share loss in your view, and is it concentrated in a specific product area — whether that’s EDOF or monofocals — versus maybe what’s happening in the market? Thank you.

David Endicott (Chief Executive Officer)

Yeah, sure. I mean, the total foldables for us globally was actually flat in volume. It was ATIOLs, and it was really U.S. So if you look at the international markets, we gained share in Europe. U.S., we lost some share in the PCIOL market, and the monofocal business — again, we actually gained a small amount. So our general view is volumes are pretty healthy still because we basically were flat this quarter on volume. But you can’t give up the ATIOL share because it’s obviously more valuable.

So this premiumization play that I think exists in that market, we need to get on the front foot with. I feel very good about what’s going on in Europe with PanOptix Pro, what’s moving around the world with Pro. We’re hoping to see that very same thing happen with Vivity Pro as we come back in on top of these competitive launches.

Ryan Zimmerman (Analyst at BTIG)

Thank you.

OPERATOR

Our next question is from Jeff Johnson with Baird. Please proceed with your question.

Jeff Johnson (Analyst at Baird)

Yeah, thank you. Good morning, everyone. So Tim, I guess one clarifying question: a lot of focus on 2027 for all the right reasons, but the approximate 6% for this year in the updated guidance — that approximate could be doing a decent amount of heavy lifting. I guess trying to back into what you expect for 4Q, if I go right to 6% I’d be kind of pushing about 100 basis points improvement versus 3Q. Are you implying in the updated guidance a little bit of improvement in growth versus 3Q, or should we be thinking 3Q is kind of the run rate at least for now?

And then one follow-up. Thanks.

Tim Stonesifer (Chief Financial Officer)

Yeah, listen, the reason we went with approximately is because we don’t see five in play and we don’t see seven in play. So we thought approximately six was kind of how we’re looking at it right now. As far as, again, I’m not going to guide Q4 revenue, but your thinking is the right thinking, and just keep in mind there will be some Neurotech in there, so that’s why you might see a little bit more of a jump up. But we would expect to see some improvement in Q4.

Jeff Johnson (Analyst at Baird)

All right, fair enough. And then David, you’ve said a couple different things on VCS and CS. I just want to clarify what you’ve said. I know you don’t guide product line but again I guess the question is you do expect — it sounds like VCS and CS combined unit growth next year offset by negative mix. But then I think you used the word value. I just want to make sure you are expecting VCS and CS combined Unity platform revenue growth next year and then on top of that a little bit of MNDX and Valeda contribution.

So that equipment growth does have a positive sign on it next year. Thank you.

David Endicott (Chief Executive Officer)

Yeah, yeah it does in both. So growth in total units will be higher than it was this year because the CS mix will help it. Growth in total dollars will be up next year, but it will be a little bit less than the unit growth because obviously we’re getting a lower ASP on average if you mix to CS versus VCS. Hopefully that helps.

Jeff Johnson (Analyst at Baird)

Thank you.

OPERATOR

Our next question is from Chris Pasquale with Barclays. Please proceed with your question.

Chris Pasquale (Analyst at Barclays)

Thanks. One on Neurotech: just how soon after diagnosis do patients need to start therapy in order to see a benefit? I’m just wondering how much penetration into that prevalence pool the peak sales estimate assumes versus just achieving some broad use in the annual incidence rate.

David Endicott (Chief Executive Officer)

This is a very slow-moving disorder and it takes years to lose as much central vision as you ultimately will. However, as soon as you’re diagnosed, historically there hasn’t been a therapy to treat this, and so I’m not sure I know the answer precisely to your question other than I think we have a pool of patients who have been diagnosed — we kind of know who they are. We need to get them to a surgeon who is willing to do this and then have them, through the system, work through the reimbursement part of this thing, and then also get them to a center that will do the surgery.

So I’m more — the logistics of this, I think, are the piece that we’re still working our way through. I think we have a sense that there are plenty of patients and patients that we can find. I think it is a matter of then how do we get them to the right surgeon who knows how to do this, is trained to do it in a center that will do the surgery. And again, this isn’t like cataract surgery where they’re doing 1,000 a year. This is one or two or three, and so it’s a novel procedure to many surgical centers.

Chris Pasquale (Analyst at Barclays)

And then you talked about premiumization in both contacts and IOLs. In some other corners of medtech we’ve heard some rumblings recently about increased economic sensitivity due to cost-of-living pressures. It certainly doesn’t sound like you’re seeing that yet, but as you think about ’27, how confident are you that price and mix can continue to be such significant contributors to your market growth?

David Endicott (Chief Executive Officer)

Well, when I think about it, I don’t know that price is going to be a big piece of it. I do think mix will be. And I think we would look at that and we’d say we’ve run sensitivities and tried to correlate consumer confidence with revenue growth in both contact lenses and IOLs, for example, or even OTC products. You just don’t see that big of a correlation. Over long periods of time, there’s almost none; in short windows, there may be a little bit.

But I think there’s principally something to ignore there on the consumer side. I think you can see that even in this current quarter where we had very significant AT IOL growth in penetration — up almost 2 points in the Americas, up 50 basis points in International. So globally, very significant penetration. The same thing with contact lenses: you saw continued movement to the highest value lenses — the dailies. I think we’re growing high single digits as opposed to the rest of the market, which was growing roughly in the 5% range.

So I think we’re pretty comfortable with the premiumization. I’d be a little more cautious on price, how that plays out.

OPERATOR

Our next question is from Graham Doyle with UBS. Please proceed with your question.

Graham Doyle (Analyst at UBS)

Morning. Thanks, guys. Just one quick clarification and then one on the midterm guide. Sorry, I know this has come up a few times, but just to double check something coming from investors here. David, your comments on Unity: you expect Unity VCS and CS to sell more volume next year than this year — just to clarify that. And then the question on the midterm guide: on the 6–8% constant currency, you obviously weren’t in the range last year; you’ll be at the bottom end this year.

How do we think about the relevance of this guide going forward into next year given where market growth is? Just be useful to know that so when we kind of go back to our models, how we think about that.

David Endicott (Chief Executive Officer)

Yeah, I obviously wasn’t particularly clear on this thing. We are going to grow in total units, and we are going to grow in total dollars. But the mix will be more to the CS side. Is that relatively clear?

Graham Doyle (Analyst at UBS)

Super clear, thank you.

David Endicott (Chief Executive Officer)

Okay, great. And then look, on the long-term guide, obviously during this stretch market growth has been more modest and, given last year’s performance and where we are this year and where we think going forward, we still think we’re in the range of our guide. But obviously we’re at the low end of it. So I think it’s hard to come off of a four and, on a five-year guide, then get yourself back into six to eight. So it’s our belief that we continue to be at the low end of that guide.

But that’s our job right now: to maximize new IOL launches, to extend our equipment presence, to get into higher-growth categories, and try and find the ways that we can grow our business beyond the market growth that’s obviously not where we would like it to be right now. So that’s partly why we’re entering new categories. We’ve got Valeda out there, we’ve got Brightly out there, and Celto is — those are all new white-space areas for us. And then you’ve got all the new IOL coming, which I think help us.

I think you’ve got continued movement in equipment that drives this a bit. So take it in aggregate, we probably have 10–12 new products, all of which are adding some degree of growth, many of which are concentrating now on the fastest segments of what we’re doing and, importantly, getting into white space. So what we need to do is perform with those, execute well against those, and try and grow our way regardless of what the markets do. That’s really where we’re focused.

My sense is we can get into and stay in the range, but it will likely be the bottom of the range.

OPERATOR

Our next question is from Steve Lichman with William Blair. Please proceed with your question.

Steve Lichman (Analyst at William Blair)

Thank you. David, just going back on contact lenses, on the price contribution — the 3% currently you mentioned — not sustainable. What level do you think is sustainable and should we be factoring in, and how does that differ U.S. versus what you’re seeing OUS?

David Endicott (Chief Executive Officer)

Yeah, I mean, the U.S. is more sustainable in price and the international is less. And the fundamentals are pretty basic, right? I mean, the online market is squeezing the chains. The chains are then resisting price, and online has always resisted price. You’re getting a little bit there, but you’re not going to get what we used to get. And in the U.S. it’s still predominantly an independent OD market, so you can still pass on price — the optometrist community passes that price along — and the chains are relatively receptive in the U.S. still, because it’s probably 60% independence and 40% chains.

And online, it’s exactly the opposite internationally. So I think what you should expect is that price is not as strong, but I think you’ll get some. And again, we’ll have to see how the consumer fares over the next couple of months. We’ve already taken a price increase in this business, so we’ll watch that for next year and see what happens.

Steve Lichman (Analyst at William Blair)

That’s helpful. And then Tim, on the efficiency programs, are the incremental savings you mentioned coming on the manufacturing side or in OpEx? And how much of the now $130 million in savings are you going to be capturing in 2026? Thanks.

Tim Stonesifer (Chief Financial Officer)

Yeah, I would say that it’s a combination of areas. We continue to drive productivity in our manufacturing operations and footprint — to your point, I would say that’s a good chunk of it. We’ve also made some structural changes in R&D due to the continuation of the PowerVision project that we talked about last quarter. And then, just looking across the business, all the teams are identifying additional opportunities. So we feel very good about the program.

And as we said when we first came out, we called about $100 million of run-rate savings, and now we think it’s going to be about $130 million of run-rate savings. As far as the additional 30 and how much of that hits this year, I’d say a small piece will. I would think a majority of that will hit next year.

Steve Lichman (Analyst at William Blair)

Thanks, Tim.

OPERATOR

Our next question is from Izzy Kirby with Redburn. Please proceed with your question.

Izzy Kirby (Analyst at Redburn)

Hi, guys. Thanks for taking my questions. I wanted to ask about the Neurotech acquisition and your commercial strategy here. Will you be leveraging your existing salesforce — any expansion needed? And then also, when Orion eventually comes to market, just thinking about what commercial investments you might need to make there. And then I have a follow-up.

David Endicott (Chief Executive Officer)

Yeah, Izzy. On Neurotech, they’re pretty well situated. You know, they’re a year into that launch and we’ll probably complement what they’re doing with some more resource. But I think, you know, mostly what we’re going to try and do is coordinate and, you know, obviously we have a fairly substantial retina Salesforce already that I think can help guide and introduce and coordinate with them to try and help relationships and, you know, some of the connections with the ASCs that they want to work with.

But I think that—think of that as just kind of, you know, free help, if you will, because it’s not any incremental cost. I do think we’ll add a little bit of resource to their business overall just because it looks like, you know, a good opportunity for us. And then on the Ariane launch, I would say, you know, most of what we’re going to do there commercially has not yet been developed. So we’re still, you know, 18 months away from, you know, an approval at least. And so I think, you know, if we’re kind of in that back half of ’28, see that as an approval timing, you know, I would think, you know, we’ll need to be putting things together, you know, really next year. Those will all be incremental costs, but I would say they’re planned in right now as we think about next year and we’ll guide on that as we get into the beginning of February.

Izzy Kirby (Analyst at Redburn)

Great, thank you. And then on ATIOLs, is the way you’re going to market or certainly marketing changing at all given how much more competitive it is, particularly in the U.S.? You mentioned you’ll include sort of direct clinical comparisons with Vivity Pro. Just how are you thinking about your go-to-market with advanced IOLs in a more competitive space? Thanks.

David Endicott (Chief Executive Officer)

Yeah, it’s a really good question. There’s, you know, there’s… Yeah, the short answer is yes, we’re doing two or three things actually. You know, one of the things we’re doing is we are speeding up the amount. You’ll see that, you know, over the last 18 months we’ve sped up the innovation pace. So we have, you know, we’ve got PanOptix Pro out, we got True Plus out, we got Vivity Pro out, all really within the last 24 months or so. We’ve got another two lenses behind that, that we will appropriately launch, you know, based on the timing that we see the market would be receptive.

I think in addition to that, I think what we’ve done is we’ve done some direct-to-patient work that’s mostly online work, but I think it’s a different go-to-market strategy than we’ve had in the past, which is to try and, you know, articulate to patients what the differences are in these lenses and where, you know, what their preferences might be and how those could. And I think further to that point, we’ve also spent a good bit of time thinking about with new products, what are we comparing to? So that we have not just, you know, lens is better than your lens, but, you know, good data that says here’s the difference in near vision actually in a direct comparison, here’s the difference in intermediate vision actually and here’s the difference, if there is one—and there isn’t in many cases—on distance and contrast because we’re quite concerned about the misinformation, I think, that’s going on, at least in some of the initial launches.

OPERATOR

Our next question is from David Saxon with Needham and Company. Please proceed with your question.

David Saxon (Analyst at Needham and Company)

Great. Good morning, David and Tim. Thanks for taking my questions. So first, maybe I’ll do Triptyr and then I’ll have a follow-up. So I think last quarter Triptyr was kind of in the high teens in dollar terms. So did that get into the 20s this quarter? And how are you feeling about having volumes next year? And also how should we think about kind of gross-to-net dynamics over the next, call it, 12 months?

David Endicott (Chief Executive Officer)

Look, Triptyr is going well. I mean, you know, our volumes are kind of on pace to what we’d hoped for. I think, you know, I think we saw something like 11,000, you know, unique prescribers last month. We’ve got two-thirds of the commercial lives covered at this point. And, you know, our share—I think we’ve, you know, we’ve gained up just short, I think, of about 6% this month or last month. And so I feel like, you know, we’re doing exactly what we need to do.

We’ve got more to do on reimbursement. We need to pick up another Medicare plan at least. And I do think there’s still some commercial work we can do. But, you know, what we’re most excited about is getting the DTC out going. We needed to kind of get over a certain threshold with commercial to make that viable. We initiated that last month. And I think what you’re seeing is a real positive response to the product itself from the physicians that are prescribing it.

And that’s been, I think, our most important idea has been, look, what are you seeing with the patients? And they’re seeing very quick response, which is what we had hoped for, and a very kind of meaningful tolerance, which is really a big deal too, because I think patients will really want resolved kind of comfort. And I think the data that we showed at the optometry and ophthalmology meetings on Triptyr, I think, gives us real comfort that what we had hoped to see, which is exactly what they’re seeing.

We were hearing that from the docs, but it’s really great to see it in both the doc feedback and then also the data that we’ve created.

David Saxon (Analyst at Needham and Company)

Okay, great. Thanks for that. And then I wanted to follow up on just your comments around the next round of IOL launches. I mean, you have PanOptix Pro and Vivity Pro out there. Vivity is coming out. But you just discontinued Power Vision last quarter. So how do we think about kind of that next leg of IOL launches as it relates to kind of what you have out there in the market or getting out and what’s already out there from a competitive perspective?

And then also just kind of general level of confidence in the U.S. penetration, PIO penetration getting into the 30, 40% range