Jana Partners Targets Cooper Companies for Breakup: The Case Against Diversification

The Activist Thesis Takes Shape#

Jana Partners, the prominent activist investment firm founded in 2001 by Barry Rosenstein, has announced a top portfolio position in COO and is publicly advocating for strategic alternatives that would radically reshape the medical device company. In a filing disclosed in mid-October and detailed in subsequent 13F filings for the third quarter of 2025, Jana has accumulated 2,434,607 shares worth approximately $166.92 million—representing 8.08 percent of its twelve-stock portfolio and establishing COO as its fifth-largest holding. The activist's thesis is straightforward and increasingly familiar in institutional circles: the marriage of two fundamentally different businesses under a single corporate roof is destroying shareholder value, and a strategic separation would unlock hundreds of millions in potential synergies while restoring appropriate investor valuations to each constituent.

The strategic critique carries particular weight because it comes from an investor class known for rigorous operational research and careful orchestration of proxy campaigns. Jana's investment strategy, which the firm characterizes as the three "Ss"—stock price, strategic activism, and alignment with star advisors—has generated a track record of successful interventions spanning more than two decades. Cooper Companies' current discount to its historical price-to-earnings multiple, coupled with management decisions that appear to prioritize portfolio expansion over cash flow optimization, presents a compelling tactical opportunity.

CooperVision's Cash Generation Problem#

At the core of Jana's argument lies a fundamental operational paradox: COO operates a world-class contact lens business that is starving for capital. The CooperVision segment generates 66 percent of the company's revenue and occupies a position of genuine competitive strength in the global soft contact lens market. With approximately 26 percent market share, CooperVision ranks as the second-largest player globally, behind only JNJ at 37 percent and locked in a tie with Alcon at 26 percent. The market itself exhibits the hallmark characteristics of a high-quality compounding business: the global soft contact lens market is estimated at roughly $11 billion in annual value and expands at a steady 4 to 6 percent annually, driven by secular shifts toward silicone hydrogel one-day lenses (still accounting for only 40 percent of the global installed base) and rising contact lens adoption across emerging markets.

CooperVision's competitive fortress is reflected in its profitability profile. The segment operates at EBITDA margins in the mid-30s range—a level that would command premium valuations in the medical device sector and reflects strong pricing power, manufacturing scale, and customer loyalty. The business generates approximately $850 million in annual EBITDA, a figure that has historically supported consistent cash returns to shareholders. Yet for the past eight years, the company's capital allocation decisions have systematically redirected resources away from this cash-generative engine toward a fundamentally different category of business: women's health and fertility services.

The $3 Billion Detour#

Since 2017, Cooper Companies management has deployed more than $3 billion in capital toward expanding and consolidating the CooperSurgical segment, which now represents 33 percent of company revenue. CooperSurgical focuses on women's health services, with approximately 60 percent of revenue derived from office and surgical procedures (including Paragard intrauterine devices, stem cell cryostorage, and associated medical devices) and 40 percent from fertility services (IVF consumables, genomic and donor services). While these remain attractive markets—the global fertility treatment market alone is estimated at $2 billion and expanding at similar long-term growth rates of 4 to 6 percent—the strategic integration has proven problematic in practice.

The fundamental issue is one of capital efficiency and strategic focus. CooperSurgical operates at demonstrably lower profitability margins than CooperVision and has not delivered on the promise of accretive acquisition economics over the past eight years of significant deployment. A company that can generate $850 million in EBITDA from contact lenses—a mature, high-margin business with global tailwinds—instead finds itself bound to a lower-return portfolio that consumes substantial management attention and corporate resources. This structural misalignment has been further exacerbated by recent operational setbacks: the company reported that organic growth in the CooperSurgical segment collapsed to just 2 percent in the third quarter of 2025, down sharply from 7 percent in the prior quarter, a deterioration largely attributable to patient hesitation regarding fertility services following public commentary from President Donald Trump suggesting potential government reimbursement of IVF costs.

The Leadership Question#

Jana's thesis takes on additional weight when examined through the lens of management composition and strategic incentives. Albert White, who has served as Chief Executive Officer since shortly after the company began its major expansion into women's health, previously led the CooperSurgical division. This biographical detail raises a significant question about strategic alignment: is a CEO with deep operational background in the lower-return business equipped to make the hard capital allocation decisions required to refocus the company on its core contact lens franchise? The activist investor's implicit suggestion is that the answer is no—that management's historical expansion strategy reflects the background and career trajectory of its leader rather than the dispassionate economic analysis that shareholders would prefer to see.

This is not an accusation of bad faith or incompetence. Rather, it reflects a common dynamic in corporate governance: executives naturally advocate for the portfolios they have built and the strategies they have championed. When the CEO's career identity is tied to a particular business segment, the case for divesting or radically restructuring that segment becomes organizationally and personally difficult to advocate. For Jana, this structural conflict creates an opening for activist intervention—not merely around strategy, but potentially around leadership selection and governance.

The Breakup Mathematics#

CooperVision's Acquisition Path#

Jana's proposal centers on a strategic separation of CooperVision from CooperSurgical, with particular emphasis on a potential transaction combining the contact lens business with a peer player. The leading candidate is Bausch + Lomb, which currently holds approximately 10 percent of the global contact lens market. A combination of the two companies would create a player with 36 percent market share—a position that falls short of JNJ's leadership position and ranks alongside Alcon, thereby limiting antitrust concerns. Notably, Bausch + Lomb has not been coy about its receptiveness to such an opportunity. Chief Executive Officer Brent Saunders has publicly stated that a potential combination with COO would "strengthen competition and create a more scaled company in the contact lens segment," a clear signal that regulatory concerns are manageable and internal appetite exists.

Alternatively, larger acquirers with even deeper pockets and lower regulatory risk profiles may emerge. European eyewear conglomerates such as EssilorLuxottica possess the scale, geographic footprint, and strategic rationale to view a combination with CooperVision as transformative. Such a transaction could yield $300 million to $500 million in synergies, according to Jana's analysis—a figure that represents 35 to 60 percent of CooperVision's annual EBITDA and would translate into material accretion to the combined entity's earnings per share from day one. The mathematical case is compelling: a business generating $850 million in EBITDA could support a standalone valuation in the 20 to 25 times EBITDA range, reflecting its quality and growth profile, which would substantially exceed the current COO group multiple applied to the segment in aggregate.

CooperSurgical's Standalone Opportunity#

As for CooperSurgical, institutional investors and private equity firms have demonstrated robust appetite for standalone women's health and fertility platforms. The precedent is instructive: earlier in 2025, Blackstone and TPG Capital executed a significant acquisition of Hologic's women's health division, signaling substantial private equity confidence in the sector's long-term economics. A standalone CooperSurgical, freed from the capital constraints imposed by its parent's contact lens ambitions, could be either taken private for an operational turnaround or, alternatively, retained by management under a strategy that prioritizes the high-margin IVF segment while thoughtfully disposing of lower-return assets. Either path would likely generate greater shareholder value than the current all-in portfolio approach.

The standalone thesis for CooperSurgical focuses on two strategic imperatives: first, the elimination of capital allocation conflicts that have historically favored geographic and portfolio expansion over profitability optimization; and second, the alignment of leadership incentives with a single business narrative that private equity sponsors or focused public markets investors could evaluate on its own merits. This separation would also allow the women's health business to make targeted investments in the higher-margin fertility segment while rationally managing the lower-return office and surgical categories. The IVF market, despite recent transitory headwinds from policy uncertainty, remains structurally attractive and could sustain 6 to 8 percent organic growth over a multi-year horizon absent significant regulatory disruption.

Outlook#

Near-Term Catalysts and Risks#

The near-term trajectory for COO will turn on management's response to Jana Partners' overture and the broader health of the contact lens and fertility markets. Q3 2025 guidance cuts underscore the temporary pressures facing both segments, but the contact lens business remains structurally sound and the fertility market slowdown appears tied to transitory policy uncertainty rather than fundamental demand destruction. As those near-term pressures ease, the company's valuation discount should narrow, providing a window in which management can execute a separation without the pressure of a collapsed share price or activist escalation to governance battles. The critical catalysts over the next 12 to 18 months include Q4 2025 and full-year 2026 earnings guidance, which will signal whether near-term headwinds are indeed transitory, and any management announcements regarding strategic alternatives or portfolio optimization.

Key risks to the activist thesis include a sustained downturn in fertility demand—though the probability of this appears low given that Trump reimbursement comments represent a one-time policy shock rather than structural market damage—and stronger-than-expected operational performance from CooperSurgical management under the current corporate structure. Additionally, regulatory concerns around the contact lens market concentration, while manageable based on current analysis, could become more prominent if European or U.S. authorities signal heightened scrutiny. The most immediate risk is that management, seeing the pressure build from Jana and reading public commentary from activist observers, proactively initiates a separation on terms that disadvantage shareholders by accelerating timelines or accepting suboptimal transaction valuations.

The Path to Resolution#

Conversely, if management resists and the discount persists through 2026, Jana Partners has already signaled its willingness to escalate the campaign to include board representation and leadership changes. The broader institutional investment community is watching closely, and the precedent of successful activist interventions in the medical device sector—from strategic divestitures to CEO replacements—suggests that shareholders have both leverage and patience. The question is not whether a separation will occur, but whether management will lead the process proactively or resist until forced to accept external governance changes.

Management's best course of action would be to engage constructively with Jana Partners and the broader shareholder base to evaluate whether a separation creates genuine value, and if so, to execute it in an orderly fashion that maximizes proceeds and maintains operational continuity. By 2027, it is likely that COO will comprise two separately traded or divested entities, each optimized for its own markets and investor base, a configuration that should command a combined valuation well above the current depressed multiple. The activist investor, having articulated a clear thesis and secured a meaningful equity stake, has established itself as a credible voice in the dialogue over COO's future.