The Cooper Companies (COO): Earnings Strength, Heavy FCF Reinvestment, and a Capital-Allocation Crossroads

Snapshot: A clearer top-line pick-up — but at what cost?#

The Cooper Companies closed FY2024 with revenue of $3.90B (+8.66% vs. FY2023) and net income of $392.3M (+33.36% vs. FY2023), a combination that produced meaningful margin expansion and stronger reported profitability versus the prior year. That improvement arrived alongside $421.2M of capex and $343.4M of net acquisition spend, leaving free cash flow at $288.1M for the year. Those juxtaposed facts — accelerating margins and earnings, yet elevated reinvestment and M&A — form the central tension for CooperCompanies as it transitions from recovery into a phase of reinvestment and scale-up.

What happened this year: growth, margins and cash flow, in plain numbers#

CooperCompanies delivered a material top-line acceleration in FY2024: revenue rose from $3.59B in FY2023 to $3.90B in FY2024, a change of +8.66% (calculated from the reported annual figures). Operating income rose to $705.7M, which implies an operating margin of 18.10% (705.7 / 3,900), and the company reported EBITDA of $1.07B, implying an EBITDA margin of 27.44% (1.07 / 3.9). Net income of $392.3M translates into a net margin of 10.06%. Cash generation remained positive — operating cash flow was $709.3M and free cash flow $288.1M, a free-cash-flow margin of 7.39%.

Where those cash flows were deployed matters. Capital expenditures were $421.2M, and net acquisitions totaled $343.4M, together accounting for the majority of investing outflows and explaining why free cash flow is modest relative to operating cash flow. The balance sheet shows cash & equivalents of $107.6M against total debt of $2.58B, yielding reported net debt of ~$2.48B.

(These figures are compiled from the company’s FY2024 financials and the firm profile as reported on Nasdaq.)

Financial tables — comparatives and calculated ratios#

Income statement highlights (FY2024 vs FY2023)#

All percentage changes above are calculated directly from the two reported annual figures for FY2024 and FY2023.

Balance sheet and key capital ratios (FY2024)#

All balance-sheet calculations above use the FY2024 reported amounts and the market-capitalization and price figures provided in the company profile and market quote (price and market cap taken from the provided stock quote snapshot). Source: company FY2024 figures and market quote on Nasdaq.

Reconciling dataset ratios and our calculations — important divergences#

The data package included several pre-computed TTM ratios (for example, a current ratio of 2.1x and an EV/EBITDA of 15.57x). When I compute the same ratios from the FY2024 line items provided, there are small but meaningful differences: our calculated current ratio is 1.91x (vs. 2.10x in the dataset), our EV/EBITDA is 16.13x (vs. 15.57x), and net-debt/EBITDA is 2.32x (vs. 2.23x). These gaps likely reflect timing differences (TTM versus fiscal-year-end snapshots), differing EBITDA definitions, or inclusion of interim items in the dataset. For analytical clarity I prioritize the raw FY2024 line items for year-over-year comparisons and explicitly note where TTM-type ratios differ.

Why margins improved — drivers and sustainability#

Margin improvement in FY2024 is the clearest positive. Gross margin expanded to ~66.67%, operating margin improved to 18.10%, and EBITDA margin to 27.44%. Several factors explain the movement. First, revenue growth of +8.66% provided operating leverage against a largely fixed-cost base in manufacturing and R&D. Second, SG&A grew more slowly than revenue (SG&A in the income statement increased modestly relative to sales), producing operating leverage. Third, product mix and pricing discipline in CooperSurgical and CooperVision (Cooper’s two primary operating footprints) appear to have contributed; higher-margin product lines, coupled with better utilization across manufacturing, lifted margin profiles.

Sustainability depends on two countervailing items. On the positive side, gross margin is structurally high (mid‑60s), giving the company room to absorb cost inflation while still delivering operating profit. On the negative side, management is investing heavily: capex of $421.2M and acquisitions net of $343.4M are both sizable, and the company’s guidance cadence (analyst forward estimates compiled in the dataset) implies continued reinvestment to support new product introductions and capacity. If those investments convert into sustained higher-margin revenue over the next 2–3 years, the FY2024 margin expansion looks durable. If not, the company risks margin reversion as investment costs normalize and incremental revenue growth slows.

Cash conversion quality: good operating cash flow, compressed free cash flow due to reinvestment#

Operating cash flow of $709.3M is healthy and improved year over year, and free cash flow of $288.1M is positive but modest relative to operating cash flow because of high capex and acquisition spend. The company’s FCF growth of +34.03% YoY indicates improving conversion, but the absolute level is constrained by strategic spend. That pattern — strong cash generation but active reinvestment — is consistent with a company attempting to scale selected product lines while maintaining a conservative balance-sheet posture.

Net debt sits at ~$2.48B, and using FY2024 EBITDA produces a net-debt/EBITDA ratio of ~2.32x, which is within standard corporate ranges for a healthcare-device company and leaves headroom for additional M&A or buybacks if cash flow normalizes. Still, the company is not in a deleveraging posture; net debt has increased meaningfully since 2021 when total debt was about $1.48B and net debt ~$1.39B.

Capital allocation and strategic trade-offs#

CooperCompanies is balancing three capital priorities: invest to expand capacity and product range (capex), buy and integrate bolt-on businesses (M&A), and return capital (buybacks have occurred but at modest levels — $8.3M repurchased in FY2024). The last two years show a step-up in acquisition activity: FY2024 acquisitions of $343.4M (net) follow FY2023’s smaller acquisition footprint. Management’s approach appears to prioritize strategic tuck-ins and capacity expansion over aggressive buybacks or dividends — the company currently has a $0 dividend policy, and repurchases are modest.

From a financial-efficiency standpoint, this is defensible if acquisitions and capex deliver accretive margin expansion or secure high-return product pipelines. The risk is valuation timing: the firm is deploying cash while trading at a trailing P/E of ~35.8x and a price-to-sales of ~3.79x, which embeds elevated expectations about future profitability growth. Management must therefore demonstrate that acquired revenue and capital investments produce ROIC in excess of the implicit cost of capital.

Competitive positioning and industry context#

CooperCompanies operates in contact lenses (CooperVision) and women’s health & surgical products (CooperSurgical), segments with distinct competitive dynamics. CooperVision faces pressure from larger incumbents on price and share, but it benefits from scale, recurring-revenue characteristics and product differentiation (lens materials and designs). CooperSurgical benefits from procedural growth, demographic tailwinds in women’s health, and higher-margin consumables sold into hospitals and clinics.

The company’s gross margin profile (mid‑60s) is notably stronger than many medical-device peers and reflects a high-value product mix. That margin advantage is a defensive moat, but market share is contestable — the company must invest in R&D (FY2024 R&D was $155.1M) and targeted M&A to stay product-competitive. The dataset’s forward estimates (analysts project revenue rising to ~$4.12B in 2025 and to ~$5.03B by 2028) indicate market consensus for steady growth; those projections imply the company can convert today's investments into revenue expansion, but they remain contingent on successful product execution and integration of acquired assets (Nasdaq.

Historical context and management execution#

Historically CooperCompanies has shown a pattern of steady revenue growth from $2.92B in FY2021 to $3.90B in FY2024, reflecting both organic growth and acquisitions. Management’s track record on integration has been mixed but recently leans positive: operating margins recovered from the FY2022–FY2023 period and improved in FY2024, suggesting better cost control and product mix. However, the company’s net income in FY2021 included a notably large non-recurring item (the unusually high net income in FY2021 vs. operating income indicates non-operational adjustments), reminding investors to separate operating performance from one-off accounting effects when assessing trend quality.

Risks and headwinds#

The principal risks are execution and valuation. Execution risk comes from the integration of acquisitions and the ability to convert capex into revenue without margin erosion. Valuation risk is non-trivial: with a trailing P/E near 35.8x and elevated EV/EBITDA (calculated at 16.13x on FY2024 numbers), expectations are priced for continued margin and earnings expansion. Macroeconomic or reimbursement pressures in healthcare, supply-chain cost inflation, or failed product rollouts would compress multiples quickly.

Another operational risk is the ramp in fixed costs tied to manufacturing expansions. Should revenue growth slow while depreciation and amortization rise (D&A was $375.1M in FY2024), operating leverage could work the other way and compress margins.

Catalysts and what to watch next#

Near-term catalysts that will clarify the trajectory include: quarterly revenue cadence (is growth broad-based or concentrated in a few product lines?), the success of recently acquired product lines (are they accretive to margin?), and free cash flow progression as capex and integration costs normalize. Analyst estimates embedded in the dataset show EPS and revenue ramping through 2026–2028, but the credibility of that path depends on execution against the current investment plan (Nasdaq.

Specifically, watch four data points in coming quarters: organic revenue growth rate excluding acquisitions, gross-margin stability, incremental free cash flow after capex, and management’s commentary on M&A pipeline and capital-return intent.

Key takeaways#

The CooperCompanies story for FY2024 is one of cleaner top-line momentum and meaningful margin expansion: revenue +8.66%, net income +33.36%, operating margin ~18.10%, EBITDA margin ~27.44%, and positive free cash flow of $288.1M. Those fundamentals are supported by a healthy operating-cash profile ($709.3M) but set against aggressive reinvestment: $421.2M capex and $343.4M net acquisitions. The balance sheet remains manageable with net-debt/EBITDA of ~2.32x, but management’s capital-allocation choices — prioritize growth via M&A and capex over large buybacks or dividends — are the defining strategic decision for shareholder returns.

What this means for investors#

For stakeholders, the FY2024 results confirm the company can grow revenue and expand margins while investing in future growth. The central question going forward is whether current reinvestment levels translate into sustainably higher ROIC and earnings, validating the premium multiples the market assigns. Investors should monitor the composition of growth (organic vs. acquired), margin durability as capex-driven depreciation flows through, and how management balances continued M&A with shareholder returns. Absent evidence that acquisitions and capex are consistently accretive, elevated valuation multiples increase downside sensitivity to any slowdown.

Conclusion#

CooperCompanies entered FY2025 with momentum: sales acceleration, stronger profitability, and robust operating cash flow. Yet that progress comes with a trade-off — the company is spending meaningfully to secure future growth, which compresses free cash flow today and places a premium on execution. Our calculations from the FY2024 line items show healthy margins and a comfortable but leveraged balance sheet (net-debt/EBITDA ~2.32x), while small discrepancies with TTM ratios in vendor datasets underscore the importance of clarity about timeframes and metric definitions. The near-term investment story will be decided by how effectively Cooper converts capex and acquisitions into higher, recurring-margin revenue.

All financial figures cited above are computed from the FY2024 and FY2023 line items and the market quote provided in the dataset; additional context and consensus estimates are published on Nasdaq and analyst compendia referenced in the company profile.