EYECARE Alcon Reports Steady Third Quarter Results, Revises Fiscal 2022 Outlook By Staff Thursday, November 17, 2022 12:24 AM GENEVA, Switzerland—Alcon (SIX/NYSE:ALC), a global leader in eyecare, reported third quarter 2022 sales of $2.1 billion for the three months ended Sept. 30, 2022. This represented an increase of 2 percent on a reported basis and 9 percent of a constant currency basis, compared to the same quarter of the previous year. “Our third quarter results reflect the continued strong operational performance of the business in an extremely challenging macroeconomic environment," said David J. Endicott, Alcon's chief executive officer. "Demand for our products was robust, and we saw particularly strong growth in our international markets.” Alcon’s Vision Care unit benefited from silicone hydrogel contact lenses and Systane artificial tears, significantly offset by supply chain challenges in contact lens care. Vision care net sales of $0.9 billion, which include contact lenses and ocular health, decreased 2 percent, or increased 5 percent on a constant currency basis, for the three-month period ending Sept. 20, 2022, compared to the third quarter of 2021. Contact lens sales reflected growth on a constant currency basis, led by silicone hydrogel contact lenses, including the Precision1 and Total families of products, the company reported. Ocular health sales decreased 3 percent, or increased 2 percent on a constant currency basis, led by Systane and international markets, significantly offset by supply chain challenges, primarily in contact lens care. There was a negative 7 percentage point impact on vision care sales from currency. For the nine months ended Sept.30, 2022, vision care net sales increased 3 percent, or 8 percent on a constant currency basis, compared to the nine months ended Sept. 30, 2021. Surgical net sales of $1.2 billion, which include implantables, consumables and equipment/other, increased 5 percent, or 12 percent on a constant currency basis, compared to the third quarter of 2021. For the nine months ended Sept. 30, 2022, surgical net sales increased 9 percent, or 15 percent on a constant currency basis, versus the nine months ended Sept. 30, 2021. Third quarter 2022 operating income was $205 million and operating margin was 9.7 percent. The company ended the first nine months of 2022 with a cash position of $1.2 billion. Cash flows from operations for the nine months ended Sept. 30, 2022 totaled $872 million, compared to cash flows from operations of $958 million in the prior year. In the fourth quarter of 2019, the company announced a multi-year transformation program to drive efficiency gains. The transformation program was originally projected to deliver annual run-rate savings of approximately $200 million to $225 million, to be reinvested into key growth drivers. The original projected cost of the program was approximately $300 million. The company has now identified additional transformation initiatives to deliver incremental efficiencies. As such, the company now expects incremental run-rate savings of approximately $100 million, with incremental program costs of approximately $125 million. The incremental savings will be used to help offset the negative impacts from macroeconomic headwinds. The company continues to expect to complete the program by year-end 2023. Alcon also updated its 2022 fiscal year outlook, with net sales now projected to be between $8.5 billion to $8.7 billion in comparison to the August outlook of $8.6 billion to $8.8 billion. This outlook assumes that the 2022 global market grows at slightly above historical rates, that inflation stays at current levels throughout the remainder of the year, that the supply chain does not materially deteriorate and that the U.S. dollar holds steady at mid-October 2022 foreign exchange rates. This outlook excludes any impact from the planned acquisition of Aerie Pharmaceuticals, Inc. “We have built a solid foundation and our business fundamentals are strong,” Endicott said. “Our positive results demonstrate that our investments in transformation, infrastructure and innovation continue to pay off. We are pleased with our margin expansion and operating leverage, despite the headwinds of a strong U.S. dollar. Looking forward, we will continue to focus on advancing our innovation engine, driving commercial execution and creating long-term shareholder value."