Bausch & Lomb Corp Q1 FY2026 Earnings Call

Good morning, and welcome to Bausch + Lomb's First Quarter 2026 Earnings Call. Please note, this event is being recorded. I would now like to turn the conference over to George Gadkowski, Vice President of Investor Relations and Business Insights. Please go ahead.

Thank you. Good morning, everyone, and welcome to our first quarter 2026 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Brent Saunders; Chief Financial Officer, Mr. Osama Eldessouky; and President of Consumer, Mr. John Ferris. In addition to this live webcast, a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section. Before we begin, I would like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking legend at the beginning of our presentation as it contains important information. This presentation contains non-GAAP financial measures and ratios. For more information about these measures and ratios, please refer to Slide 1 of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. The financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure. With that, it's my pleasure to turn the call over to Brent.

Thanks, George, and good morning, good afternoon and good evening to everyone joining us today, including my colleagues from around the world. Before we get into the quarter, I want to address the question we hear most from investors. It's not whether our markets are growing or whether we have the right portfolio. The real question is, when will our earnings consistently reflect the strength of this business? Let me start there. Bausch + Lomb is a durable growth company. We operate in a category with long-term tailwinds, aging populations, rising myopia and a move toward premium products in cataract surgery. That demand is not in question, and you see it in our performance. We're growing consistently across Pharmaceuticals, Surgical and Vision Care. What is changing and what matters most for shareholders is the quality of that growth. Over the past 3 years, we focused on building a strong and lasting foundation, simplifying the organization, driving cost discipline, improving execution. It's a fundamental shift that started to translate into operating leverage and margin expansion in the second half of 2025. You're seeing it in our mix as higher-margin categories like dry eye and premium IOLs become a larger part of the portfolio. You're seeing it in how we manage expenses with a much sharper focus on accountability, and you're seeing it in the consistency of our execution. We understand investors' focus on earnings consistency and leverage. We're addressing both through disciplined execution and continued adjusted EBITDA growth that supports deleveraging over time. 6% year-over-year constant currency revenue growth demonstrates the consistency I referenced earlier. More importantly, what we're proving quarter-by-quarter is that we can convert that growth into high-quality earnings with 59% adjusted EBITDA growth and 16.1% adjusted EBITDA margin in Q1, thanks to enduring structural changes. The patterns and proof points we're establishing position us well to deliver sustainable value for shareholders. Three years ago, we set a clear plan, and we've executed against it with discipline. We're not making heel turns or concentrating risk in one area. We're doing exactly what we said we would, driving sustainable growth and margin expansion, improving how we sell and operate and continuing to invest in a pipeline that will carry us forward. On the growth front, I'd highlight an outstanding first quarter performance from Pharmaceuticals with 12% constant currency revenue growth and 14% reported revenue growth. That's a prime example of selling excellence. AI is becoming an increasingly important driver of operational excellence across the business. We're embedding it into how we work from improving sales effectiveness and enabling more targeted customer engagement to streamlining operations and reducing reliance on external vendors and utilizing AI in drug discovery. Just as importantly, we're continuing to invest in our people, making upskilling a priority so teams can use these tools in practical and impactful ways. This is not a stand-alone initiative. It's a fundamental shift in how we operate and create value. As we said before, our pipeline isn't theoretical. It's active and progressing. We continue to deliver concrete milestones that show execution, not just ambition, which I'll touch on shortly. Our 3-year plan for growth and meaningful margin expansion we presented at Investor Day in November is advancing with significant year-over-year improvements. One call-out is a more than 300 basis point improvement in adjusted SG&A margin, a direct result of company-wide buy-in to our Vision '27 initiative and the muscle we continue to build around financial discipline. Keep in mind, these are part of an enduring structural change I referenced earlier. The plan calls for steady acceleration of revenue growth and margin expansion through 2028, and we remain confident in our ability to meet or exceed the targets we set. This is a pipeline that's moving. In the first quarter, we filed the NDA for LUMIFY NXT, formerly LUMIFY Luxe, and completed CE Mark submission for seeLYRA, while trial recruitment remains on track. These advancements demonstrate both development and regulatory progress. Commercialization is on full display as well, with both PreserVision AREDS3 and Blink Triple Care preservative-free shipping in the first quarter. We'll cover both later, but I can tell you anecdotally that the buzz for both products is real based on my own conversations with eye care professionals at various industry gatherings. This is what pipeline momentum looks like, consistent, visible and building. It's important to note that we delivered impressive financial results while increasing our R&D investment by 17% in the quarter, which shows that growth and innovation are moving forward together. The dynamics in eye health are evolving, and that's clearly working in our favor. We're the most diversified eye health company in the world with broad-based growth across key brands. It's a simple formula. The broadest portfolio leads to deeper customer, patient and consumer relationships, which drive more consistent and long-lasting performance. I referenced our standout Pharmaceutical first quarter performance earlier, but would also note that our Vision Care segment, which includes both contact lenses and consumer products, continues to deliver. Contact lens growth was a particular bright spot as it appears will once again outpace the industry, thanks in large part to 25% growth in our daily SiHy portfolio. Our Surgical business delivered growth in the quarter, though the results came in below expectations, primarily due to temporary factors, including weather-related disruption to cataract procedures and reimbursement pressures in select markets. This also reflects a challenging comparison to Q1 2025 when the business grew 11% on a constant currency basis. More importantly, we took deliberate action to strengthen our competitive position by rebuilding our U.S. surgical field force. This was not a reactive move, but a strategic reset to ensure we have the right structure, capabilities and focus to fully capitalize on our expanding portfolio of premium products and upcoming launches. While there is some near-term transition impact, early signs are encouraging with improving execution, rising productivity and sales trends moving in the right direction. What gives us confidence is the underlying trajectory of the business. Our premium strategy continues to gain traction. In the U.S., premium products represented 26% of Q1 sales, up from 19% last year, with global mix increased to 13% from 10%. enVista U.S. sales grew 16%, with Envy up 88% year-over-year as we continue to build momentum post recall. In addition, U.S. system placements were nearly 3x higher than the prior year, positioning us well for future procedure growth. These are clear leading indicators of improving performance. As the new commercial structure scales and our premium mix continues to expand, we expect the Surgical business to strengthen sequentially through the year and beyond. I'll now turn it over to Osama to unpack first quarter financial drivers and update guidance. Osama?

Thank you, Brent, and good morning, everyone. Before we begin, please note that all of my comments today will be focused on growth expressed on a constant currency basis, unless specifically indicated otherwise. In addition, all references to adjusted EBITDA will exclude Acquired IPR&D. Q1 was a strong quarter with robust top line growth and margin expansion. We delivered meaningful operating leverage with adjusted EBITDA reported growth of 59% on a year-over-year basis. The performance highlights the structural changes we have made to drive operating leverage, which are now translating into P&L flow-through. We have simplified our operating model, streamlined indirect support to better align resources with growth opportunities and started implementing productivity initiatives across manufacturing and supply chain. Taking a step back, we are building on our 2025 momentum and continuing to execute against the targets we outlined at Investor Day. This marks our third consecutive quarter of delivering on our priorities, and Q1 results reinforce that our focused execution is keeping us well on track to achieve our 3-year targets. Turning now to our financial results on Slide 9. Total company revenue for the quarter was $1.244 billion, up 6% year-over-year, reflecting strong underlying demand. Foreign exchange was a tailwind of approximately $42 million in the quarter. Now let's dive into each of our segments in more detail. Vision Care first quarter revenue of $711 million increased by 5%, driven by strong growth in both consumer and contact lenses. Let me go over a few highlights. The consumer business delivered 5% growth in the quarter. LUMIFY generated $55 million of revenue, up 15%. The consumer dry eye portfolio delivered $114 million of revenue in the first quarter, up 16%. Growth was driven by Artelac, which was up 25%; and Blink, which was up 5%. Eye vitamins, PreserVision and Ocuvite grew by 2% in the first quarter. Contact lens revenue growth was 5% in the first quarter. The growth was led by Daily SiHy and our Ultra franchises. In the first quarter, Daily SiHy was up 23% and Ultra was up 3%. The contact lens business grew in both the U.S. and international markets, with the U.S. up 6% and international up 4% in the quarter. Moving now to the Surgical segment. First quarter revenue was $228 million, an increase of 1%, lapping 11% growth in the prior year. As Brent mentioned, the Surgical business was impacted by, among other things, one-time weather-related disruption and a rebuild of the U.S. field force, which is a strategic action designed to strengthen our execution as the year progresses. In Q1, implantables were up 3%. Our Surgical portfolio continues to transition to higher-margin premium categories with growth in premium IOLs up 27% for the quarter. Consumables were up 2% in the first quarter. Equipment revenue declined 4%, driven by a greater mix of system placements that position us well for future pull-through sales. Revenue in the Pharma segment was $305 million in Q1, an increase of 12%. Our U.S. Pharma business was up 14% in the quarter with strong execution across Miebo and Xiidra. Miebo delivered $76 million of revenue in Q1, up an impressive 33% year-over-year as it continues to scale in line with normal seasonality. Consistent with our commitment, Xiidra delivered revenue growth in the quarter. Xiidra revenue was $87 million, up 30% on a year-over-year basis. As we've discussed, the dry eye portfolio has moved beyond the launch phase and is now in growth mode. With the platform established, we expect increasing bottom line leverage while continuing to invest behind the highest return opportunities. We are confident in the portfolio's trajectory and expect sustained revenue growth and margin expansion from both Miebo and Xiidra. Finally, our International Pharma business was up 7% in the quarter. Now let me walk through some of the key non-GAAP line items on Slide 10. Adjusted gross margin for the first quarter was 61.2%, which was up 170 basis points year-over-year. In Q1, we invested $101 million in adjusted R&D, an increase of 15% year-over-year as we continue to focus on advancing the pipeline to drive the substantial opportunity ahead of us. In the quarter, we saw approximately 340 basis points of adjusted SG&A margin improvement and delivered meaningful operating leverage. This highlights the structural changes implemented in 2025, which have been in place and effective for the last couple of quarters. We are driving SG&A efficiencies and delivering growth with a lower fixed cost structure. That discipline is translating into meaningful operating leverage, which is an outcome we expect to continue. First quarter adjusted EBITDA was $200 million, up 59% year-over-year on a reported basis. And adjusted EBITDA margin was 16.1%, expanding 500 basis points year-over-year. Adjusted cash flow from operations was $45 million in the quarter, and CapEx for the quarter was $100 million, including capitalized interest of $7 million. This reflects the normal first half cash generation cadence. As we move through the year, we expect operating cash flow to increase driven by earnings growth and working capital efficiencies with a lighter CapEx profile in the second half. Net interest expense was $93 million for the quarter. We remain focused on progressing towards our 3.5x net leverage target by the end of 2028. Our net leverage improved in the quarter and we expect to make continued progress over the course of the year. Adjusted EPS, excluding Acquired IPR&D, was $0.08 for the quarter compared to a loss of $0.07 in the prior year. Now turning to our 2026 guidance on Slide 13. The fundamentals of our business and the eye care market remain strong, and the momentum we're seeing reinforces our outlook. We delivered a strong start to the year, and the Q1 results further strengthen our confidence in our ability to execute through the remainder of 2026. We are raising our full year revenue guidance by $45 million to a range of $5.42 billion to $5.52 billion. The updated revenue guidance reflects constant currency growth of approximately 5.3% to 7.2%, up roughly 30 basis points versus our prior outlook. Turning to adjusted EBITDA. We are raising our full year guidance by $10 million to a range of $1.01 billion to $1.06 billion. This reflects a margin of approximately 19% at the midpoint of the guidance range and adjusted EBITDA growth of approximately 16% on a year-over-year basis. We are executing our margin expansion strategy with discipline and momentum and continue to expect meaningful operating leverage in 2026, with adjusted EBITDA growing at a rate of nearly 3x that of revenue. In terms of the other key assumptions underlying our guidance, based on current exchange rates for the full year 2026, we estimate currency tailwinds of approximately $50 million to revenue. We expect adjusted gross margin to be approximately 62% and investments in R&D to be in the range of 7.5% to 8% of revenue. Below the line, we continue to expect interest expense to be approximately $365 million and our adjusted tax rate to be approximately 19%. Full year CapEx remains unchanged and is expected to be approximately $285 million. As mentioned, CapEx is weighted to the first half of the year and spend is anticipated to be lighter in the second half of the year. In conclusion, Q1 was our third straight quarter of delivering on our strategy, and we are firmly on the right path. We are executing against our priorities, driving operating leverage and margin expansion and seeing that discipline convert into tangible P&L results. As we move through 2026, execution will remain our top priority and the momentum we have established reinforces our confidence in achieving our 3-year targets. And now I'll turn the call over to Brent.

Thanks, Osama. We'll now hear from John Ferris, President of our Consumer business, who will explain how we're leveraging leading brands to drive performance while broadening our reach through new product rollouts.

Thanks, Brent. Bausch + Lomb is the #1 consumer eye health company globally, anchored by our strength in the U.S., where we've built a durable portfolio of hero brands. From PreserVision, the gold standard in eye vitamins to LUMIFY, the #1 redness reliever to Blink and dry eye, we've continued our track record of growing faster than the market and winning share in the categories that matter most. And that strength extends globally, where we're building an international consumer powerhouse led by Artelac, our high-growth dry eye franchise now available in more than 40 countries. A few call-outs on first quarter performance. Artelac delivered 34% reported revenue growth with no signs of slowing as our geographic footprint continues to expand. Blink has now grown for 7 straight quarters under Bausch + Lomb management. And with the newly available Triple Care preservative-free offering, we expect to attract new users as we continue to infuse the brand with clinically meaningful innovation. We grew 2% in eye vitamins, a category we built and have led for decades. PreserVision increased market share during the quarter, and we're extending that leadership by significantly expanding the addressable market in AMD with the introduction of our AREDS3 formula, which incorporates B vitamin science. More on that in a moment. And finally, LUMIFY, 15% reported revenue growth nearly 8 years after launch with a 6% share gain in the quarter. We now hold close to 70% of the U.S. redness relief market. That's what a true power brand does. It keeps building. In consumer, innovation is the engine behind the enduring brands, and our pipeline reflects exactly that. PreserVision AREDS3 is now available nationwide on retail shelves and online with distribution continuing to build. This launch changes the game for us in the AREDS formula eye vitamin category. With the addition of our unique B vitamin complex, we're no longer limited to serving the 11 million intermediate to advanced AMD patients. We can now meaningfully address an additional 17 million early-stage patients. That's a significant expansion of our addressable market and we're building toward it the right way with professional endorsement first. We've hosted educational events at major industry meetings, completed dedicated field force training and began detailing and sampling more than 8,000 targets earlier this month. It's early in the launch, but initial retailer orders in the first 60 days have exceeded expectations and the sales velocity on Amazon is tracking well with a 4.7 star user rating. Turning to LUMIFY. LUMIFY is beloved by over 3 million highly satisfied users with a commanding 95% share of U.S. eye care professional recommendations. And yet we believe we've barely scratched the surface of what this brand can become. The core audience for LUMIFY, beauty enthusiasts, is 100 million strong. That's a significant and largely untapped runway for growth. We've built a highly differentiated durable brand with the scale, premium positioning and professional credibility that make it increasingly difficult to displace. Later on LUMIFY NXT, expected to launch in the first half of 2027, and we believe we have a clear path to continue building one of the most enduring brands in consumer eye health.

Thanks, John. Let's turn our attention to the biggest revenue drivers in Pharmaceuticals. You'll notice that we've moved from highlighting prescription growth to focusing on revenue, aligned with our strategy as Miebo enters the next phase of growth and our refreshed Xiidra market access approach takes hold. The acceleration we're seeing in Miebo revenue, which saw a 33% increase, shouldn't come as a surprise. It's consistent with the trajectory we've been building, strong uptake, growing familiarity among prescribers and increased confidence in the product. The same is true for Xiidra, which grew 30%. We said revenue growth was a priority, and that's exactly what we delivered and then some. There's nothing sudden or unexpected here. It's the result of steady, disciplined execution against a clear plan. This is the strategy working as designed. Together, Miebo and Xiidra continue to anchor our dry eye portfolio, providing a strong and complementary foundation for growth. And with seasonality working in our favor, we expect that momentum to build as the year progresses. Our contact lens business continues to deliver, reflecting the strength of our portfolio and reinforcing our position as a reliable performer. As noted earlier, 5% constant currency revenue growth in the category was driven by continued outperformance from our Daily SiHy lenses. We expect that momentum to continue as we execute a disciplined strategic rollout of planned SiHy offerings across the globe over the next few years. As we continue to build momentum with our current portfolio, we remain focused on what's next. Beginning in 2028 with Project Halo, we have a new wave of disruptive lenses progressing through the pipeline that we believe position us to capture additional market share in a highly cost-effective way. It's a clear example of how we're pairing near-term execution with long-term innovation. While the overall Surgical business performance in the first quarter wasn't quite up to our standards, our premium IOL portfolio remains a bright spot with 27% constant currency revenue growth. Our desire to develop a premium heavy IOL portfolio has been no secret, and the transition is well underway. With the early April launch of enVista Envy in Europe, our first attractive premium IOL in the region, our expansion into the higher-margin segment continues. Envy will complement our European LuxLife offering, giving surgeons optionality to meet their evolving needs. We expect continued momentum in premium IOLs as we expand globally and drive a greater mix of higher-value offerings. We've talked about our pipeline potential. Now you're seeing the reality. Advancement is happening across multiple programs and stages with a steady cadence of milestones being achieved. Importantly, this is not a near-term peak. It's a sustained profile. This is the pipeline built to deliver year after year well into 2030 and beyond. Now let's open things up for questions. Operator?

And the first question today is coming from Matt Miksic from Barclays.

Great. Congratulations, Sam and Brent and team on a really strong start to the year. So I wanted to maybe start with just a question about the strategic elements that are coming together to drive the leverage that you've talked about and the drop-through that you're seeing.

Apologies. We seem to have lost Matt. We will bring Matt back in when he reconnects. In the meantime, we'll move to Robbie Marcus from JPMorgan.

Congrats on a good quarter. Maybe I'll just ask my two upfront. I wanted to ask about two different markets, dry eye and contact lenses. Miebo was good. Xiidra was a lot better than expected. Maybe speak to what you're seeing there, particularly with Xiidra and what drove the pretty substantial year-over-year growth. And then I'll just ask second, contact lenses that was in line. What are you seeing there from a market perspective? We've seen over the past few quarters, the market decelerating as pricing has moderated. You put up 5% growth, 6% in the U.S., 4% outside the U.S. Just what you're seeing there in the market and how you think you're faring?

Yes. Thanks, Robbie. Let's start with dry eye. The important part of the strategy we began implementing a few years ago was to be an absolute leader in dry eye, both on the prescription and OTC sides. Strategically, the goal was to provide the full continuum of care for the patient wherever they are, whether in the OTC channel or the prescription channel. It is a very large and underpenetrated market and a multifactorial disease. Being able to offer both the only anti-evaporative treatment and the best anti-inflammatory prescription treatment really complements one another. During the first two years of Miebo and Xiidra, we focused on adoption—the launch phase. We invested heavily to make sure prescribers and patients understood the mechanisms, benefits, and risks of each medicine and how they work together. We needed adoption and trial, clear clinical and medical information, and consumer activation including DTC. Over the past year we shifted from launch to growth, and into 2026 our focus is on revenue growth and profitability of these franchises. You can see that in the quarter. I know you described Miebo as being okay, but 33 percent revenue growth to me is better than okay. Xiidra at 30 percent growth for a brand that has been on the market for several years is very impressive. We have a lot of momentum in dry eye. The category is still underpenetrated from a prescription perspective and we are seeing the market expand. Even with some limited competition that launched last year, we are capturing more than our fair share and driving market expansion. With our dual action R&D program, we are committed to this category and to driving innovation, so I expect this momentum to continue. Also remember there is a lot of seasonality in the dry eye market, with the first quarter typically the weakest and the fourth quarter the strongest, largely due to how reimbursement and insurance plans work. Putting up these kinds of numbers in the first quarter is a real testament to the team's execution and our ability to drive growth. I expect the momentum to improve as seasonality becomes a tailwind and execution continues to sharpen. On contact lenses, data is a little harder to come by than in the prescription pharmaceutical world. On the fourth quarter call I said we anticipated 2025 market growth around 4 percent and expected improvement in 2026 to somewhere between 4 and 5 percent. Looking at our growth and at least one competitor's reported results, we grew at about double their rate in the quarter. I expect us to lead the market in growth. Growth was much higher in the U.S. than outside because in the U.S. we offer all modalities and have the full portfolio. It is much easier to become the lens of choice when you have the full lineup; it is harder for a prescriber to offer a line that lacks a toric or a multifocal. We are launching other modalities in other markets, so I believe the rest of the world will look more like the U.S. over time. There is some seasonality in contact lenses, though not as pronounced as in pharmaceuticals, with the first quarter a bit slower, as we saw in the first quarter last year. Our growth increased sequentially throughout last year and we expect the same pattern this year. Overall, the contact lens market is modestly improving and our goal is to outperform the market.

Really helpful, Brent. I always talk relative 33% is a good absolute year-over-year growth.

The next question will be from Joanne Wuensch from Citibank.

I'll put my questions upfront. I'm curious what you're seeing globally as we think about the impacts of world order on the consumer. And I'm also coming closer to home, sort of curious what you're seeing in terms of implementation of your strategy and what gives you confidence as you go through the year?

Yes. So Joanne, just to clarify, you're talking about the Middle East and the repercussions when you say consumer sentiment or...

Middle East repercussions, consumer sentiment, inflation, I'm just going to put it in the new world order.

All right. Yes. No problem. Look, I would say this, and I'm going to ask John Ferris, our head of consumer, who's with us here, to also weigh in because he tracks this very closely. And maybe Osama has some comments as well. The one thing that gives me great confidence in navigating some of the world's uncertainty is this team is tested, prepared, and focused. If you've watched us deal with many different obstacles over the last three years, I hope it gives you confidence that we can do that. Take the Middle East as an example. We have a dedicated team that focuses on transportation, supplier negotiations, and cost efficiencies on a weekly basis. So we plan for them; we don't react to them. When you look at oil and freight costs, it's probably a little too early to quantify the impact, but we didn't see an impact in our numbers in the first quarter. It was quite minimal, and the impact we saw wasn't demand-related. It was logistical and about making sure we could get our products where they needed to be at the right cost. The fix is somewhat straightforward for us in that regard. It's more planning and making sure we have inventory in the right location at the right cost with the right shipping frequency, and that's what the team is focused on. That said, if oil costs remain persistently elevated, it could become a headwind for us, but it's too early to call. If you recall, at this time last year we were talking about tariffs and people were asking us to quantify them. We pushed back, saying we could manage through it; it was too early to call, and we navigated that disruption quite well. I think we'll be able to do the same with higher energy costs. Finally, on consumer confidence, I'd say it's fine. Some markets are different; the U.S. is holding up more resiliently than perhaps China and Southeast Asia at the moment. But overall, globally, it's playing out exactly as we predicted and exactly how we expect the year will play out so far. But John, any other comments? You're much closer to the consumer.

Yes. I'd say we're always mindful of consumer sentiment. But that being said, our business has proven resilient through multiple cycles of macro headwinds that we think post pandemic. Brent mentioned inflation and tariffs, and now we talk about affordability. Part of that resilience comes from the need-based categories that we compete in, but a larger part comes from our execution and really the strength of our brands. So I think we've shown we can consistently grow our business faster than the market, even in challenging environments with some macro headwinds. So that gives us confidence moving forward. But I will say, hey, we're always mindful of the health of the consumer and keeping a close eye on it.

And the next question is coming from Matt Miksic from Barclays.

So maybe a follow-up on Surgical here and just one quick one on contacts. The really great growth sort of as expected. I don't want to take away from the credit, but that's good. It's probably right. I mean at ASCRS, it seems like there was a lot of interest and traction and feedback from doctors has been very good on your lenses, your ATIOL lenses and on equipment. And so maybe just to round out some of the success you're seeing in this time last year, you had to pull some products, you got them back into the market and they're now sort of regaining that momentum. On the equipment side, I mean, the numbers would say equipment is down, but that wasn't the feedback that I got from clinicians and from the conference that there was some sort of share shift in equipment. Maybe if you could talk a little bit about that. And then I had one quick follow-up.

Yes. So I think you're right. As I mentioned in the prepared remarks, there was a focused rebuild of our Surgical U.S. field force, much like we did in Pharma and in contact lenses. So we have a lot of experience in making sure that our frontline salespeople are the best in the industry, and we're doing that in Surgical as well. And so when you think about what I said in the prepared remarks, our system placements were 3x higher than they were Q1 of last year. That's probably the strongest leading indicator to support what you saw at ASCRS. And so we feel very confident that equipment and the consumable pull-through will continue to strengthen sequentially throughout the year. Our team is doing an excellent job in placing and getting trial, and that will result to higher sales as time goes. So I feel very good. I think on the premium side, 27% constant currency growth there. And very impressive, Envy up 88%. And so you see the momentum that we had in that tough first quarter comp last year where prior to recall is back, right? I think I can fully say Envy is the best trifocal in the market, providing the best outcomes for patients and doctors and surgeons are recognizing that. So I feel very good. And the last thing I would just say, the momentum and part of my optimism of sequential improvement in surgical is while we focus on the U.S., we just launched in April in this quarter, Envy and Aspire in Europe. We're just launching our new Bi-Blade for retitrectomy in Europe this month. We're launching it in the U.S. in the third quarter. We're upgrading the entire portfolio globally to preloaded from the enVista line, which is very important to surgeons. That's just happening this quarter. And then, of course, in the second half, we expect to launch Elios with assumed approval in the second half. So a lot of really positive momentum in the surgical business to be seen throughout the year.

That's great and super helpful. And then just on some of the geographic performance in contact lenses, really strong, yes, 6% U.S., international also 4%. But I guess heading into the quarter, we had heard, or maybe from some of your competitors' results, of more uneven performance, particularly in Asia Pac and maybe around Japan or some of the other markets. Can you talk a little bit about what you saw there and whether that's because you're just offsetting that with strong growth elsewhere or whether you're seeing anything like that and what it looks like in terms of trends?

Yes. So I think from a market perspective, and let's talk about our performance in that market because they do bifurcate a bit. I think in fairness, the market in the U.S. is the strongest followed by Europe and then Asia. And Asia, it's more of a China, Southeast Asia kind of softness that I'm not worried about long-term trends. I think it's more of an economic muting of the market. But I do think it will come back and long term, I think, is a very important market for us. Japan has been a flat to declining market for the last few years. But in fairness, this is where I think we bifurcate, our Japanese business was up 4% in the year. And remember, as I mentioned in the first question, we're just starting to launch the new modalities or additional modalities of our Daily SiHy portfolio into these markets. So if we can kind of perform better than the market in those even troubled or softer markets, and we're doing that organically and the new products are still on the come. I feel very good about where we're positioned to grow faster than the market and take more than our peers.

The next question will be from Young Li from Jefferies.

I have a follow-up on the earlier question. We looked at monthly script trends for Miebo: January and February were much lower sequentially, March rebounded strongly, and April weekly numbers also look pretty good. You addressed some of the dynamics driving that, but I want to emphasize it since investors raised the topic. What caused the large sequential deceleration in scripts in January and February and the subsequent rebound in March, and how confident are you that the improving trends will be sustainable for the rest of the year, especially with a major dry eye launch still ramping?

Great question. I think this is the new normal. As we've moved away from launch mode and become a much bigger product, we will see true seasonality in this business for the foreseeable future. It's driven by how insurance works, so it's totally normal — you'll see the same pattern next year and the year after. With higher co-pays and higher deductible plans, January and February will always show lower prescription volume because more people face higher costs and abandon prescriptions at the pharmacy. That's how these markets work, and that's how we plan and model. We believe our team is executing with excellence; you're seeing the rebound in March. I actually thought it would happen in April, so we're a bit ahead of my expectations. I feel very good and optimistic about the trends, and Miebo and Xiidra will be strong growth drivers throughout the year and for the foreseeable future.

Great. Very helpful. I guess another question just on the Surgical side. So you have PanOptix Pro ramping, Unity out there, PureSee is launching. I heard the 1Q comments on weather and tough comps. But just wanted to get a sense about your feeling of your product portfolio and how that compares with all these new launches. We're assuming some level of trialing from PureSee. Just wondering if you are expecting that as well in your numbers?

Yes, we are. On Unity, I don't see any impact to us. They're focused on upgrading their existing customer base. They ran some trials last year, but we haven't seen that this year, so it's not a concern. Our seeLYRA and next-generation seeNOVA are very competitive. I often hear that once people try seeLYRA they view it as the most stable and best phaco machine in the market, even compared with Unity. Our next-generation equipment will be best-in-class. I meet with the R&D team every other week to review the project plan, and we're progressing very nicely. We're very competitive with our current portfolio and poised to break out with the next generation. On the IOL side, we will probably see some trials, but we're positioned for growth. Envy has been incredibly well received. With IOLs, surgeons often wait a year or more of results after implantation, and our data shows we have an excellent product, so word is spreading. I noted 88% growth for Envy in the quarter against a tough comparable in the first quarter last year. Remember, the recall was in the second quarter, not the first. Given the outcomes, penetration, growth opportunity, and our rebuilt surgical field force, I feel very confident we're primed for sequential improvement in growth throughout the year.

The next question will be from Lei Huang calling in for Larry Biegelsen from Wells Fargo.

It's Lei calling in for Larry. Good start to the year. Just two questions. First, you raised your sales growth guidance, looks a little bit conservative. Your EBITDA raise of $10 million is slightly below the beat in Q1. So can you just talk about how much conservatism is built into that outlook? And if there's anything to call out in the marketplace that you want to flag concerning, for example, contact lens in China, Southeast Asia, cataract reimbursement change, any of those things affect your outlook? And my second question, I'll ask that as well, just phasing for the rest of the year in terms of sales growth and EBITDA. You had a pretty easy comp in 2Q in terms of the top line growth, but that does get tougher in the second half of the year.

Yes. Great question, Lei. Look, honestly, I expected that question because I think investors look at the quarter and how our team has executed and have higher expectations, and that makes sense to us. But the fact is, we're raising guidance. We feel good about that. I'll be pretty direct on this: we raise guidance when we have conviction, not when we have optimism alone. We're only one quarter into the year, and I agree our momentum is real. I think 6% constant currency revenue growth and 59% adjusted EBITDA growth, with margin expansion of 500 basis points year-over-year, is a real sign that the team is executing, and we intend to keep that up. But I also think we have to recognize that, as Joanne raised, there are a lot of other variables. We're early in the year, so we have to take this one step at a time. We have a lot of momentum and expect it to continue. I think you can tell by my answers I'm very excited about what the rest of the year looks like. Stay tuned; as we continue to deliver, we'll adjust the guidance appropriately. Osama, do you want to?

Yes. No, you covered it pretty well, Brent. I’ll add a bit more color to what Brent said. When we think about the guidance, as Brent noted, we’re excited about both our initial guidance and the recent upgrade. You have to keep in mind there’s a fundamental shift happening in the company right now with our operating leverage. We’ve seen improvement in product mix and gross margin, and we’re also seeing a 340 basis point improvement in SG&A and pulling that through into our full-year expectations. That gives us confidence not only in this year’s guidance but also in the three-year targets we outlined on Investor Day. You also asked about phasing, so let me address that. We expect the phasing for 2026 to be very similar to the cadence we saw in 2025. Focusing on Q2 as a reference point, Q2 last year was roughly 25% of revenue achievement relative to the midpoint, and we would expect something in line with that if you use 25% over the midpoint of our revenue guidance. On EBITDA, we’re seeing the benefit of our leverage work with a higher achievement rate. Last year Q2 was about a 21.5% achievement; this year we expect Q2 to be about a 22.5% achievement off the midpoint of our guidance. So we’re seeing progress and the leverage in the P&L reflected in the phasing.

The next question will be from David Roman from Goldman Sachs.

This is Marco on for David. I wanted to ask more on the sales force rebuild. I appreciate that this is a deliberate action, but can you help us frame this more concretely? How should we think about the magnitude of reps being added versus current headcount and I guess, expectations for the new productivity?

Yes. I think we said last year that we had brought in a new head of the U.S. He came in and he's a pro; he quickly diagnosed that we needed to organize the field force differently and focus more on account management given the breadth of the portfolio, and partner with practices to ensure better outcomes and improved productivity in the office and ASC. That led us to realign territories, which always means breaking and renewing relationships, and surgical is still very much a relationship business. Sam and I track it weekly with our leadership team, and as we look one month into the second quarter, we're seeing really positive signs of productivity improvement among that field force. We will continue to add to that, particularly as we get ready to launch Elios in the second half of the year. It wasn't just about adding more people; it was also about making sure we had the right structure to best service the customer.

The next question will be from Doug Miehm from RBC Capital Markets.

I'd like to expand on the Xiidra outperformance for the quarter, up over 30% or so. And I'm just curious, you had guided that product given the changes that were occurring on the insurance front and reimbursement to about mid-single digits. And while we may expect the 30% to moderate. Number one, I'm wondering if there was any one-time benefit in Q1 due to inventory changes. And then as we think about the rest of the year, how should we be thinking about gross to nets and the growth for this product because it could have a material impact on your operations? And if this is a new norm, I'm curious as to why you didn't do it earlier? And I'll leave it there.

Great question, Doug. So look, Xiidra was a great performance and great execution from our team. The biggest change for us was walking away from the CVS contract. We discussed that last year, and we told you it was going to happen, and that you would see TRxs decline, but revenue increase. So it played out exactly as we had told everyone last year we would do. And the reason we didn't walk away from it earlier, it was a contract that we inherited from Novartis and it lasted until this year. And so we had to wait for the contract with CVS to end. We did try to renegotiate, but we couldn't get to an acceptable rate with them. Our relationship with CVS is good, and we'll revisit it again next year. If we can get to a good spot, we would. But I would remind you, coverage for both Xiidra and Miebo still remain industry-leading in the mid-70s percent coverage. So most patients are covered. And so it was the right decision to make. I think the other part of your question was what's the future of Xiidra. I think you're right, we're comping a softer quarter. Q1, because of the seasonality, I've said several times on this call, shows Xiidra at 30% growth. I wouldn't expect that level of growth throughout the year. But I do think low double-digit growth should be the new norm for the rest of the year, and then we'll see where we are to set guidance for the following year. But Xiidra will be a revenue and profit driver as will Miebo, and that's just the new phase we're in.

Yes. And Doug, just to follow up on the last part of your question on the gross to net, we expect it should be about the low 70s.

Yes, yes. Okay. Great. And then just the last question as a follow-up. Around PreserVision and Ocuvite, an important portfolio for you. And with the introduction of AREDS3, I'd expect growth to accelerate certainly from what we saw in Q1. Is this something that could be mid- to high single-digit type of business portfolio for you? Or would you expect it to stay in the lower single digits?

Yes. I'll ask John to weigh in, but I would just say that I think AREDS3 is a big opportunity for us. It will take some time to build because it's unlike a lot of our other consumer brands; it's very reliant on physician recommendation. And so we need to build medical communication, medical information, sales reps, samples and the like. But John, do you want to take it from there?

Sure, Brent. We're very excited about the long-term potential of AREDS3. As Brent said, it's important to emphasize that this is going to be a multiyear opportunity. As I noted in my remarks, we've built and led this market for over 20 years, so we understand both the science and how to execute here and are confident we'll deliver on that opportunity. That being said, it starts with eye care professionals first, and that's where we're focusing our efforts today. I would say we've seen one data point that's very encouraging: 12% of eye care professionals in the U.S. are already reporting that they're recommending PreserVision AREDS3 to their patients. That's a really strong number this early in the launch. I've launched multiple consumer products, including PreserVision AREDS2, and that number reflects strong interest and is impressive for us. We're on shelf in retailers now, distribution is continuing to build, and that will ramp up through the second quarter. At that point we'll layer on our consumer marketing efforts in the back half of the year, and that's when we anticipate seeing a ramp-up in consumption that will be reflected in our results. When we think about the long-term potential for this brand and the growth we've seen in our eye vitamin franchise, mid-single-digit to slightly higher growth is within our expectations, and we're confident in our ability to deliver. It will take some time to ramp up, but we're starting with eye care professionals and are seeing some really good early indicators.

And we have time for one last question today, and that's coming from Tom Stephan from Stifel.

I wanted to go back to Miebo Xiidra. Brent, can you talk about the script growth you're seeing year-to-date? As we consider the product's underlying fundamentals and look toward growth beyond 2026, what are you seeing?

Yes. So when you look at prescription growth, it's actually declining, and we knew that as a result of the CVS contract termination. We told you that last year, but to expect revenue growth. And so it's playing out exactly as we thought. Our goal is to stabilize that throughout the year. I think our team is best-in-class. And so I think we'll get there. But we've pivoted to really focus on revenue and profitability versus just trying to get broad TRx growth. And I think that's given the life of where we are and the fact that we have the combination coming, I think we're doing this the right way. And I think we're poised for being a leader and a growth driver of this market for more than decades ahead, given our portfolio. So playing out exactly as we expected, and we're very confident for a strong year.

That's great. And then one quick follow-up, if I can. Just on contact lens performance, Brent, to go back to an earlier comment, I think you said that you expect sequential acceleration throughout the year. Is that right? And if so, what drives that notably as 1Q was the easiest comp of the year?

Yes. Let me back up. I did say you'll see sequential improvement. In part, that's due to seasonality. It's not as pronounced as in the prescription market, but there is some seasonality in contact lenses. More importantly, we're focused on selling the whole portfolio, leading with our Daily SiHy while also pulling through our Ultra and FRP offerings. Different markets around the world have different needs and economics, and we have the full portfolio to match the right product to the right consumer in the right market. We're launching other modalities in additional markets worldwide. Based on what we saw in the U.S., our Daily SiHy portfolio performs best when we have the full set of modalities. That isn't always the case in other parts of the world, so as those launches come online this year we expect much better performance of Daily SiHy in markets with more modalities. Net-net, the best way to look at it is the pattern we had in 2025 — the sequential growth of the contact lens business — and I expect a similar pattern this year, which would show sequential improvement. I believe that was our last question. Let me conclude with a couple of thoughts to wrap up the call. First, thank you everyone for participating. Most importantly, I want to thank my colleagues around the world for delivering a great quarter; we're excited to see what the team can do throughout the year. When I joined three years ago I talked a lot about selling excellence and creating revenue growth. Over the last three years we've created a durable revenue growth story, with 6% constant currency revenue growth in the quarter. We talked about pipeline innovation being important. We've invested in the talent and capabilities of our R&D team, and now have more than 60 programs advancing through the clinic. We didn't get many questions for Yehia, who is on the call, but we have a number of data readouts in the second half of the year. We're excited to see how our products perform in clinical trials and will release that information as it becomes available. Expect a steady cadence of pipeline news in the second half. We are hosting an R&D teach-in on contact lenses on June 1, and we hope everyone can join. We also focused on operational excellence, ensuring our supply chain is reliable and high quality, and we have met our metrics there. Now we're pivoting to gross margin improvement and supply chain efficiency. At Investor Day we announced financial excellence as the fourth pillar of our strategy, and this is the third quarter where we've shown that in full display. With 6% constant currency growth and 59% EBITDA growth, you can see the leverage in the P&L — another proof point that we're executing financial excellence quarter by quarter. As our new guidance suggests, adjusted EBITDA should grow at roughly three times the rate of revenue. We expect to meet or exceed the financial goals outlined at Investor Day in November, including more than 600 basis points of EBITDA margin improvement by 2028. Everything is on track. There's a lot of momentum in the business; the team is focused and executing. We feel very good about the year, and we look forward to keeping you updated. Thank you again for joining us. Thank you, operator.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.