LENSAR® Reports First Quarter 2026 Results and Provides Business UpdateMay 8, 2026
LENSAR, Inc.
7 ALLY Robotic Cataract Laser Systems® (“ALLY System”) Placements in First Quarter 2026; Backlog of 11 ALLY Systems as of March 31, 2026
First Quarter Recurring Revenue was $12.6 million
Total Laser Installed Base Climbs to 440 Systems, Driven by 39% Growth in ALLY Placements
ORLANDO, Fla., May 08, 2026 (GLOBE NEWSWIRE) -- LENSAR, Inc. (Nasdaq: LNSR) (“LENSAR” or the “Company”), a global medical technology company focused on advanced robotic laser solutions for the treatment of cataracts, today announced financial results for the quarter ended March 31, 2026 and provided an update on key operational initiatives.
“Our first quarter total revenue and related system placement results decreased slightly as compared to the first quarter of 2025, primarily driven by the uncertainty and disruption in the market around the Alcon transaction, which was terminated near the end of the quarter. Despite the effect of the lengthy transaction process and uncertainty in the outcome of the acquisition, which have had a significant impact on system placements, the underlying fundamentals of our business remain strong. The core business in recurring revenue is solid and our outlook is one of continued growth,” said Nick Curtis, President and CEO of LENSAR. “Notably, our recurring revenue reached approximately $12.6 million in the first quarter, representing approximately 94% of our total revenue. There is no question the value ALLY brings to surgeons. We expect recurring revenue will continue to grow as utilization ramps and we return to historical levels of system placements over the next several quarters, now that the merger-related uncertainty is in the rear view mirror.”
First Quarter 2026 Financial Results
Total revenue for the quarter ended March 31, 2026 was $13.4 million, reflecting a decrease of 5% compared to total revenue of $14.2 million for the quarter ended March 31, 2025. The decrease was primarily attributable to decreased systems sales of $1.8 million partially offset by increased procedure volume of $1.0 million. First quarter 2026 recurring revenue increased approximately $1.1 million, or 9%, over the first quarter of 2025.
During the three months ended March 31, 2026, the Company placed 7 ALLY Systems, bringing the total installed ALLY base to approximately 205 at quarter end. As of March 31, 2026 the Company had a backlog of 11 ALLY Systems pending installation.
The total combined base of LENSAR Laser Systems and ALLY Systems increased to approximately 440 systems as of March 31, 2026, representing a 12% increase compared to total installed base at March 31, 2025.
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The following table provides information about revenue and recurring revenue, which we consider to be all components of our revenue except for the sales of our systems:
Three Months Ended
March 31, (Dollars in thousands) 2026 2025 System $ 836 $ 2,632 Recurring revenue: Procedure 9,240 8,286 Lease 1,681 1,884 Service 1,671 1,357 Total recurring revenue 12,592 11,527 Total revenue $ 13,428 $ 14,159 Recurring revenue % 94 % 81 %
The following table provides information about procedure volume:
2026 2025 2024 Q1 54,094 52,347 39,486
Selling, general and administrative expenses were $2.5 million and $11.1 million for the quarters ended March 31, 2026 and 2025, respectively, a decrease of $8.6 million, or 77%. General and administrative costs in the quarter ended March 31, 2026 were reduced by $4.4 million in acquisition-related costs associated with the terminated merger. Excluding acquisition-related costs, selling, general and administrative costs were $6.9 million for the three months ended March 31, 2026 and 2025.
Research and development expenses were $1.4 million and $1.5 million for the quarters ended March 31, 2026 and 2025, respectively.
Total operating expenses for the quarter ended March 31, 2026 were $4.1 million, a decrease of $8.8 million, or 68%, compared to $12.9 million for the quarter ended March 31, 2025. The decrease was primarily due to the decrease in selling, general and administrative expenses, as previously described.
Net income for the quarter ended March 31, 2026, was $36.3 million, or $1.56 per basic and $0.00 per diluted share, compared to a net loss of $27.3 million, or $(2.32) per basic and diluted share for the quarter ended March 31, 2025. First quarter 2026 net income was primarily related to $10.0 million in acquisition-related income associated with the termination of the merger transaction and $23.9 million in non-cash income associated with the change in the fair value of warrant liabilities due to the fluctuation in the Company’s share price. Included within net income and loss were stock-based compensation expenses of $0.7 million for each of the quarters ended March 31, 2026 and 2025.
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) for the quarter ended March 31, 2026 was $37.3 million, compared with ($26.4) million for the quarter ended March 31, 2025. Adjusted EBITDA, which we calculate by adding back stock-based compensation expense, change in the fair value of warrant liabilities, and acquisition-related income and costs, was ($0.3) million for the quarter ended March 31, 2026 and $0.2 million for the quarter ended March 31, 2025. EBITDA and Adjusted EBITDA are non-GAAP financial measures, and a reconciliation of these measures to net loss is set forth below in this press release.
As of March 31, 2026, the Company had cash, cash equivalents, and investments of $13.5 million, as compared to $18.0 million at March 31, 2025.
Conference Call
LENSAR management will host a conference call and live webcast to discuss the results and provide an update on the Company’s go-forward strategy today, May 8, 2026, at 8:30 a.m. ET.
To participate by telephone, please use this registration link. All participants must use the link to complete the online registration process in advance of the conference call. The live webcast can be accessed under “Events & Presentations” in the Investor Relations section of the company’s website at https://ir.lensar.com. The call and webcast replay will be available until May 22, 2026.
About LENSAR
LENSAR is a commercial-stage medical device company focused on designing, developing, and marketing advanced systems for the treatment of cataracts and the management of astigmatism as an integral aspect of the procedure. LENSAR has developed its ALLY Robotic Cataract Laser System™ as a compact, highly ergonomic system utilizing an extremely fast dual-modality laser and integrating AI into proprietary imaging and software. ALLY is designed to transform premium cataract surgery by utilizing LENSAR’s advanced robotic technologies with the ability to perform the entire procedure in a sterile operating room or in-office surgical suite, delivering operational efficiencies and reduced overhead. ALLY includes LENSAR’s proprietary Streamline® software technology, designed to guide surgeons to achieve better outcomes.
Forward-looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding trends in worldwide procedure volume, ALLY’s commercialization and the Company’s operational performance. In some cases, you can identify forward-looking statements by terms such as “aim,” “anticipate,” “approach,” “believe,” “contemplate,” “could,” “estimate,” “expect,” “goal,” “intend,” “look,” “may,” “mission,” “plan,” “possible,” “potential,” “predict,” “project,” “pursue,” “should,” “target,” “will,” “would,” or the negative thereof and similar words and expressions.
Forward-looking statements are based on management’s current expectations, beliefs and assumptions and on information currently available to us. Such statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various important factors, including, but not limited to: any anticipated effects of the termination of the agreement governing the merger on the value of our common stock; the outcome of any legal proceedings that may be instituted against us and others relating to the merger; our history of operating losses and ability to achieve or sustain profitability; our ability to develop, receive and maintain regulatory clearance or certification of and successfully commercialize the ALLY System and to maintain our LENSAR Laser System; the impact to our business, financial condition, results of operations and our suppliers and distributors as a result of global macroeconomic conditions; the willingness of patients to pay the price difference for our products compared to a standard cataract procedure covered by Medicare or other insurance; our ability to grow our U.S. sales and marketing organization or maintain or grow an effective network of international distributors; our future capital needs and our ability to raise additional funds on acceptable terms, or at all; the impact to our business, financial condition and results of operations as a result of a material disruption to the supply or manufacture of our systems or necessary component parts for such system or material inflationary pressures or enacted tariffs affecting pricing of component parts; our ability to compete against competitors that have longer operating histories, more established products and greater resources than we do; our ability to address the numerous risks associated with marketing, selling and leasing our products in markets outside the United States; the impact to our business, financial condition and results of operations as a result of exposure to the credit risk of our customers; our ability to accurately forecast customer demand and manage our inventory levels; the impact to our business, financial condition and results of operations if we are unable to secure adequate coverage or reimbursement by government or other third-party payors for procedures using our ALLY System or our other products, or changes in such coverage or reimbursement; the impact to our business, financial condition and results of operations of product liability suits brought against us; risks related to government regulation applicable to our products and operations; and risks related to our intellectual property and other intellectual property matters. In addition, a number of other important factors could cause the Company’s actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements, including but not limited to the other important factors that are disclosed under the heading “Risk Factors” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”), as such factors may be updated from time to time in its other filings with the SEC, including the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, to be filed with the SEC, each accessible on the SEC’s website at www.sec.gov and the Investor Relations section of the Company’s website at https://ir.lensar.com.
All forward-looking statements are expressly qualified in their entirety by such factors. Except as required by law, the Company undertakes no obligation to publicly update or review any forward-looking statement, whether because of new information, future developments or otherwise. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.
Contacts: Lee Roth Thomas R. Staab, II, CFO Burns McClellan for LENSAR ir.contact@lensar.com lroth@burnsmc.com
Non-GAAP Financial Measures: The Company prepares and analyzes operating and financial data and non-GAAP measures to assess the performance of its business, make strategic and offering decisions and build its financial projections. The key non-GAAP measures it uses are EBITDA and Adjusted EBITDA. EBITDA is defined as net loss before interest expense, interest income, income tax expense, depreciation and amortization expenses. EBITDA is a non-GAAP financial measure. EBITDA is included in this filing because we believe that EBITDA provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of actual results on a comparable basis with historical results. Adjusted EBITDA is also a non-GAAP financial measure. We believe Adjusted EBITDA, which is defined as EBITDA and further excluding stock-based compensation expense, change in fair value of warrant liabilities, and acquisition-related income and costs provides meaningful supplemental information for investors when evaluating our results and comparing us to peer companies as stock-based compensation expense and change in fair value of warrant liabilities are significant non-cash charges, and acquisition-related income and costs are not recurring. We use these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. However, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance and, therefore, any non-GAAP measures we use may not be directly comparable to similarly titled measures of other companies. Investors should not consider our non-GAAP financial measures in isolation or as a substitute for an analysis of our results as reported under GAAP.
Reconciliations of EBITDA and Adjusted EBITDA to their most comparable GAAP financial measure are set forth below.
Three Months Ended
March 31, (Dollars in thousands) 2026 2025 Net income (loss) $ 36,332 $ (27,345 ) Less: Interest income (145 ) (159 ) Add: Depreciation expense 904 844 Add: Amortization expense 229 232 EBITDA 37,320 (26,428 ) Add: Stock-based compensation expense 690 654 Add: Change in fair value of warrant liabilities (23,948 ) 21,714 Add: Acquisition-related costs (4,373 ) 4,225 Less: Acquisition-related income (10,000 ) — Adjusted EBITDA $ (311 ) $ 165
LENSAR, Inc.
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) Three Months Ended
March 31, 2026 2025 Revenue Product $ 10,076 $ 10,918 Lease 1,681 1,884 Service 1,671 1,357 Total revenue 13,428 14,159 Cost of revenue (exclusive of amortization) Product 3,947 4,466 Lease 889 830 Service 2,210 1,738 Total cost of revenue 7,046 7,034 Operating expenses Selling, general and administrative expenses 2,529 11,149 Research and development expenses 1,385 1,534 Amortization of intangible assets 229 232 Total operating expenses 4,143 12,915 Operating income (loss) 2,239 (5,790 ) Other income (expense) Change in fair value of warrant liabilities 23,948 (21,714 ) Acquisition-related income 10,000 — Other income, net 145 159 Net income (loss) 36,332 (27,345 ) Other comprehensive loss Change in unrealized loss on investments (4 ) (3 ) Net income (loss) and comprehensive income (loss) $ 36,328 $ (27,348 ) Income (loss) per common share: Basic $ 1.56 $ (2.32 ) Diluted $ 0.00 $ (2.32 ) Weighted-average number of common shares used in calculation of net income (loss) per common share: Basic 12,161 11,774 Diluted 15,420 11,774
LENSAR, Inc.
BALANCE SHEETS
(In thousands, except per share amounts) March 31, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 12,494 $ 12,974 Short-term investments 1,001 5,004 Accounts receivable, net of allowance of $47 and $62, respectively 4,896 6,377 Notes receivable, net of allowance of $6 and $6, respectively 287 295 Inventories 23,099 21,520 Prepaid and other current assets 625 601 Total current assets 42,402 46,771 Property and equipment, net 457 505 Equipment under lease, net 15,194 15,485 Notes and other receivables, long-term, net of allowance of $13 and $15, respectively 658 731 Intangible assets, net 4,962 5,191 Other assets 2,550 2,747 Total assets $ 66,223 $ 71,430 Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 10,097 $ 18,982 Accrued liabilities 3,904 7,771 Deferred revenue 3,013 3,074 Operating lease liabilities 785 747 Acquisition-related deposit — 10,000 Total current liabilities 17,799 40,574 Long-term accounts payable 5,000 — Long-term operating lease liabilities 1,789 1,988 Warrant liabilities 16,246 40,194 Other long-term liabilities 815 909 Total liabilities 41,649 83,665 Series A Redeemable Convertible Preferred Stock, par value $0.01 per share, 20 shares authorized at March 31, 2026 and December 31, 2025; 20 shares issued and outstanding at March 31, 2026 and December 31, 2025; aggregate liquidation preference of $20,000 at March 31, 2026 and December 31, 2025 13,784 13,784 Stockholders’ equity (deficit): Preferred stock, par value $0.01 per share, 9,980 shares authorized at March 31, 2026 and December 31, 2025; no shares issued and outstanding at March 31, 2026 and December 31, 2025 — — Common stock, par value $0.01 per share, 150,000 shares authorized at March 31, 2026 and December 31, 2025; 12,101 and 11,993 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 121 120 Additional paid-in capital 151,912 151,432 Accumulated other comprehensive income — 4 Accumulated deficit (141,243 ) (177,575 ) Total stockholders’ equity (deficit) 10,790 (26,019 ) Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) $ 66,223 $ 71,430
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Alcon (ALC) Q1 2026 Earnings Call TranscriptMay 6, 2026
Image source: The Motley Fool.
Date
Wednesday, May 6, 2026 at 8 a.m. ET
Call participants
Chief Executive Officer — David J. Endicott Chief Financial Officer — Timothy C. Stonesifer Vice President, Head of Investor Relations — Daniel Cravens
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Full Conference Call Transcript
Daniel Cravens: Welcome to Alcon's First 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 are included in our Form 20-F, earnings press release and inter financial report each of which is on file with the Securities and Exchange Commission and available on their website at sec.gov. We will 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. Reconciliation 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 first quarter. After his remarks, Tim will walk through our financial performance and outlook for the remainder of 2026. David will then return with closing comments before we open the line for Q&A. Before I turn the call over, I'd like to share that Alan Trang has accepted a new finance leadership role within Alcon, supporting our surgical business in Singapore. On a personal note, I want to thank Alan for his deep expertise, sound judgment and the partnership and friendship he has brought to our team and to our engagement with the investment community. He has made a meaningful impact on Alcon.
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And while we'll miss him in his current role, we're excited to see him take on this next chapter within the company, and we expect to announce Alen's replacement in the near future. With that, I'll turn the call over to our CEO, David Endicott.
David Endicott: Good afternoon, and thanks for joining us. Let me start by recognizing the incredible work of our talented teams around the world. Your ongoing dedication, innovation and commitment to our customers continue to move Alcon forward. and make a meaningful difference in patients' lives. Now the first quarter was an important step forward for our new products, demonstrating strong market acceptance and share gains. In a quarter marked by uneven market conditions, particularly in cataract, our teams stayed focused and delivered results that reflect the strength of our innovative portfolio. . Our recent product launches contributed meaningfully to top line growth in the first quarter, and we expect that contribution to continue to build as the year progresses.
Importantly, we're seeing market share gains across key categories particularly in U.S. AT-IOLs, surgical equipment and consumables and contact lenses as well as dry eye. That momentum was clear at the ASCRS meeting last month. Across more than 60 presentations and peer-to-peer sessions, we saw strong surgeon engagement driven by impactful scientific data and hands-on demonstrations. Discussions focused on consistency, workflow integration and matching technology to patient and doctor needs. This real-time feedback reinforces our confidence in our ability to translate innovation into real-world clinical value. I'll now move to discussing recent innovation, starting with our Unity [indiscernible] device.
As we discussed in the past the Unity platform represents our most significant equipment upgrade opportunity in more than a decade, and the scientific community continues to recognize that. In addition to previous top innovation awards, I'm pleased to report that Unity VCS was named an Edison Award winner last week. This is one of the most recognized honors for market-ready innovation and reflects its meaningful impact on surgical technology. Launched in 2025, Unity VCS is engineered to enhance surgeon control, improve efficiency and streamline the surgical workflow. VCS has been introduced across most major markets worldwide and continues to build momentum and performed well in the quarter.
In late last year, we expanded the platform with Unity CS, our stand-alone cataract system. It's designed to increase surgical throughput while maintaining precision and safety. Unity CS has also been very well received. Surgeons have noted its seamless workflow and next-generation energy delivery that help optimize case efficiency without compromising outcomes. With a substantial installed base of legacy machines and a compelling value proposition across both efficiency and clinical performance, Unity represents a significant technology upgrade. Beyond the replacement market, Unity is also showing strengthening share and actually expanding our installed base. As a result, our order pipeline remains robust, especially post ASCRS.
We're continuing to work closely with customers to manage all our installations with the quality, service and support they expect from Alcon. Now alternative plantable where our innovation is strengthening our competitive position and driving solid performance. In fact, in the U.S., we gained share in IOL category in the first quarter. I'll start with PanOptix Pro, our latest trifocal IOL. Pro builds on the proven success of PanOptix, which is already the world's #1 most implanted trifocal with over 4 million implants. Pro introduces new features that reduce light scatter and delivers greater quality of vision. In the U.S., this lens has helped to drive almost 2 share points of growth in the PC-IOL category.
Internationally, we're just getting started. We recently had an upcoming launch in Australia, Japan, South Korea and now Europe. Feedback from these launches have been positive, and we're confident that PanOptix Pro will bolster our presbyopia correcting Iowa leadership globally. Building on PanOptix Pro momentum, we launched True Plus, our new enhanced monofocal IOL. This lens extends the range of vision of a traditional monofocal providing enhanced intermediate vision without compromising distance performance. TruPlus is designed for surgeons who want an enhanced monofocal option. It enables us to compete more effectively while defending our Clarion monofocal base.
Importantly, TruPlus launches with a toric version from day 1 and having a toric modality is a meaningful advantage for competing in the astigmatism-correcting segment and growing our ATIL share. Finally, we remain on track to launch an upgraded version of Vivity, our extended depth of focus well in early 2027. With more than 2 million implants, Vivity is already the world's most implanted EDOF lens and this enhancement is designed to improve near vision while preserving vivity's low visual disturbance profile. Now I'll move to retina, where Valeda, our photo biomodulation device for intermediate dry AMD continues to see encouraging early adoption.
Valeda is the first and only therapy clinically shown to maintain vision improvement in dry AMD patients with some patients achieving about a one-line gain in visual acuity. This technology uses 3 specific wavelengths of light to improve mitochondrial activity and retinal health, giving [indiscernible] a noninvasive treatment option for dry AMD that they've never had before. Importantly, reimbursement is progressing with all but one Medicare administrative contractor covering Valeda, and we're actively engaging private payers and expanding physician education. Valeda complements Voyager by expanding our office-based procedures, enabling practices to operate more efficiently while offering patients convenient noninvasive options. Now I'll move to contact lenses, where we continue to gain traction with our innovative reusable portfolio.
More than half of new wearers started reusables, which is a segment that supports strong patient retention and delivers highly attractive margins. Given our under-indexed share position, this category remains an important growth opportunity for us. Our reusable portfolio is anchored by total 30 of the industry's first and only monthly lens with water ingredient technology, which delivers exceptional comfort for 30 days of wear. Last year, we expanded the total 30 family to cover all major modalities, sphere, toric and multifocal. And in February, we introduced total 30 multifocal for astigmatism, which is our first multifocal toric contact lens.
This lens fills an important unmet need for presbyopic patients with the stigmatism, a group that historically has had very few options. Initial feedback has been excellent with ECPs highlighting [indiscernible] Vision at all distances and long-lasting comfort. pAlongside Total 30, Precision7 broadens our portfolio with a high-quality accessible 1-week replacement lens. Designed for patients where daily disposables are not an option, Precision7 delivers a comfortable experience at an attractive price point while introducing a replacement schedule that many optometrists view as more intuitive than traditional 2-week lenses. Combined, these innovations drove share gains in the quarter, and we are expected to continue to do so in this category.
Now finally, in ocular health, we continue to strengthen our leadership in the expanding dry eye category through innovation in both our over-the-counter and pharmaceutical products. On the over the counter side, our sustained family of artificial tears delivered another quarter of high single-digit growth. Most notably, last year, we launched SustainPro, our most advanced artificial tier. It's triple action formula is designed to hydrate, restore and protect the ocular surface delivering long-lasting relief. Early performance has been strong, contributing to continued share gains in U.S. artificial tears and reinforcing our leadership as that category expands. In Pharmaceuticals, Tryptyr continues to perform well. Doctors appreciate its rapid onset and novel mechanism of action.
Importantly, Tryptyr is already capturing share with approximately 4 share points in just 8 months into the launch. We've also made great progress with payers. In the first quarter, we expanded coverage to more than half of our commercial lives, our focus for the remainder of the year is on broadening the prescriber base and securing future Medicare Part D coverage, which will significantly expand patient access and make Tryptyr easier to prescribe. Tryptyr and SustainPro together represent significant innovation in dry eye, extending our reach across the full spectrum of dry eye sufferers and reinforcing Alcon's leadership in this category. Looking ahead, our innovation pipeline remains strong.
With upcoming launches, including a new entry into a high whitening category as well as UnityM, our newest microscope and UnityDx, our whole eye diagnostic device. And these programs build on the momentum we're seeing across the portfolio and reflect our continued focus on advancing differentiated innovation. Together, they reinforce our confidence in the durability of our pipeline and our ability to drive sustained growth over time. Now I'd like to turn to operational improvements where we are making a number of things happen internally. As we scale innovation across the portfolio, artificial intelligence has become an important enabler at Alcon, helping us operate faster and make better decisions.
We started applying AI selectively where it enhances productivity, quality and speed. In R&D, we've deployed solutions that we expect will increase speed to approval while working on AI-enabled modeling and simulation for accelerating design and development. In operations and quality, we are leveraging AI solutions to improve yield and perform automated inspections. And on the commercial side, AI-assisted analytics are enabling deeper customer insights and more personalized engagement. So while it's still early in our journey with AI, these advancements are fortifying our operational foundation at a pivotal moment and enabling us to leverage a more stable cost structure and seize emerging opportunities. Now before I close, I want to share a few observations on the market environment.
In cataract surgery, consistent with prior quarters, we estimate that global procedure volumes grew low single digits. While this relative softness has persisted for several quarters, we continue to believe that market growth will return to historical levels as health care systems adapt to increasing demand. However, for 2026, our guidance continues to assume that current trends continue. On the other hand, we estimate that global ATI well penetration was up 130 basis points to approximately 17%. There was broad-based strength in most regions of the globe, which was pressured by weakness in China. If you would exclude China, global penetration was up approximately 220 basis points.
In contact lenses, we estimate the global market grew at the low end of mid-single digits, led by strength in the United States. In summary, while market conditions remain mixed, our strong portfolio of innovation is performing well and continues to deliver solid results. We're operating from a position of greater strength backed by a deeper innovation engine and a more resilient commercial model. This positions us to deliver durable, profitable growth and create meaningful long-term value for shareholders. With that, I'll turn it over to Tim, who will walk you through the financials.
Timothy Stonesifer: Thanks, David. Our first quarter sales of $2.7 billion were up 6% versus prior year. In our surgical franchise, revenue was up 6% year-over-year to $1.5 billion. Implantable sales were $438 million in the quarter, up 1% versus the prior year period. As David mentioned, PanOptix Pro growth continued to perform well. We saw solid growth in IOLs in the U.S., partially offset by ongoing competitive pressures internationally. We also saw some pressure in surgical glaucoma. In consumables, first quarter sales of $769 million were up 4%, which reflects softer than historical market conditions as well as price increases. .
In equipment, we saw another quarter of accelerating growth with sales of $253 million, up 23%, driven by strong momentum from Unity. Early adoption has been encouraging, and we're seeing Unity active and meaningful catalysts for equipment growth. Turning to Vision Care. First quarter sales of $1.2 billion were up 6%. The Contact lens sales were up 4% to $738 million. This growth was primarily driven by product innovation and price increases, partially offset by declines in legacy products where we've limited our promotional activity. In ocular health, first quarter sales of $487 million were up 10%, led by continued strength of our dry eye portfolio, including Tryptyr and sustain.
Tryptyr continues to perform well with strong refill rates and broad prescriber enthusiasm. As access expands and awareness builds, we continue to expect Tryptyr to be a meaningful growth driver this year. And as David mentioned, our sustained family of eyedrops also had another great quarter with high single-digit growth. Within that portfolio, our multi-dose preservative-free formulations contributed nicely, growing more than 20% year-over-year. Now moving down the income statement. First quarter core gross margin was 63%, down 40 basis points year-over-year. This is primarily due to 120 basis points of pressure from incremental tariffs. Core operating margin was 21.2%, which was flat year-over-year.
Improved operating leverage from higher sales and manufacturing efficiencies were partially offset by the pressure from tariffs that I just mentioned as well as investment behind new product lenses and R&D. First quarter interest expense was $52 million and other financial income and expense was a net benefit of $2 million. The average core tax rate in the first quarter was 19.7%, down from 21% in the prior year. And finally, core diluted earnings were $0.85 per share in the quarter. Turning to cash. We generated $279 million of free cash flow in the first quarter, which was flat when compared to the same period last year.
Lastly, with respect to tariffs, we incurred $33 million of incremental tariff-related charges in the first quarter, which is recognized in cost of sales. Now moving to our outlook for the remainder of the year. Our outlook assumes that aggregate eye care markets grow 3% to 4% for the year at exchange rates as of the end of April hold through year-end, and regarding tariffs, we are now assuming that an average tariff rate of approximately 10% on U.S. imports holds for the remainder of the year versus our previous assumption of 15%. We also assume retaliatory tariffs remain unchanged.
This change results in an estimated $25 million reduction in tariff expense versus our February guidance, which we would expect to reinvest back into the business. Based on these assumptions and our performance through the first quarter, our guidance is as follows. We continue to expect constant currency sales growth of between 5% and 7%. Turning to margin, we continue to expect core operating margin expansion of between 70 and 170 basis points. We expect the majority of this expansion to occur in the second half of the year. As in prior years, SG&A is expected to peak in the second quarter due to normal seasonality with incremental spend this year and support of product launches.
Accordingly, we expect second quarter core operating margin to be below the prior year period. And lastly, we now expect core diluted EPS growth of between 10% and 13%. Moving on, I'm happy to announce that our Board has approved a new $1.5 billion share repurchase program to be executed over the next 3 years. This authorization reflects the strength of our balance sheet and robust cash flow generation, and is fully aligned with our long-standing capital allocation priorities. We will continue to prioritize investments in top line growth through R&D and disciplined bolt-on M&A.
This program enables us to return incremental capital to shareholders in a measured and disciplined way without constraining our ability to fund growth or maintain a healthy deal pipeline. And before I wrap up, I'm also pleased to report that our -- at our Annual General Meeting last week, our shareholders approved a dividend of $0.28 teams per share, which we expect to pay on or around May 7. I'd like to thank our shareholders for their continued support. And lastly, I'd also like to extend my thanks to our more than 25,000 associates across the organization for their dedication and hard work. And with that, I'll turn it back to David. .
David Endicott: Thanks, Tim. To close, the first quarter underscored the strength of our business. Our steady cadence of innovation, balanced portfolio and strong execution are driving durable performance across the company. New product launches are gaining traction. Our pipeline continues to advance, and we're utilizing tools like AI to help us operate with greater speed, precision and scale. Taken together, these advantages position Alcon to navigate the environment with confidence and deliver steady profitable growth and long-term value for our shareholders. With that, operator, please open the line for questions.
Operator:[Operator Instructions] And our first question today is from the line of Ryan Zimmerman with BTIG. .
Ryan Zimmerman: Maybe to start with the implantable category growth for a minute here, David. If you look at the growth over the last 5 quarters or so, you think about the peers in the category, it's been a bit below that market rate. And so I'm wondering how much you -- surgical glaucoma dragging down your growth, given what you're seeing in PanOptix Pro and the Clarion launch? And if you could kind of parse out what's China VBP versus glaucoma versus maybe more of your core AT-IOL adoption, I'd appreciate it. .
David Endicott: Yes. Thanks, Ryan. Really good question. Look, the 1% growth on the implantables broadly is made up of a number of things. And one of the reasons we kind of called out glaucoma implantables is because, as you know, the reimbursement changed this year. And we also had about a $3 million, $4 million kind of supply issue on Hydrus kind of late in the quarter. So our core growth there, actually, when you back just the Hydrus piece out is about 3% -- if you looked at it in the U.S., it was 6%. So we had a very good quarter in the U.S.
And if you look at it without China, it gets higher because China, we had -- as we kind of moved forward with [indiscernible] last year, we had some inventory come in, so the comp is a little bit big. So we've actually had a pretty good quarter in implantables around the world in various markets. I think as we go forward, PanOptix Pro really looks to be doing very well. I think in the U.S., in particular, we gained share in the implantables. It was maybe gained in AT-IOL more than a share point of 1.4. I think. We were up AT-IOL 2.2. So we've stabilized that market a bit.
And I think we're feeling like once we get Pro into Europe, which is just launching this month. It's had a nice reception in Japan, but we just got that in, I think, in February. So we're getting a number of other markets now as we launch those, doing well. And I think when you add to that True Plus. And then you think about going forward at the end of the year, we've got Vivity Pro, we won't have the same kind of exposure for a long duration of periods to competitive products. Most of the products you're seeing right now come in the market we've seen for a long time.
So we've got a number of new things right now coming in that are hopefully going to offset it. Make no mistake, it's going to be competitive. And I think what we've said in the past, and I still would reiterate is I think we can grow at market rate here, but it's going to be competitive. The best thing that happened, honestly, was AT-IOL was up 230 basis points in the U.S. So really nice movement around the world on AT-IOL well penetration, and we seem to be doing pretty well right now in the U.S.
We'll see how that takes shape as other products launch, but I generally think it's going to be a competitive fight, but pretty healthy position we're in. .
Ryan Zimmerman: Understood. And maybe for Tim. Gross margins came in a bit better than I think -- the Street was looking for here. It sounds like some of that was priced -- you have a little bit less of a tariff impact. You're not assuming refunds. I'm just wondering kind of with gross margins trending higher than maybe -- the Street was looking for. One, what are your expectations there? But do why can't that flow through at a higher level to the op margin line and subsequently EPS?
Timothy Stonesifer: Yes. I think you got the pieces of the pie correct. I mean we did see -- we did still see tariff pressure. So when you look at it from a year-over-year perspective, the rate cuts that we talked about, those really will hit in the back half of the year, starting, I think, it's in March. But listen, we're seeing some nice, when you take into account the projects we're working on in our manufacturing plants from a productivity perspective, to your point, we are still getting price. So I'd expect those margins -- the gross margin to continue to be in that neighborhood of 63% as we go out through the course of the year. .
Operator: Our next questions are from the line of Veronika Dubajova with Citi.
Veronika Dubajova: First one, kind of how you think about the market momentum, I guess, lots of moving parts, obviously, in Q1, especially on the surgical side. with weather and some strikes that some of your peers have called out. I'm just curious, I think you described the market growing as 3% in Q4. sounds like maybe Q1 on the surgical side was a little bit softer. What's your degree of confidence that we're going to be within that 3% to 4% range that you guided for, for the year? And I guess to what extent you're seeing a momentum that has improved looking at March and April, if you can comment on that, that would be super helpful.
And then my second question is on contact lenses. We've seen the gap between you and the market really narrow. And looking at the last couple of quarters, certainly on a sort of sell-in perspective, it seems to be that you are tracking market very, very closely. I was just hoping that you can talk about how you feel about the competitive dynamics there and your degree of confidence in your ability to outgrow that market as we look through the remainder of the year?
David Endicott: Yes. Thanks, Veronica. Let me start with the surgical market. Yes, there were strikes. There was weather. There was all that stuff going on, and I do think some of that had some effect. But I think the way to think about this market is kind of as we described it, 3% to 4% to remember is the aggregate market number for us. So that is contact lenses, which grows 4% to 6% generally. The cataract market, which, again, generally grows kind of in that 3% range. And then you've got the pharmaceutical markets and the OTC markets, and those grow right now a little bit better than that. So we are confident in that 3% to 4% range.
In the quarter, we were on the lower end of that because, frankly, the U.S. market in Surgical was soft. And so we can put it in the weather, we can put it on [indiscernible]. You do any of that stuff. But I think at the core of it, there is a lot of demand for cataracts that is not currently being met. The demand for cataract is very high. Number of days of wait time has gone up. And I think what's really happening, and we've been seeing it for a while is this kind of restructuring of the service -- the workflow here. Surgeons are hiring optometrists. They're using office-based surgery.
They're finding more ASC time in other places. But to do that, it takes a little bit of time. And I think as they work through to try and capture the economics of what is kind of I don't want to say an unlimited demand, but there's plenty of cataracts out there to do. They need to find more OR time and they do more in a day, and that's what they're working through right now. So as we see 3% to 4% going forward, I don't really think there's a big change in the U.S. cataract market this year, we kind of called the market as we saw it at the beginning of the year.
We think that continues all year. But I do think we feel comfortable with that range in aggregate. So again, there'll be some markets that bounce around a little bit more than others, but that's where we are right now. On the other point on the contact lenses, what I'd say is that -- we've done real well with a lot of our products. I think reusable -- 1 of the things you'll note is that -- for example, we gained, I think, a share point change on reusables. But our DAILIES business was a little bit flat. It was slightly up. I think we were only 1 of 2, I think, of the bunch of us that gain share.
So we are gaining share, but it is more modest than it was when we first came out with P1 or with or with 30. We're getting a lot of share in the U.S. right now in reusables. We're getting a lot of share in DAILIES in the international markets. And then we're kind of losing -- were flattish in the U.S. on DAILIES -- so I would say it's a mixed bag, but I do think that if you look at where we are with, for example, Precision7 and Total30, we're continuing to grow that market. I think the drawdown on DAILIES has been our legacy business.
So if you think about that legacy business, which is kind of getting smaller and smaller, the front half is bigger than the back half, obviously. And so our comp gets a little easier as you move to the back. And that's kind of the -- that's really the story of the year, which is pretty level loaded year broadly. I think what's important to know is that the acceleration of new products really takes off kind of front half, let's call it, 1/3 or a little bit more than that in the back half, kind of 2/3 a little bit more than that. That's the truth on all the new products.
Operator: Our next question comes from the line of Matt Miksic, Barclays.
Matthew Miksic: So listen, appreciate the color on the market and congrats on the progress on PanOptix Pro. I was just wondering if you could talk a little bit about the effect of some of the pull-through that you've seen from the Unity renewals in terms of either kind of locking down or taking more share in monofocal Iowa growth -- and then I had 1 quick follow-up. .
David Endicott: Well, it's a really good question, Matt, because we did actually see -- and I didn't really mention it, but we took a fair bit of share in monofocal actually in the quarter. globally. And some of that has to do with our presence in the OR. And when you're selling more stuff in the OR, then you can generally sell more stuff. So that's the view that we have on that. So it is connected at one d1 level because we've got a lot of people in the OR right now with a lot of new products. So I think that's been very positive.
I would say that the AT-IOL business is still the one we pay most attention to because globally, we've got a challenge at, I would say, in the international markets, and we're stabilized and kind of beginning to grow again in the U.S. market. But again, there's more competition coming. So I'd say the fight is really ATI wells, but you're not wrong, we are gaining a good bit of share in the monofocal business. On the Unity process itself, obviously, the other thing that helps is we just launched CS. And so the benefit of that is, of course, it's a little easier to install. It takes a little less time.
It's a less complicated machine and requires a little less handholding. So we're looking forward to -- and there's a lot of cataract surgeons. So just in terms of total sheer number of placements, we're in a lot more ORs right now as we start to expand beyond retina and really kind of begin to sell the CS machine. So that again gives us an opportunity to sell viscoelastic sell BSS, sell all kinds of stuff that we generally do. So a really good important point you're making.
Operator: Our next questions come from the line of Jack Reynolds-Clark with RBC Capital Markets.
Jack Reynolds-Clark: My first was just coming back to the kind of surgical cataract market. With the waiting list long. What is it -- could you just kind of just talk us through exactly what has to happen for this demand to translate into a higher market growth when that's going to happen? Is it going to be '27, '28 kind of what are the drivers there? And then on AT-IOL well penetration. So could you just remind us what it was in Europe and how you see that progressing over the next kind of couple of years, do you expect to catch up with the U.S. or something like that? .
David Endicott: Yes. Look, I mean, I think let me answer the second 1 while I've got the data in front of me. I mean I think -- the Europe PC AT-IOL penetration was pretty good on the quarter. Directionally, it was 1.1% and it was up 260 basis points. So almost the same as the U.S., a little better than that. it was 230 in the U.S. The only thing that cap down was China went the wrong direction because there was a recall from one of our competitors. So the data looks a little weird there. But fundamentally, most markets are beginning to catch up to the U.S.
So I think U.S. is sitting somewhere in the 20s like 21% or something and -- so you've got a relative comparison. I do think that historically, this market penetration has grown 50 to 100 basis points, I would still draw that line. I think what you're seeing right now is a lot of promotion from a lot of companies. and that's moving people towards AT-IOL, which is a good thing. There's a lot of room in this market to grow. And I think the upper limit, I think we've said in the past is maybe mid-30s to upper level high 30s. But that's the ceiling.
So it's not everybody going to use one of these, but they're worth a lot more to us on a value basis. So moving this market along, I think, is a very positive sign. On the other point you make, which is the surgical market and what it takes to translate demand into revenue. I think that's the big question that most PE guys have in the U.S. is what all the big practices they're working on. And at the core of it, it really is freeing up time to do more surgery. I mean that's just that simple.
But that's not so easy when you're competing with, for example, a hospital OPD who wants to give that time to a more productive, more economically valuable procedure somewhere else. So certain parts of the market are shrinking for available time and certain parts are growing. So what's really happening right now is you're seeing this rotation into things like office-based surgery, which is very popular right now is gaining some momentum in the U.S. where they're putting office facilities in play that can carry our machines microscopes, they're setting them up to do surgery. It's a friendlier environment.
The reimbursement is still complicated, but I would just say that the -- that's creating more capacity and more flexibility for the surgeon. I think the other thing that happens is you see a lot more ODs entering practices with large group practices, PE groups, even small practices, I was in one recently in Boston where they were -- just hired 2 ODs and they're doing some primary care work and some, pre, post-op work, , and that frees the surgeon to do more time in the OR. So that's the adaptation of practice pattern that has to occur -- and it's going to take some time.
I mean I think that's really why we've seen kind of unabated growth by bringing down the time in surgery, the time and surgery is going to only get better by a little bit now. We're flipping rooms just a little bit almost as fast as we can. We'll get a little bit better there with our machine. But I think the opportunity here is really now to see more days in surgery from the core surgeons.
Operator: The next question is from the line of Susannah Ludwig with Bernstein.
Susannah Ludwig: I guess my first is just on contact lenses. If you could talk a little bit more on the drivers of growth and the contribution from volume price and the mix shift to DAILIES. And then maybe just a little bit about your performance geographically in the U.S. versus Europe versus Japan? And then second, just a follow-up on the questions on IOLs. You have noted sort of heightened competitive pressure in IOLs and international markets for several quarters now. Could you talk maybe about how this pressure has progressed sequentially and when you will start to lap some of that pressure? .
David Endicott: Yes. Let me take them on first with -- the first bit of that, which was the contact lens market. Historically, I think the way to think about the contact lens market is we've always said it's kind of mid-single-digit grower 4% to 6%. And price is 2% to 3%, mix is 2% to 3%, volume basically has been flat. You pick up 14-year-olds, you lose 40-year-olds and probably about the same rate. What I think is happening right now and most recently has been the resistance to price internationally in particular, where chains in the Internet have a bigger participation in the process, and they're very sensitive to consumers.
So I would say what's really gone on is there's a pause in the ability to push price into the market that's certainly what we see. I think that's really what's driving a little bit of a slower market. But again, we're still in the normal range. I would just say we're on the low end of the normal range there. So going forward, I think what you're going to see is as the consumer gets a little bit stronger. And as you see new products and mix, in particular, for us, the mix to reusables, the mix to DAILIES generally allows us to help outperform. We're also gaining share there.
So I think both of those will allow us to kind of grow a little faster than that market. On the geographic performance outside the U.S., the IOLs, our share in the U.S. has been stabilized principally on the back of PanOptix Pro. And we really didn't have a new product in the international market until really Japan at the beginning of this year. So I think what you're going to see is a similar playback where you've got some other pressures coming in, I think they obviously will come in.
But again, I think we've seen both of these products in the past in different markets, and we've got data now on them, which I think will help manage, let me just say the impact on that. So the share movements have always been a little bit more significant outside the U.S. where we have I think, a more competitive market where there's more products. And so I think we continue to believe that the introduction of products, meaning specifically PanOptix Pro than TruePlus than Vivity, the N20, I guess, that's the way out of this thing. And so it looks pretty good to us.
Operator: Our next questions are from the line of Graham Doyle with UBS. .
Graham Doyle: It's just one. In the context of the phasing through this year, you just printed a 6 against what we think is the easiest comp in the year at least optically. And therefore, I think there's -- you can see in the share price today, there's disappointment that maybe we're looking at sort of slowing growth or no improvement from here. Is that a reasonable way of thinking? Or is there actually scope here for growth to improve as you go through the quarters? It'd be good to get that sense, please? .
David Endicott: Well, Graham, let me just -- let's clarify the comp itself and the number itself. We had a number of things happened that would have, I think, maybe changed the optics on this a little bit. The Middle East piece of this is that disruption was worth $11 million in shipping to us, which is probably 50 basis points of growth. And then I think if you take the Hydrus piece, there's another 10 basis points. So I think on 6.1, which is where we ended, we would have been something closer to like 6.7%, 6.8%, something like that. I mean I think, candidly, we've had a level-loaded plan for a while.
And what you really see is the front edge of this -- front half of this year is going to be a lower amount of new products, and the back half is going to be a much higher amount of new products. And so you're going to see that acceleration kind of coming around on the next comp, which is slightly better than last -- than the front half. on a comp basis, that's how you make up for it.
So I think we've had a point of view on this one from the beginning that we were pretty close to the right answer from the beginning of the year, which is markets are going to be kind of 3% to 4%, which is a little softer than we've seen in the past, but new product flow is going to make up for it and it accelerates in the back half. .
Graham Doyle: Okay. So fair to say you'd hope to maintain this momentum and avoid the sort of Hydrus and Middle East shipping issues in the next few quarters effectively. .
David Endicott: Yes. I mean I think that's probably fair, right? I mean I don't think we believe that we're going to have that challenge. One of them was an outage that we created. So I mean that's a solve problem with Hydrus. already. And then I think the other piece is, we'll have to see, but I'm not a prognosticator on the Middle East. So what I would say is we just watch and see, but that was obviously a problem for us. .
Graham Doyle: No, that's super helpful. .
Operator: The next question is from the line of David Saxon with Needham & Company.
David Saxon: I wanted to ask on trip to her, David or Tim, maybe you can talk about the contribution to growth there. what kind of traction you're seeing in existing accounts and kind of how you're positioning it for expanding the prescriber base as you kind of move into the next wave?
David Endicott: Yes, David, we're very excited about what's going on with Tryptyr in the response. I mean I don't know that we knew precisely -- you never know for sure until you get a product into the market and you have an opportunity to watch it for a while. I think we're at a place now where we have a pretty good feel for it. Our refill rates are 70 plus, which is really great. I mean I think there was some criticism, I think, about the comfort of this product.
I think what patients are finding is that it is worth -- it does have a little bite to it when we put it in, but at the same time, feel relief quickly. And that relief day 1 is worth it. And so I think what we're seeing is 2 things: patient acceptance as a function of refill rates. And then the breadth of prescribing now has gone very wide. So I think we're getting a lot of trial from the full audience. And so I think our sales force has done a terrific job of getting out to everybody, but also you're seeing kind of repeat prescriptions and refills come nicely along.
So that -- I mean, the big thing here, like all pharmaceutical products is going to be reimbursement. We're about 55% of commercial lives right now covered. We expect that to grow throughout the rest of this year. And obviously, as we go into next year, we're expecting to have Medicare coverage come through so that we'll be kind of positioned for a full run next year. But definitely on plan for us, maybe a little bit better than expected.
David Saxon: Great. And then just on implantables, I know a lot of focus is on PanOptix Pro and Vivity. But would love to hear how you're thinking about the TruePluslaunch kind of frame it in terms of how meaningful that could be to recapture some of the share you lost to kind of the competitive monofocal Plus launches from the last couple of years? .
David Endicott: Yes, it's a good question. And I'm going to -- I'll just tell you this much. I think the True Plus brand is a terrific product. And this product actually has got better intermediate than alternatives out there, and it has the same kind of monofocal distance that you would expect that you want from a monofocal. So if you're going to use and charge a patient, particularly [indiscernible] patient, for a monofocal Plus product, this is going to be, I think, a terrific choice for you because it's going to get them a little bit more intermediate than what's available without compromising any of the kind of monofocal qualities that we would want.
I do think we did lose -- in the toric business, in particular, we lost in the U.S. I don't know, about 10 share points to toric competitors. And I think that internationally, the market size is a little bit bigger than that. I don't know that this is going to be a big product incrementally. I do think it will cannibalize and sustain our core business. And so think about it maybe more as an upgrade to our current toric monofocal, our current monofocal with a slight price increase and a real safety margin for competitive intrusion because I don't think anybody is going to be able to match this particular brand in the Clariant platform.
Operator: The next question is from the line of Steven Lichtman with William Blair.
Steven Lichtman: Maybe start, Tim, with 1 quarter complete here, I'm wondering if you can provide any more color on the operating margin guidance range -- and whether you see it trending toward upper half or lower half for the year, it seems like FX will be less of a tailwind, but you have the efficiencies kicking in. And I think you said 2Q will be down year-over-year, so it puts more emphasis on second half. So any further color within that range would be helpful. And then I have one quick follow-up. .
Timothy Stonesifer: Yes. I mean the 70 to 170 basis point improvement that we guided towards, we're very comfortable with. That's in constant currency. So just keep that in mind. Q2 will be light as we've talked about. And as you've seen, if you go back and look at our historical financials, it's a heavy investment period for us from an SG&A perspective, when you think about back-to-school programs and other programs like that. So first half op margin will be lower than the second half. That will start to accelerate in Q3 and Q4. But overall, we feel very good about the 70 to 170 basis point improvement. .
Steven Lichtman: And then just quickly on the accommodating tunable IOL. Any further color when we could see that early data. I think you talked maybe either Q2 call or 3Q call? .
David Endicott: Yes. I think somewhere between here and the next call. I think we certainly expect that data to come through. I think we've got most of it in-house now. We're looking at it probably midyear, as I think I said last call. .
Operator: The next question is from the line of Young Li with Jefferies.
Young Li: Great. I guess start maybe just 1 more on the guidance. So 1Q was the easiest comp of the year. It seems like Unity and Tryptyr doing better than expected, but hitting the midpoint of the full year guidance implies a pretty sizable ramp against tougher comps. I guess, can I just maybe push you on thoughts on which segments get meaningfully better from here? And which segments are going to be the laggers? .
David Endicott: Well, I mean, I would think about -- I would go to the new product flow. The easiest way to think about it is I think we have -- I can't count the number at this point, but I think there's 10, maybe 6 that are big new products. almost all of them came out middle of last year. So if you think about the back half of last year and product flow, really, we got a little bit in the third quarter. We got a little bit more in the fourth quarter. But what really you're seeing now is a pickup that's meaningful for the full year effect.
And so by the time you get to the fourth quarter, you're kind of 18 months into some of these products, which is really, we should be moving quite well. I would say all of -- most of the big ones, let's call it Unity, Tryptyr, Pro and I think -- don't forget, our OTC brands. Those are doing really well right now. I think one of the underestimated parts of our business tends to be the ocular health business. It's the same size as the implantables and similar profitability and it's growing, I think, at 10%.
So I do think that if you just kind of go through the list of products and think about when they were launched and what they're wrapping around on the back half of last year, you'll find where the growth comes from because the core business is going to continue to grow roughly at the core market. slightly better maybe because we gained some share, but that's basically where we are.
Young Li: Great. Very helpful. And then I guess on the implantables growth, there wasn't a competitive launch in 1Q. Going forward, there will be for this year, I think you're expecting around 2% growth. how much competitive [indiscernible] baked into that number? Is 2% still the right number for annual growth? .
David Endicott: Yes. We haven't -- I don't know that we've guided individual categories, but I would just say that we're very excited about our competitive launch of PanOptix Pro in Europe because I think we will do some positive momentum for Europe, which really has needed it. And I guess you're thinking probably about the U.S. launch of other products and same thing with Europe competitively. My own point of view is we know both those products really well. And I think we've got them pretty much dialed into the forecast as we gave it. My hope is that we see with True Plus and with PanOptix Pro that we do a little better than expected, but we'll see.
I these have been aggressive markets and aggressive competitors, and we wouldn't expect any less. So we -- but we're doing well right now. .
Operator: The next question is from the line of Richard Felton with Goldman Sachs.
Richard Felton: Two for me, please. First one is on China IOLs. I know historically, it was a relatively small part of your business, but I guess there's been a lot of growth for AT-IOLs and share gains for Alcon post [indiscernible]. So any sense of how material that market is for you guys currently? And linked to that, any expectations for the upcoming round of China IOL VBP. And the next one, it would be great to get an update on Orion, please. What's the feedback been like on the commercial launch in Japan any incremental data or insights on efficacy versus the transplants?
And if possible, could you give us an update on the time line for Phase III trials in the U.S., please? .
David Endicott: Yes. Just on China, Yes. The IOLs are about the same as the full business, which is about 5%. So I would think about it as that -- at one point, we really didn't have much of an IOL business there. We had a small bit, but I think we had a nice run with the VBP piece. It's picked up. Our share is pretty good. We'll see what happens. That VBP rolls around again in the middle part of the year. So we'll certainly look forward to that. I think on the Orion piece, what I would say is that we've started the Phase III already.
We had our first dosing, I think last -- earlier last month, so middle of last month. So -- we're excited about that. That's a product that I think if they finish the trial this year, we have a potential to file it next year. That's a really exciting opportunity for us to help a lot of patients avoid a corneal transplant and do something really special for these patients.
Operator: Our next questions are from the line of Larry Biegelsen with Wells Fargo.
Lei Huang: It's Lei calling in for Larry. I'll ask both the upfront, please. Just on the Unity, you sound very excited about the launch and it seems to be doing well. Can you just talk about how you think about equipment growth for the remainder of the year with both of these products? And if you can give a timing update and whether it's U.S. OUS for some of the new Unity products are coming to the market like [indiscernible], et cetera? And my second question is around M&A.
Alcon has recently exited 2 deals, I mean, for different reasons, obviously. -- do you think the space has become tougher in terms of M&A, maybe given Alcon's size or anything about the valuation environment, anything you're thinking differently in terms of how Alcon is approaching M&A going forward? .
David Endicott: Yes. On Unity, we expect Unity to continue to grow. I think we had talked a little bit last year about the number of placements. We're still kind of that mind. I don't know that we want to run through the whole thing, but Remember, we've got 30,000-ish of a base that we will replace over 10 years. That's the normal cycle. You put a little more upfront, you take a little way on the back end, and that's what we'll probably see in terms of placements. Now most of those are sold units, some of them are rental units, some of them are leased. Those are all things that go on.
But we feel really good about where we are relative to what we said in the past on Unity and both its timing. And to be honest, the Unity CS piece is also exciting because we've kind of gotten through the heavy lifting on the retina side. And we can do more of that, but there will be more of that. But I think we're now in the cataract unit, which will be fun, too. I think on the other pieces of that, Unity M is late this year. I would think about it as a first phase of a multiphase launch, we are excited about it. This is going to be an exciting scope.
We'll talk about it later in the year. At DX, I think, is slated for next year. We will -- you'll start to see it later this year, but we're really doing a controlled launch on that one to make sure that, that one is perfect. So I think we're going to be patient with DX and make sure that we get that 1 tied into our [indiscernible] planner and the microscope and a lot of the other stuff that it needs to integrate with. So we're being careful around that one. On M&A, I would just say that we haven't changed anything on M&A really.
Our own point of view is still that most of what we are interested in are kind of single product companies that are nice tuck-ins. They probably range, and we've often said this kind of 50 to 500 range, still pretty much the majority of what we do. We're very capable of doing something a bit larger than that, but we don't see any need to do that. And there, frankly, aren't that many targets that we pay attention to that are like that. So I would just say that Star was one of the bigger ones that we talked about, why that didn't happen.
And LENSAR was just another one of these kind of smaller things that again, I will see what happens on that one, but I think that's a miss in terms of the opinion on where that sits in the market. I think, unfortunately, there's a short life at this point for [indiscernible] relative to robotics, and we're really -- we're moving on to robotics at this point.
Operator: Our last question comes from the line of Brett Fishbin with KeyBanc Capital Markets.
Brett Fishbin: Great. And I'll try and keep it fairly brief. So you took the tariff estimate down by $25 million within the guide and mentioned that the plan would be to reinvest within the business. So just curious where you saw incremental need for greater investment activity rather than potentially letting that drop down to earnings. .
Timothy Stonesifer: Yes. I think a majority of that you're going to see in the R&D line. There's some innovation that we're very excited about. And again, that drives the whole revenue thesis that we have. So we're going to continue to back that when we can. .
Brett Fishbin: All right. Great. And then just a follow-up on margins. You kept the 70 to 170 basis points core operating margin expansion guide. But I think since the last call, there have been noise around the macro, especially energy prices and concerns around inflation. So just curious how that's contemplated in the guide? And any general thoughts on Alcon's exposure to those items? .
Timothy Stonesifer: Yes, it's a great question. It's not really that material for us. It's primarily transportation and resins. So we will see -- we've assumed that oil is at a certain price and maintains that price through the course of the year. We've baked that into our guide, but it's not a material amount at this stage. .
Operator: At this time, I'll turn the floor to Dan Cravens for closing remarks. .
Daniel Cravens: Okay. Thanks, Rob, and thanks, everybody, for joining us. If you have any follow-up questions, please don't hesitate to call either Alan [indiscernible] or myself. Thanks again for your time. Appreciate.
Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines at this time, and have a wonderful day.
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Alcon (ALC) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool
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