Alcon Inc. (ALC) Q2 2026 Earnings Report, Transcript and Summary

Greetings. Welcome to Alcon's Second Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Dan Cravens, Vice President and Global Head, Investor Relations. Thank you. You may begin.

Welcome to Alcon's Second 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 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, so please do not place undue reliance on them. Important factors that could cause actual results to differ materially are included in our Form 20-F, earnings press release and interim financial report, each of which is available on file with the Securities and Exchange Commission and available on their website at sec.gov. We will also 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 second quarter. After his remarks, Tim will walk through our financial performance and outlook for the remainder of 2026. Dave will then return with closing comments before we open the line for Q&A. So with that, I'll turn the call over to our CEO, David Endicott.

Thanks, Dan, and good morning, everyone. Our second quarter results demonstrate the strength of our new products and the benefits of our innovation investments. We delivered 7% sales growth, which was broad-based across both franchises and geographies, reinforcing the impact of our diverse portfolio and our commercial reach. Now I'll start my remarks today with UNITY, which is one of the clearest examples of our innovation translating into commercial success. Demand for UNITY VCS remains robust, reflecting its versatility across both cataract and vitreoretinal procedures. Surgeons are experiencing firsthand the benefits of UNITY CS, including its advanced energy delivery 4D phaco, improved fluidics and streamlined workflow. Now encouragingly, UNITY ASPs have exceeded our expectations and underscore our customers' belief in the platform's differentiated value. With strong customer engagement and a healthy sales funnel, we have clear visibility into our second half placements. Turning to implantables. As we highlighted in our earnings release, we made the decision to discontinue our work on the PowerVision IOL programs following the analysis of the latest clinical study data. This data demonstrated persistent unpredictable shifts in postoperative distance vision in a subset of patients that remain unresolved after multiple developmental efforts. As a result, the programs did not meet our standards for visual performance and patient outcomes. Although we are disappointed that the programs ultimately did not advance, they generated valuable insights into accommodation, tunability and long-term visual outcomes that will inform future innovation efforts. Looking at our performance in the quarter, implantables grew 1% with IOLs up 2% despite new competitive launches. The PanOptix family grew double digits in the quarter, driven by strong adoption of PanOptix Pro. Building on the foundation of PanOptix, the world's most implantable trifocal IOL, PanOptix Pro enhances quality of vision through its advanced optical design and continues to gain traction with surgeons globally. In the U.S., adoption has exceeded expectations. Nearly all PanOptix accounts have been converted to PanOptix Pro with the platform now representing approximately 90% of PanOptix implants. Feedback on visual performance and reduced light scatter remains very encouraging. We expect this momentum to extend internationally as we roll out PanOptix Pro and continue to build on the strength of Clareon Toric. Early launches in Japan, Canada, Australia and more recently in Europe have been well received, supporting our confidence in share stabilization and long-term growth. And we're also excited about the acceleration of our pipeline of new IOLs. We've begun a KOL launch of TruPlus in the U.S. and recently received CE Mark for Europe. This lens is an important addition to our portfolio and provides an entry point into the monofocal plus segment. We intend to phase these launches deliberately as we continue to prioritize the scale-up of PanOptix Pro in international markets and prepare for the introduction of Vivity Pro. Expected to launch with KOLs late this year, Vivity Pro builds on the success of the Vivity platform through a next-generation lens that is designed to extend the range of vision and enhances near performance. The new lens is designed to deliver up to one additional line of near vision while maintaining Vivity's strong distance and intermediate vision performance and its clinically proven low visual disturbance profile. Importantly, TruPlus and Vivity Pro represent only the next wave of innovation from our IOL portfolio. Our pipeline remains robust, and we expect to continue to deliver a steady cadence of new technologies and product enhancements in the years ahead. Beyond cataract surgery, we continue to see enthusiasm for Valeda, our first-of-its-kind treatment for dry AMD. This technology uses 3 specific wavelengths of light to improve mitochondrial activity in retinal health. Importantly, clinical studies showed that more than 80% of patients maintained or improved their vision at approximately 2 years. Adoption accelerated during the quarter as we expanded the installed base and increased utilization across existing accounts. We were also encouraged by continued progress with the Medicare administrative contractors, which we believe will further support access to this therapy. Based on current adoption trends, clinical experience and reimbursement progress, we continue to believe the platform has the potential to generate sales of between $100 million and $150 million over time. Turning to contact lenses. Innovation continues to drive growth across our portfolio. The overall contact lens market remained healthy in the second quarter, providing a supportive backdrop for continued category expansion. Against that backdrop, we achieved a record global market share position, supported by strong U.S. share gains and continued momentum across both dailies and reusables. In dailies, TOTAL1 and PRECISION1 remain important growth drivers and continue to gain share in one of the largest, fastest-growing market segments. We're also encouraged by the momentum in reusables. TOTAL30 continues to perform well across the family, supported by the recent launch of TOTAL30 multifocal for astigmatism, which expands our reach into an attractive and underserved segment. In addition, PRECISION7 sales have more than doubled versus the prior year, reflecting strong adoption of the weekly replacement category and providing another meaningful avenue for growth. With multiple platforms across dailies and reusables, we believe we're well positioned to continue capturing share and pursuing attractive growth opportunities across the contact lens market. And finally, in ocular health, execution remains strong across both our prescription and consumer dry eye franchises. TRYPTYR, our novel prescription treatment for dry eye disease, continues to gain momentum. Market access now includes nearly 2/3 of commercial lives and more than 20% of Medicare lives, including the recent addition of Humana Medicare Part D. Less than a year post launch, TRYPTYR has already captured approximately 5% market share, reflecting strong early adoption in a market that's growing double digits. On the OTC side, Systane continues to perform well, delivering another quarter of double-digit growth and share gains, further strengthening its leadership position in artificial tears. Given the strength of the franchise and the opportunities we see ahead, we believe Systane remains well positioned on its path towards becoming a $1 billion brand in the coming years. As we look ahead, we see a robust pipeline of growth catalysts across both our Surgical and our Vision Care franchises. Beyond the positive contributions from our recent launches, we're preparing for the introductions of Vivity Pro as well as the planned launch of our new eye whitener, among others. In addition, I'm pleased to report that we recently made our first sale of UNITY M, our new microscope, and are beginning to ramp up our commercialization efforts. Together, these near-term opportunities are expected to support steady future growth across our portfolio and further strengthen our market positions. We're also excited about the potential of our recently announced collaboration with RxSight. While still in the early stages, the collaboration combines Alcon's expertise in advanced optics and lens architecture with RxSight's adjustability platform. Together, we aim to develop a next-generation lens designed specifically for the platform with the potential to further enhance visual performance and refractive precision. Before discussing the individual markets, it's worth highlighting the attractiveness of Alcon's portfolio. We participate across a variety of surgical and vision care markets, including cataract, vitreoretinal, refractive, contact lenses, ocular health and dry eye, among others. Each of these markets is supported by unique growth drivers ranging from procedural growth to innovation, premiumization and increasing adoption of advanced technologies. Taken together, we estimate these aggregated markets grew approximately 3% to 4% in the second quarter. Within cataract, we estimate global procedure volumes grew low single digits in the quarter, led by strength in international, while the U.S. was flat. This was a sequential improvement compared to the first quarter. Importantly, AT-IOL penetration increased by approximately 110 basis points globally and 180 basis points in the U.S. In contact lenses, we estimate the global market remained healthy and grew mid-single digits, led primarily by strength in the U.S. This was moderated by international markets where price has contributed less to growth. In summary, our focus remains on disciplined execution of the steady flow of new product launches. Combined with our leading positions in a broad range of attractive eye care markets, we believe Alcon is well positioned to extend its leadership, capitalize on future growth opportunities and create long-term shareholder value. And with that, I'll turn the call over to Tim, who will walk you through the financials.

Thanks, David. Beginning with the top line, our second quarter sales were $2.8 billion, up 7% versus prior year. In our surgical franchise, sales were up 7% year-over-year to $1.6 billion. Implantable sales were $466 million in the quarter, up 1% versus the prior year period. Within this, IOLs were up 2%, partially offset by lower sales in surgical glaucoma. As David mentioned, PanOptix Pro continued to perform well, growing nicely in the U.S. and Japan. Strong customer interest and continued commercial execution supported growth despite increased competitive activity. In consumables, second quarter sales of $825 million were up 5%. This growth was driven by strong vitreoretinal market trends, healthy international cataract procedural volumes and favorable pricing and reflects softer U.S. cataract procedure volumes. For reference, 1 point of growth of the global cataract market, including IOLs and consumables, is worth approximately $10 million per quarter to Alcon, while 1 point of AT-IOL penetration is worth approximately $15 million. In equipment, solid performance from our recent product launches, including Unity, drove sales of $279 million, which were up 25% versus prior year. UNITY adoption was strong throughout the quarter, underscoring the commercial traction we're seeing across markets. Turning to Vision Care. Second quarter sales of $1.2 billion were up 7%. Contact lens sales were up 5% to $726 million, lapping a strong prior year period with 7% growth. Positive trends from our innovative product portfolio, including share gains and pricing were partially offset by declines in legacy products. In ocular health, second quarter sales of $486 million were up 12% as TRYPTYR and Systane continued to drive meaningful growth in the category. TRYPTYR continues to perform well with prescription demand growing steadily and high refill rates. We've made meaningful progress on market access, positioning us to increase investment behind the brand in the second half of the year. We believe the combination of improved access, growing awareness and expanded commercial efforts will support continued TRx growth while driving a more favorable payer mix over time. Systane delivered another strong quarter with double-digit growth and remains a key contributor to ocular health. Growth was driven by continued share gains and strong momentum in our multi-dose preservative-free portfolio, which grew more than 40% during the quarter. Second quarter core gross margin was 64.7%, up 250 basis points year-over-year. This improvement reflected price increases and manufacturing efficiencies as well as $15 million in other revenue from a licensee. The prior year period also included higher inventory-related costs. Moving to operating expenses. As noted on our first quarter call, we are investing behind new product launches, including TRYPTYR, UNITY and others, and we'll continue to prioritize investments to support near- and long-term growth. Our resulting core operating income was $574 million and 20.6% of sales, up 160 basis points versus the prior year on a constant currency basis. This improvement was driven by our strong revenue performance net of our targeted commercial investments and also benefited from the timing of the $15 million in other revenue that I referred to earlier. Below the operating line, interest expense was $53 million during the quarter, broadly in line with the prior year. Turning to taxes. Our core effective tax rate was 20.7% in the second quarter, which was broadly in line with our guidance. Finally, core diluted earnings were $0.84 per share in the quarter, up 9% versus prior year. Turning to cash. We generated $693 million of free cash flow in the first half of the year, allowing us to return $538 million to shareholders through dividends and share repurchases over the same period. Moving to our outlook for 2026. We continue to assume that aggregate eye care markets grow 3% to 4% for the year and exchange rates as of the end of July hold through year-end. We also assume the tariffs currently applicable to Alcon's business remain in effect through year-end, including U.S. import tariff rates of approximately 10% to 12.5%. This guidance also reflects an anticipated refund of approximately $60 million from the U.S. government in the third quarter, of which we plan to reinvest approximately 2/3 back into the business. Based on these assumptions and our performance through the first half of the year, our guidance is as follows: We continue to expect constant currency sales growth of between 5% and 7%. For the second half of the year, we expect tougher equipment comparisons, partially offset by easier comparisons in contact lenses, particularly in the fourth quarter. We also expect launch contributions from TRYPTYR, Valeda, UNITY CS as well as PanOptix Pro in Europe to become more meaningful as we move through the balance of the year. Turning to profitability. We are increasing our expected core operating margin expansion to a range of 90 to 190 basis points in constant currency, reflecting the strong first half operating performance. Gross margin will also benefit from the tariff refund of approximately $60 million. On SG&A, given the favorable response to our recent launches, we intend to reinvest a portion of the tariff refund to support growth. As such, we expect SG&A spending for the second half to be consistent with last year on a percentage of sales basis. Lastly, we're increasing our core diluted EPS growth outlook to a range of 12% to 15% in constant currency. This reflects our strong operational performance as well as the benefit from our share repurchase program. In summary, we delivered another quarter of solid financial results. Sales grew 7%, earnings increased meaningfully. Free cash flow remained healthy, and we returned significant capital to shareholders. These results reflect the strength of our portfolio, the impact of recent launches and the dedication of more than 25,000 associates around the world. And with that, I'll turn it back to David.

Thanks, Tim. In closing, our recent launches are performing well. Our pipeline continues to progress, and we remain focused on executing against the opportunities in front of us. While we continue to operate in an evolving environment, we believe our portfolio, innovation pipeline and disciplined execution position Alcon well for long-term growth. With that, operator, please open the line for questions.

[Operator Instructions] And our first question is from the line of Anthony Petrone with Mizuho Group.

Congratulations on the nice print here. I'll have one on equipment and one on IOLs. Dave, just on equipment here, obviously, mid-20s, you're holding better price than you had expected at the onset of the launch and the funnel looks good in the back half. Maybe you gave some data at the beginning of this cycle, 30,000 pieces of equipment. By the end of this year, what percent will have upgraded to UNITY VCS? And what will the cycle look like over the next 2 to 3 years, let's say? And then I'll have a follow-up on IOL.

Yes, Anthony, we have been pleased with the response that we've gotten out of VCS in particular, that the ASPs have been solid, and I think that reflects customers' view that this is really a step change in what they can do in retina in particular, but also cataract. We are on track with our funnel. We are on track with what we've given to you in the past in terms of the movement of the base of product. We've actually gained some share in this market as well. So I think all things are kind of green light on the unit movement. I think what I would tell you is that there really isn't a change in the way which we thought about it. Of the 10 years, I divide it by 10, the 30,000, add a little more upfront, take a little way on the back end and then you're going to be kind of close to where we've always expected this to be. So in these first couple of years of launch, we'll do a little better. It will settle down a little bit, and then we'll replace on a kind of a steady replacement basis. So that's probably the main thing. You got an IOL question, too.

Yes, IOLs, a little bit of improvement sequentially. PanOptix Pro is helping, but it's still lower than the historical growth rate. Maybe just the outlook on IOLs as it relates to surgeon capacity in the U.S. and where you think that business could trend to, let's say, in the 2027 time frame?

Sure. Yes. I think -- look, we're very pleased with PanOptix Pro. I mean the response to that product has been outstanding. I think we made a comment around 90% of our folks that used to use PanOptix are now using Pro, and that's probably tells you all you need to know that's inside of a year. So the use of light in that lens is superior to just about everything out there. We're getting, I think, 93% of the light being used in productive ways, which creates less scatter. That has made a big difference. And I think it also shrinks the market for things like Vivity penetration. We know Vivity is a good lens. We also know there's competitors to it. And again, we are chasing a new Vivity, which does even more than what Vivity did on its own. So again, we're looking for another line of vision at near out of Vivity. So we get that done. I think, again, we continue to push our lenses out in front of competitive lenses. And so we're very confident in our long-term share stabilization. I would say that we're getting towards the end of it, but we're not there. It's still a very competitive market out there. But we've seen now, I think, in most of the rest of the world and in the U.S. pretty much the most difficult competitors we're going to face. And I feel pretty good about where we're headed. So I think the only other thing I'd tell you is that relative to penetration and movement in implantables themselves, penetration matters a lot, and we're seeing a very positive trend right now in the United States. I think this is the second quarter in a row, we've seen more than 150 basis points in the U.S. move up. And I do think that for some surgeons doing more AT-IOLs is a very productive thing. They're kind of getting used to it. They're getting better at the diagnostics, and there's just a lot of promotion out there on this. So I think that's moving the market, and that does help. And as we kind of settle out on share, and I think we will settle out on share, we benefit a lot from penetration. So I just keep that in mind.

Our next question is from the line of Brett Fishbin with KeyBanc.

I'll just ask 2. First on the tariff refund and reinvestment plans. I was just curious if you could give a little bit more color on where you're driving that incremental investment into the business in 2H. And should we think of this step-up in investment activity as a little bit more onetime in nature, given the fact that it's tied to the tariff refund?

Yes, sure. Great question. So we are reinvesting back in the business. I would say that now that we have a better view on the new product launches, we're going to double down in a couple of the areas that we think that there's more opportunity. We're also going to look at other OTC products. If you think about the ocular health business, we may have some opportunities there. But we're going to put the money to work. $40 million is relatively small if you look at our total marketing and sales spend. But nonetheless, we're going to put the money to work and some of that will drive some near-term revenue and then some of it will obviously drive long-term revenue.

All right. And then second question, just on the contact lens market. I think you might have used the word healthy describing the market in 2Q. So curious if there's any signals that things are picking up a little bit, maybe closer to the mid-single digit or mid- to high end of the typical 4% to 6% range after what we viewed as some softer quarters.

Yes. I mean I think the Vision Care business on contact lenses was a bit mixed. U.S. had a very strong quarter. I think it was like 8%. International was more like 3%. So in aggregate, it was 6%. I would say 6% is very healthy globally. So what you're really seeing is the U.S. is bouncing some price. I think you're lapping 2 price increases. International is much more difficult to get price. So you're seeing much more mix there. So I would just say that in aggregate, it looks pretty normal in that 4% to 6% range. It's really on the high end of it.

Our next question is from the line of Brian Zimmerman with U.S. Bancorp.

With the write-down of PowerVision and the RxSight collaboration agreement, David, I want to get your thoughts on kind of what you hope to achieve now that you've made that decision to go purely an adjustable route versus maybe an adjustable and accommodative route? And how you think when it is available, how you think it impacts your core franchise? And then I have a follow-up question.

Well, I would maybe change the premise a little bit. I don't think we've made a decision to do one or the other. I think we're -- we still think that adjustable accommodating is the best long-term answer. We just couldn't get there with this particular technology. So I think I would describe these as 2 different ideas. RxSight really is an idea about how do we take a step forward in tunability with an optic that we already have or one that we could design for it. And that's -- I would call that an intermediate step towards where I think we need to go, which is long term into an accommodating lens. And so PowerVision was always a big idea. We learned a ton from it. We've got a lot of really great science and a lot of great scientists who I think have a better informed, probably the world's best informed vision of how it is that we could get to an accommodating lens. I just don't know that we have the technology yet. But we've probably been through I would say, a number of accommodating ideas over the last 4, 5 years, including PowerVision. And we'll continue to look at them. There's still more out there. Somebody is going to figure this out. I suspect it will be us, but we're watching very carefully that. So I would think about accommodating and tunable as the end game. It's just further out than we wish it was.

Helpful. And turning to surgical glaucoma. I mean, we've seen the changes you've made in Hydrus over the last year or so continues to be a drag on the business. You've done a ton in terms of pharmaceuticals and glaucoma. So what are your thoughts at this point? And what are your plans potentially with surgical glaucoma? What do you want to do? Do you feel like you still need to be in that market? Just would be good to kind of get your high-level thoughts there, David.

Well, I mean, obviously, the reimbursement arena there has changed the dynamic quite substantially. And I think we're obviously working on that dynamic, but I don't know that, that changes anytime soon. So I wouldn't count on that. I think from our point of view, Hydrus still is the most effective implant out there, but it is used by a select group of folks who really understand that point of view. And so I think what we believe is that there are other parts of the glaucoma therapy in the algorithm of treatment that probably have more accessibility. So think about Voyager. We think that's a really good idea. We think everybody should be starting with SLT. I think that's a broadly accepted idea. I think we are excited about what we can do there. Again, Voyager has moved a little slower than we had hoped for because of the kind of frequency that people use their own current argon lasers. But as people really understand that product, I think we're going to get better and better traction on it. So we're opportunistic there. I think there are other technologies out there as well that we keep an eye on that I think could do some things in glaucoma interventions that are also maybe a little bit more on the horizon. But in terms of stents, stenting generally, I think, is pretty stable right now and is likely to kind of stay that way.

The next question is from the line of Graham Doyle with UBS.

Just a couple from me. Just firstly, on the top line guide, Tim, the 5% to 7%, is it still reasonable to think the 7% is plausible and a reasonable case rather than best case for the full year? Obviously, the comps get a bit tougher. So just to get your thoughts on where you see that in terms of probability. And then it's another point on IOL. So another way of looking at this is, when do you think you'll have PanOptix Pro, Vivity Pro and TruPlus approved in U.S. and Europe, just in terms of competitive dynamics, it would be good to get that sense.

Yes, Graham, thanks for the question. Listen, I'll leave it to you as to what you think is plausible. We give a range of 5% to 7%. Historically, we have been kind of a midpoint type of company is what we try to say. I will at the beginning of the year, we thought we stated that the revenue would be relatively level loaded. I think that's still going to be the case. I mean we get a lot of questions on the comps to your point. And the way I think about it, just to give you a little more color, there will be a tougher comp in equipment with UNITY VCS for sure, right, because we launched that sort of at the beginning of the second half of last year. But -- and then when you look at some of the other launches like UNITY CS, as an example, that was launched this year. So we should get some benefit there. If you look at TRYPTYR, that's accelerating. We continue to improve our market access, so that should be helpful. And Valeda continues to do well. So we didn't really kick that off until, call it, mid-second quarter of last year. So we do feel like the new product launches will carry us through. And that 5% to 7% guide, again, that assumes aggregate markets grow at 3% to 4%.

Yes. Graham, on the approvable front, PanOptix Pro is approved now in both U.S. and Europe. We are just launching it. I think we launched it in June in Europe, and we're still getting it out in major markets. So look for the back half to be a meaningful impact on Europe. And then Vivity Pro, I would expect that late this year, maybe early next. It just kind of depends. Neither the U.S. nor Europe have that yet, but it's been submitted to both. And on TruPlus, both the U.S. and CE Mark, we have CE Mark approval. We just received it, I think, recently. But again, I would be careful with that one because we're managing that rollout carefully to not interfere with the PanOptix Pro and Vivity Pro. We've got a lot to do right now, which is kind of exciting. But we're going to manage all 3 of those kind of carefully to prioritize Vivity and PanOptix.

The next question is from the line of Veronika Dubajova with Citi.

One is on equipment and the second one is on the gross margin. Just on equipment, Tim, David, just curious if you could provide a little bit more color as to what the contribution from Valeda was in the quarter and to kind of to what extent is actually visibly driving an acceleration in the equipment growth rate. I've not heard you guys articulate the peak sales potential before today. So it would be really good to understand kind of what's got you there and how much of a contributor is already being? And then my second question is Tim, for you. Just on the gross margins, really, really strong improvement year-on-year and also sequentially. I appreciate, obviously, the color on Q2 margins last year being very depressed. But just curious if you kind of feel the 64-ish level once we strip out the licensing income as a reasonable proxy for the remainder of the year? Or are there other things we have to bear in mind as we look into the back half of the year? Obviously, I'm excluding the tariff refund because we all can do the math on that.

Yes. Veronika, on Valeda, we haven't really called out individual products. As you know, we tend not to do that. I would say that it contributed several points of growth in the quarter. But we're doing really well with a number of pieces of equipment. Obviously, the main driver in equipment right now is UNITY CS and VCS. And I think over time, we think that's -- as we had -- we were trying to make sure we gave everybody some sense of what this product actually is. And so I think $100 million to $150 million was a nice number that we can kind of get to in that, let's call it, 3- to 5-year frame. So maybe think about it as a typical R-shaped new product curve.

Yes. And as far as the gross margin goes, listen, we exited last year at roughly 63%. I'd say the first half of this year is probably in the 64% range. The tariff is a onetime benefit. So I would strip that out. But I would think that we're going to have probably a higher gross margin in Q3 given the -- assuming that the tariffs come in, and then that will probably dip down in Q4 to give you kind of a normalized rate.

The next question is from the line of David Saxon with Needham & Company.

On the quarter here. Maybe 2 product-related questions. First on contact lenses. Maybe if you could peel back the onion there, like how much of contact lens growth was price versus volume? And then any way to break out the legacy decline -- legacy volume decline versus the core volume growth and how you're just thinking about the market's ability to take price in the back half and into '27?

Let me try and get at that a little bit. Price was about 4% in Q2 I think of the 5, it was significant. I think our view on price in the U.S. in particular was that we were wrapping around, I think, 2 price increases. So we had a couple there that were meaningful. The important part in the U.S., I think, was that the share performance was outstanding. I think we had almost 1.5 share point gain. And that is, I think, largely a function of continued promotion around our DAILIES TOTAL1, our P1 in categories that are growing very nicely. We continue to see legacy value decline. We've had a very large legacy business, and it's always been a challenge for us to kind of manage that decline against that growth. And ultimately, as that goes away, you'll see more and more growth come to the surface. But I do think that was meaningful, and I would hesitate to answer your question directly because I'm not clear on exactly what that contribution was. However, I would say broadly that what we're excited about is the breadth of what we've got going on. We've got reusables in categories now like P7 that creates a new avenue for growth. We've got data in multifocal astigmatic lenses, which I think makes T30 a very unique lens and completes that family. We've got a product in every category in almost every need. And I think we are, as a consequence of that, very effective on the ground, growing share. So I think we're in a pretty good place. As I said to you earlier, I think the U.S. market looked healthy. International may have pretty good, but maybe a little softer than normal, but I think it will be fine.

Okay. That was helpful. And then just on TRYPTYR, any way to qualitatively talk about the contribution either, I guess, sequentially? And then I know you said IQVIA is not that accurate. But directionally, it looks like trends have been kind of picking up. So going from here, like how should we think about TRYPTYR's kind of trajectory going forward?

Yes. I think the one thing I'm going to look to -- TRYPTYR, I think, is going into IQVIA July 10. So you can actually get the data now. So I think we're giving them the data that we've got from the third party that we use. So I think they should have relatively accurate data for you to use on this one. Again, I think we're excited about it because of the share movement and also the refill rates. I think probably the thing that we were probably interested in and we got a lot of feedback on was how will the patients like this. And the refill rates seem to indicate that patients have -- are getting great relief out of this and are happy to refill it. So we're very positive about where TRYPTYR is headed.

The next questions are from the line of Larry Biegelsen with Wells Fargo.

David, I haven't seen and heard about any update on UNITY DX in a while. Actually, I think you got it cleared in the U.S. a while ago, and that seemed like a good opportunity for you. So just love to hear an update on the DX time line. And I have one follow-up.

Yes, you're right, Larry. We had an approval on DX, I think, early in maybe this year or maybe it was a little bit last year. We've had the product for a while. We believe that it's a great product. It was not just -- it was not in a manufacturable -- a scalable manufacturing condition when we got it. We've been working very diligently to make this a product that will have the kind of durability that our customers expect. And that means it isn't going to break inside of a year. It really has got reusable pieces. It's serviceable on the ground. All of that stuff that is, I'll call it, made for manufacturability. That stuff was really not done in a way that we were comfortable with to launch it. So we've been working backwards from what is an excellent design and an excellent technology. It's hyper parallel OCT, which I think is going to be really great for pre-op cataract use. That should be out later this year in, I would say, pilot form. I think we've got a number of folks that we're going to put it in play with along with our Adi platform. We've got a lot going on with the ecosystem around the microscope, which, again, we just talked about today for the first time. Our new microscope is also approved, and we just sold one. We're not going to sell a ton of them this year, but we are going to get a few of them out there with DX and with UNITY VCS. So the UNITY platform wrapped around with the Adi system is now kind of complete. And as we learn through that, and it's going to take us a while, I think what people are going to see is how exciting it is to work in a next century kind of idea, which is digitizing the whole of the ecosystem and really seeing what that could do in the OR to speed things up and create new efficiencies. Very exciting stuff, and DX plays a big role in that. I would expect revenue from that middle of next year kind of thing.

That's helpful. And just one follow-up on Valeda. I mean the $100 million, $150 million peak sales, are you feeling better about like the high end there? And I think when you bought it, the contribution was about $10 million to $15 million a year. Just where is that -- what's the run rate now?

Yes. We like the 100 to 150 range. I mean it's a brand-new product, and we've been selling it now for all of about 9 months. So I think we're comfortable with that range. We have been very pleased with the uptake. And I think it makes sense, right? I mean there's very little for these patients that really improves vision. And so if you can improve them by a line and you can do that in a very kind of noninvasive way, this is an exciting idea. So I think we'll see where this takes off. I think it's probably too early to give much more color than we think 3 to 5 years is peak revenue and $100 million to $150 million seems like the trajectory it's on.

The next question is from the line of Steve Lichtman with William Blair.

David, coming back to end market health, are there any changes that you're seeing in U.S. consumer sentiment on the IOL side or within contact lenses? You mentioned premium IOL up year-over-year. So I assume that's okay. But any color on anything we should be keeping an eye on for the higher-end products in either category?

Not really. I mean we've been surprised, I think, both in terms of positive -- we've always known that the eye care business was relatively independent of consumer confidence. But the contact lens business sometimes, I think, historically has had some stall out and trade up. So if you pair of reusable lenses and you can you can wait and you can put those dailies in some other month. That's probably been the only sensitivity that we've seen. We saw mostly trade-up internationally that drove the market. And then in the U.S., we saw really steady trade-up and actual price went up meaningfully in the United States. So on the contact lens business, I would say, relatively normal. And on IOLs, I think you'd have to say, particularly in the U.S., with the penetration rate up 180 basis points or whatever it was, it's really -- we've said this for a long time. I mean this is really -- the peak on the penetration should be somewhere in the high 30s, and we're still down in the 20s. So I think there's plenty of room to grow. We think consumers will pay for this. It's a great value long term, and I think surgeons know that.

That's helpful. And then, Tim, just following up, some moving parts with operating expenses this year, including the reinvestment you talked about today from tariffs. Where does the new cost efficiency program stand that you talked about heading into the year? Are you still expecting $50 million in savings and $150 million in charges associated with that program overall?

Yes, we feel really good about it. In fact, a majority of the actions have already been taken. So we feel good about the $100 million run rate, $50 million this year. I would say a vast majority of that just due to the timing of the exits will occur in the second half of the year. So that's all on track, and the $150 million looks good from what we see so far.

The next question is from the line of Young Lee with Jefferies.

Can I maybe double-click on the strong UNITY upgrade and adoption a little bit? It's been a little bit more than a year since the launch. I wanted to hear some of the key drivers for this adoption. Is it mostly converting older equipment? Is it the efficiency benefits? Are UNITY accounts experiencing, I guess, more procedures and shorter wait list from these efficiencies?

Yes, yes, you've got most of it right there. I mean the big idea here has been conversion on retina procedures in the near frame. I mean in the first year, we spent a lot of time on the retina guys because it was a much different procedure than what we do with constellation. So we changed almost everything. We changed the cut speed. We changed the entry system. We changed the gauge of the instrumentation. We changed the fluidics. And as a consequence, we also changed the speed and the safety of what was going on. It's much safer. And it's also -- we could -- if you were doing 4 or 5 vitrectomies in a day, you could probably do another one. That matters a lot. I mean you're talking about a saving kind of 20% to 30% in time. That effect when we got kind of people really wrapped their heads around the retina benefit that we had mattered a lot. And I think that's been a real positive halo going forward. In fact, I think that accounts for a lot of the reason we've got such a nice mix right now of more VCS probably than we expected. CS is coming up the curve, but people are also electing to buy VCS because it's handy. And particularly in the international markets where ORs are shared by the retina folks and the cataract guys, you don't have to move one machine over, pull the other one in. It's just a better buy. So if you're in the market for it, I think it's very plausible and efficient, I think, to buy this one machine. On the cataract side, I think equal story, same story, really. It's just different in that the cataract surgery already today is a very efficient surgery. But what you're seeing is the elegance of 4D phaco. And when you see the nucleus just kind of stay in the center of the eye and not move and not get shoved away from the tip and you see how easily the cut moves and how elegant the fluid stays in place, it's really -- that's a beautiful thing to watch. And surgeons feel super comfortable with it because it looks and feels safer than just about anything they could be doing. And yet it's a good bit faster. So again, if you can imagine doing 20 cataracts in a day, you'd probably do 21. You guys can do the math on all those. And I think we do the math for everybody who says, look, how do I pay for this? And it does not take very long if you schedule correctly. So we're certainly replacing older machines that are going out of warranty and out of service, and we'll continue to do that, but we're also getting some modest share. We've got a lot of share. So it's -- I wouldn't say we're getting huge much of new share, but we're very competitive with this machine. And again, it's doing what we hoped it would do.

Great. Really helpful. And then maybe one more just on the Rx partnership. Why do you think the LAL shares have been kind of hovering around the 10% penetration rate in the U.S. What are some of the ways and opportunities that Alcon can potentially introduce down the line to increase this adjustable category penetration?

I'd redirect that question to Aziz over at RxSight. He's got the new position over there. He's a terrific guy. I think he'll do great there, and he's going to have a much better answer than I'll have for that one. So let me send it that way for you.

Next question is from the line of Jeff Johnson with Baird.

David, I just wanted to follow up on your comments. It sounds like you have great visibility in the second half here on the UNITY order book. That's encouraging kind of lock that number in, it sounds like, which is good. How do we think about the size of the backlog? Obviously, 2Q delivered above, I think, what most of us were thinking about. But as you look forward, is the order book bigger, smaller today than it was maybe 6 months ago? And how to think about that backlog going into 2027? And then I have one follow-up.

I think we're just working through the demand that we see out there. So I'm not sure it was -- I'm not sure it's bigger than it was in the first half. I think there was a fairly large bolus of people waiting actually as we kind of anticipated the product and talked about it before it was launched. So we've worked our way through that part of it. I think now it's -- I would just describe it as relatively uniform opportunity and uniform around the world. I think we're in every market now. We're in with CS and VCS. We've got demo units everywhere. We're demoing them every day. And we've got a lot of good programs out there to make it easy for people to try and use and buy. So I would just call this business as usual at this point, and we feel pretty good about it.

Fair enough. Tim, maybe a guidance question for you. Just on the EPS guidance change. You raised by a few pennies at the midpoint there on a constant currency basis. I think about the tariff refund, obviously, you're reinvesting 2/3 of that, so we can do the math on that. Share count now expected to be lower. You have been buying back aggressively there. That licensing fee in 2Q helps maybe a little bit on the year. But just help us maybe bridge the change in the EPS guidance change that you made today. Do you feel fundamentally kind of on the core underlying operational side of the business that, that has held in steady and the EPS guidance change was just for those other factors? Or did those other factors outweigh maybe a little bit the size of the change and the core profitability maybe coming down a little bit as you maybe reinvest in some of these product launches or anything like that? Just help us bridge kind of that change.

No. We feel pretty good about the investments in the underlying core operating margin. I think you have most of the components. I mean if you do the math on the buyback and the refund, that will pretty much get you there. I throw in the one-timer as well. But again, every year, we have one-timers, so that one I'd be a little careful with. But for sure, the refund and the share buyback is flowing through. But overall, we think that we continue to manage the cost with a lot of discipline. We're making the appropriate trade-offs. Again, as we get that revenue growth, that gives you a little bit more operating leverage. So the fundamentals seem to be working right now.

Our next question is from the line of Tom Stephan with Stifel.

First one for me on implantables. Pro doing well, but growth in the segment a little subdued again this quarter against an easy comp. As we think about competition accelerating from here, you're lapping the U.S. Pro contribution, China VBP maybe delayed a bit. So David, maybe for you, can you help us think about 2H growth in implantables? And then with Vivity Pro, what's your confidence 2027 implantables can maybe get back to market growth? And then I'll have a follow-up.

Well, I mean, the implantables growth is a function of 3 different things, right? It's -- if you look at our share all in, we've actually -- we were flat in share. So we were already stable. The problem was in -- it wasn't AT-IOLs that we were flat and we were losing in AT-IOLs and gaining in monofocal. So I think there's 3 pieces. One is market growth, one is penetration, one is share. And I think you got to take those 3 kind of independently. I think market growth in the U.S. has been below what we would normally expect. But again, we have forecasted that most of the year. So I don't think that was a surprise to us. I think on that one, we'll have to see where we sit next year. And I think as we get into next year, we'll take a position on that. But for now, we don't anticipate any change for the rest of the year in the U.S. I think the other one that is a little bit more positive is the penetration. And that was in the U.S., 180 basis points and around the world, 110. That's probably 50 basis points higher than what we think the historical average has been. So people with promotion have obviously decided to use more AT-IOLs. We like that move because I think as Tim said, 1 point of market growth for us affects us about $10 million, but a pen of penetration is about $15 million. So we -- if you had to trade one of those for the other, you'd trade it that way. Now we'll see where penetration goes, but we've had a couple of quarters now that look pretty good. I'd be generally on the positive side of that number. And then share is a bit of a wildcard. I think this is a very competitive market and people are trying lenses and surgeons like to try lenses, and there's some good ones out there. So I think what we'll see is continued trial for the new lenses that come in. But I think the difference between today and maybe 2 years ago is I think everybody knows we've got a steady lens cadence now of advances against the market-leading lenses, and those are very positive. So I would say PanOptix Pro is a significant improvement on PanOptix. It's doing really well for trifocals. I think it actually gained share if we're looking at the trifocal space. Vivity has got a little bit of a gap here before we get to Vivity Pro. But Vivity Pro, I think, is going to find its way into much better near vision than anything else out there in that space. And again, I think that's what people are looking for. They're looking for a better use of visual of the amount of light. So I think that will play well. And then we've got a monofocal plus for those folks who really are looking for a better monofocal and that market in Europe has been fairly positive. So we've got a little bit of everything for everybody. And I think going forward, I don't know that anybody can match what we've got on a cadence level going forward after that. So we're excited about where we're headed, but I would give ourselves some time here to weather the storm of many, many people entering this market. So be patient with it, but I think it's headed in the right direction.

Got it. And then my follow-up, maybe just on kind of constant currency growth ex equipment. When I look at that number, I'm arriving at, I think, around 5% constant currency in the first half with the 2-year CAGR closer to 4%. So David, I'll stick with you. How do we think about this 4% to 5% ex equipment growth moving forward, particularly in 2027 when you really fully lap UNITY and especially relative to your 6% to 8% long-term target that you laid out last year. It'd be great if you can talk about that ex equipment growth in the 4% to 5% range, maybe reflect on the LRP. And then I guess the heart of my question would be like why won't 2027 sales growth decelerate from 2026 levels as you lap UNITY?

Well, I mean, the easy answer is new product flow. So just hang in there. We've got lots coming. So you don't get a full year of TRYPTYR, for example. We're still fighting the reimbursement battle on TRYPTYR. We've got another OTC product coming. We've got 2 new pieces of equipment. We've got another couple of IOLs. We've got Valeda, which is continuing to grow. We kind of -- I would just hang tight until we get to February, we'll lay it out for you. But I think what you're going to hear is we've got good transition from old products to new products, all of them are getting better ASPs, getting good lift year-on-year. And then we got additional new products coming along.

The next question is from the line of Susannah Ludwig with Bernstein.

I have 2, please. I guess first on ocular health. Systane has been a key contributor to growth there with the multiple -- multi-dose preservative-free being a key driver. I guess, could you share roughly what percent of the Systane business is now that multi-dose preservative-free? And how sustainable you see the broader Systane growth is? And then after that, it would just be helpful to have a little bit more in-depth thoughts on the U.S. cataract market conditions and whether this is just still surge in capacity or if there's anything else going on there?

On ocular health, we're scrambling to find the numbers. On ocular health, I think I'll just tell you that it's roughly 15% of ocular health is the MDPF. Is that right, guys? Is that...

They've gone well.

They're working on it. So Systane has been a double-digit grower for us.

15%.

And 15% is about the MDPF level. So I think we got that for you. The -- that category for us has been exciting. And I would say that what you should see in the back half is also some increased promotion around this area. It seems like the more we talk about MDPF, the better it goes. And I think the market wants it. I'll just remind people, too, that the international markets are dominantly MDPF and the U.S. market is not. It's moving that way directionally. But we had known that for some time, and that's really the trend we're playing is the rest of world has been on the multi-dose preservative-free bandwagon for a while. We're just getting on there in the U.S. So it's a good opportunity for us. On the other question you had was on the market. And if you're talking about the cataract market, I'll just make this point. The cataract market is certainly part of our business. And -- but we talk about aggregate markets as growing 3% to 4% in the quarter, and that was pretty much where we were, certainly what we forecasted. Most of our markets are growing in the mid-single digits. So if you take artificial tears like we were talking or dry eyeRX or contact lenses or retina procedures or surgical equipment, all that stuff, basically, we've had pretty solid mid-single-digit growth, which is -- or higher. What we continue to believe, though, is the U.S. is going to remain relatively flat to slightly up in the cataract market. And that's largely because what's going on is surgeons are incorporating optometrists and other professionals into their workflows to get them more surgical time. And as we do that, it's going to take them some time to do that, but that allows them then to find more time for more cataracts because the demand is certainly there. It is just a matter of retiring -- too many surgeons retiring and too many young folks taking their place that aren't as productive as the ones retiring. So that will change over time, but we see it pretty much as kind of these trends take some time to manage. They should recover to the historical rates at some point. We're not calling that this year. We'll update it, obviously, for next year when we get there. But the general trend underneath that for IOLs, as I just mentioned, was that AT-IOLs are up. International markets are healthy, and I think we feel pretty good about where we're doing with our product lines.

Great. And if I can maybe sneak in a quick follow-up. Do you think the increase in AT-IOL adoption is having any effect on volumes, just given that's more time intensive?

Well, it could, but it's -- we -- actually, in our world, economically, you trade -- you'd make that trade, right? If you traded one monofocal surgery for AT-IOL surgery, Alcon would make more money as would most people. So you could actually make that trade successfully on an economic basis, even though that's not great for patients. So I would say that maybe it has some effect, but I think really, especially with the new equipment and certainly, one of the reasons we're working on UNITY Dx is to make this a faster workup and make it an easier workup for people and a more automated digitized one. As we get down that path, I think these things will kind of equilibrate in terms of time spent, certainly by the surgeon. But remember that a lot of the workup too needs to be moved to para-professionals, people around the surgeon who can do that work for them and then check it obviously do a good job with it. But that's what the -- I think that's the most productive way most practices can run.

Our final question is from the line of Issie Kirby with Redburn.

I wanted to ask about the eye whitener product that's been mentioned a couple of times. I'm not sure if you've given any time line around that, but would be helpful to know if you have. And then what's going to differentiate this product versus competitors in the sales given this could be quite a meaningful category for you guys?

Yes. We really haven't spent much time on it, but I would say that we're excited about it. It's just -- it's a next year product. So we should get -- we should have an approval late this year. When we do have an approval, we'll look at the label. And we obviously have an idea as to why this is better. We think it will be better than the market-leading competitor. But until we get our labeling, we'll need to keep that a dark secret, and we'll relay it to you next time, hopefully.

At this time, we've reached the end of our question-and-answer session. I'll hand the floor back to Dan Cravens for closing comments.

Great. Thanks, everybody, and thanks for joining us again this morning. If you have any follow-up questions, certainly reach out to Richard Bourne or myself. And for media questions, reach out to our Corp Com team. Thanks, and have a great rest of your day.

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines at this time, and have a wonderful day.