Alcon reports second quarter 2021 results

Alcon, the global leader in eye care, reported its financial results for the three and six months ended June 30, 2021. For the second quarter of 2021, worldwide sales were $2.1 billion, an increase of 75% on a reported basis and 69% on a constant currency basis(2), as compared to the same quarter of the previous year. Second quarter 2021 diluted earnings per share were $0.31 and core diluted earnings per share were $0.56.

“Our second quarter performance demonstrates the strength and resilience of our businesses, with our highest quarterly sales and earnings since our spin-off,” said David Endicott, Alcon’s Chief Executive Officer. “Strong commercial execution behind our new product launches resulted in all sales categories in Surgical and Vision Care posting growth over 2019, notwithstanding the continued impact of COVID-19.”

Mr. Endicott continued, “The healthy recovery in the business underlies our confidence in driving top line growth with continued innovation and the growing demand for eye care. With the ongoing expansion of our manufacturing capacity, we remain focused on maintaining a steady stream of product flow as we expand our portfolio and respond to market demand.”

Second quarter and first half 2021 results
Worldwide sales for the second quarter were $2.1 billion, an increase of 75% on a reported basis and 69% on a constant currency basis, compared to the second quarter of 2020. All categories benefited from the improvements in the eye care market, led by the strong recovery in the US and varied paces of recovery in international markets from the COVID-19 pandemic.

Surgical momentum continues
Surgical net sales of $1.2 billion, which include implantables, consumables and equipment/other, increased 100%, or 94% on a constant currency basis, compared to the second quarter of 2020, with strong increases across all three categories. Implantables growth was driven by market improvements as well as the continued adoption of advanced technology intraocular lenses, led by the launch of Vivity and continued strength of PanOptix. Consumables growth was driven primarily by the recovery in surgical procedures over the prior year, while the equipment/other category benefited from the healthy demand of refractive and cataract products. For the first half of 2021, Surgical net sales increased 44%, or 40% on a constant currency basis, compared to the first half of 2020.

Vision Care returns to growth; strong demand for Precision1, Systane and Pataday
Vision Care net sales of $0.9 billion, which include contact lenses and ocular health, increased 49%, or 44% on a constant currency basis, compared to the second quarter of 2020, also with double-digit increases across both categories. Contact lens growth reflected improvements in all product categories and continued momentum from the launch of Precision1 and Precision1 for Astigmatism. Growth in ocular health was led by Systane and Pataday, primarily due to the recent launch of Pataday Extra Strength. For the first half of 2021, Vision Care net sales increased 20%, or 17% on a constant currency basis, compared to the first half of 2020.

Operating income
Second quarter 2021 operating income was $229 million, which includes charges of $128 million from the amortization of certain intangible assets. Excluding this and other adjustments, second quarter 2021 core operating income was $382 million. The prior year period saw a broad slowdown in non-urgent surgeries and lower demand due to the COVID-19 pandemic. Second quarter core operating margin of 18.2% increased versus the prior year, mainly driven by higher sales, gross margin and operating leverage, as sales growth outpaced increases in marketing and selling expenses and research and development. The prior year was impacted by unabsorbed manufacturing overhead costs and provisions for expected credit losses related to COVID-19 as well as higher inventory provisions. Foreign exchange had a positive 70 basis point impact on second quarter 2021 core operating margin.

Operating income for the first half of 2021 was $378 million, which includes charges of $253 million from the amortization of certain intangible assets and a $45 million impairment of an intangible asset. Excluding these and other adjustments, core operating income for the first half of 2021 was $726 million and first half core operating margin was 18.1% compared to 7.4% for the same period last year. Foreign exchange had a positive 50 basis point impact on first half 2021 core operating margin.

Diluted earnings per share (EPS)
Second quarter 2021 diluted earnings per share were $0.31 and core diluted earnings per share were $0.56. First half 2021 diluted earnings per share were $0.48 and core diluted earnings per share were $1.05.

Balance sheet and cash flow highlights
The Company ended the second quarter with a cash position of $1.4 billion. Current year cash flows benefited from higher sales, lower separation and transformation payments, partially offset by the payment of $355 million for the acquisition of US distribution rights for Simbrinza, higher capital expenditures and a $54 million dividend payment. Cash flows from operations for the first six months of 2021 totaled $542 million and free cash flow(3) amounted to $320 million, compared to cash flows from operations of $58 million and negative free cash flow of $110 million for the same period in the previous year. The increase in free cash flow was driven by higher cash flows from operations, partially offset by higher capital expenditures. Financial debts totaled $4.1 billion, in line with prior year-end. The Company ended the second quarter with a net debt(4) position of $2.8 billion. The Company continues to have $1 billion available in its existing revolving credit facility as of August 17, 2021.

Financial outlook
The Company raised its full year outlook as follows. This guidance assumes that global markets return to 2019 levels at the end of the year. It further assumes that the US market will continue to grow relative to 2019 in the second half of the year and that international markets will return to 2019 levels early next year. Business Wire