Alcon Reports ‘Solid’ Q1 Sales, But Sees ‘Significant Impact’ from COVID-19 on Q2 Results

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GENEVA—Alcon (SIX/NYSE:ALC), a global leader in eyecare, reported Tuesday that its worldwide sales rose 3 percent to $1.8 billion in the first quarter, which ended March 31. The increase was 4 percent on a constant currency basis, according to the announcement from the company. Alcon also noted that its first quarter was highlighted by the successful launch of Pataday, which the company said has strengthened its leadership in the over-the-counter allergy market in the U.S.

In addition, Alcon said its first-quarter operating loss totaled $28 million, which includes charges of $259 million from the amortization of certain intangible assets, $71 million of separation costs and $7 million of transformation program costs. Excluding these and other adjustments, core operating income in the first quarter was $302 million, which produced an operating margin of 16.6 percent. This was a decrease of 110 basis points compared with the first quarter of 2019.

“Our first quarter reflects the solid underlying growth prospects of our business," chief executive officer David Endicott said. “We saw strong sales growth in both franchises during the first two months of the year, led by key growth brands and new product launches. However, as the COVID-19 outbreak spread worldwide, the widespread shutdowns negatively impacted demand by mid-March.”

Alcon said sales growth was driven by its key growth platforms, including Dailies Total1 contact lenses and Systane Complete eye drops. Also contributing to the solid performance in the quarter was the new launch of Pataday for ocular allergies. “Strong top-line growth in January and February absorbed the sharp decline in late March as the COVID-19 outbreak affected the U.S. and European markets,” Alcon said in its announcement.

In the vision care segment, sales totaled $838 million in the quarter, an increase of 8 percent (reported), or 10 percent (constant currency). Contact lens sales totaled $502 million in the period, an increase of 2 percent at constant currency.

Sales were driven by solid demand for Dailies Total1, launch momentum for Precision1 contact lenses, stocking-related demand in ocular health products, and the successful launch of Pataday allergy drops in advance of the U.S. spring allergy season, Alcon said.

The company said a decline in global demand for surgical procedures will negatively impact second-quarter results, but also noted that “given the critical nature of eyecare, customer demand is expected to resume when underlying conditions normalize and gradually lead to an improvement in the back half of the year.”

Endicott added, “As we navigate these challenging conditions, we remain focused on the safety of our associates and supporting our customers. To help contribute to our community safety, our associates are producing personal protective equipment and hand sanitizers for first responders, which is a testament to the resourcefulness of our people.

"Lastly, we are taking decisive actions to maintain our global supply chain and control our expenses and cash flow. Although we expect a significant impact on second quarter results, the prudent actions we are taking will prepare us for recovery and preserve the ability to pursue our long-term goals," Endicott said.