Alcon continued its slow crawl back from the impact of the global pandemic in the first quarter of 2021. The global eyecare company, with manufacturing and research facilities in Berks County, reported positive results in the first quarter of 2021 compared to the previous year’s. Results were also better compared to fourth quarter 2020, when the company began its recovery from COVID-19 effects.
The company was spun-off from Novartis in February 2019.
“The first quarter was a solid start to the year, with healthy sales, a return to 2019 core margin levels and the substantial completion of our separation activities. Strong commercial execution of our new product launches continues to drive market share gains despite the continued impacts of COVID-19,” said David Endicott, Chief Executive Officer, in a statement.
Wall Street disagreed with Mr. Endicott as Alcon stock opened down 6.41% in opening trading Wednesday.
First quarter 2021 results
Worldwide sales for the first quarter were $1.9 billion, an increase of 2% on a constant currency (cc) basis, compared to the first quarter of 2020. Sales in the United States were $835 million, an increase of $43 million above 2020 sales of $792 million. International sales in the quarter were $1.075 billion compared to $1.030 billion in 2020.
First quarter 2021 operating income was $149 million, which includes amortization charges. Excluding adjustments, first quarter 2021 core operating income was $344 million.
First quarter core operating margin of 18.0% increased by 140 basis points, due to an increase in sales partially offset by increased investment in research and development and higher spending in marketing and sales. Foreign exchange had a positive 40 basis point impact on core operating margin.
Diluted earnings per share (EPS) in first quarter 2021 were $0.17 and core diluted earnings per share were $0.49. The company declared its first dividend of CHF (Swiss francs) 0.10 per share, which is expected to be paid on May 6, 2021.
The company ended the first quarter with a cash position of $1.6 billion. Cash flow from operations totaled $156 million and free cash flow amounted to $48 million compared to an outflow of $60 million in the previous year. Higher cash flow from operations was partially offset by increased capital spending.
Financial debts totaled $4.1 billion, in line with prior year end. Alcon ended the first quarter with a net debt position of $2.5 billion. The Company continues to have $1.0 billion available in its existing revolving credit facility as of May 4, 2021.
Business Segment Results
Surgical net sales of $1.1 billion, which include implantables, consumables and equipment/other, increased 7% on a constant currency basis, compared to the first quarter of 2020. Sales growth was primarily driven by demand for cataract and refractive equipment and other refractive products, as well as continued strength in PanOptix and the launch of Vivity.
Consumables sales were similar to the previous year’s levels due to the continued impact of COVID-19 on surgical procedures.
Vision Care net sales of $0.8 billion, which include contact lenses and ocular health, declined 3% on a constant currency basis, compared to the first quarter of 2020. Contact lens sales benefited from the recent launch of Precision1 sphere and toric but were more than offset by declines in international markets. Ocular health net sales reflected strong demand for Pataday and the recent launch of Pataday Extra Strength.
Financial outlook
Mr. Endicott continued, “Our recent success validates our continued investment in a robust product pipeline that will meet the future needs of eye care professionals and their patients.”
The company provided its full year outlook as follows. Net sales are expected to be between $7.8 to $8.0 billion. The core operating margin is expected to be approximately 17% and core diluted EPS between $1.85 to $1.95. This assumes markets return to historical levels in the third quarter and grow in the second half of the year.
Alcon (NYSE: ALC) is the largest eyecare device company in the world, with complementary businesses in surgical and vision care. The company has a long series of industry firsts based on deep capabilities in materials science, surface chemistry and optics. Alcon’s pipeline includes more than 100 projects in process and the company has over 23,000 associates working worldwide.
