Cooper Companies Shares Tanked: What You Need to Know
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What: Shares of contact lens maker Cooper Companies (NYS: COO) can't see straight today, falling by as much as 19% with no end to the selling in sight, after the company expanded its recall of some contact lenses.
So what: The company's CooperVision subsidiary has expanded its recall of lots of Avaira Toric lenses to also include limited lots of Avaira Sphere lenses. CooperVision is continuing to collaborate with the Food and Drug Administration in implementing the recall. The Avaira Sphere lenses identified don't meet the company's updated quality requirements due to the level of a silicone oil residue. CooperVision plans on replacing the product with available inventory.
Now what: The company had announced a recall in October that covered 600,000 lenses that arose from complaints of severe eye pain. The sell-off has been swift, but possibly overdone, as the total cost of the recall is expected to be around $23.2 million, and last quarter's total revenue was $351.4 million, and net income was $38.1 million. Cooper has already taken $14.2 million of the costs in the third quarter, so it is setting aside a reserve of $9 million to cover the rest. The recall will definitely be pricey, but a 20% haircut is rather extreme.
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