Cochlear delivers positive outlook for implant growth

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Cochlear (ASX:COH) has announced its full-year 2019 result with sales revenue up 7 per cent to $1.446 billion and net profit up 13 per cent to $276.7 million.

According to CEO and president, Dig Howitt said, “The highlight was the strong growth of the Services business with a slower year for cochlear implant system sales.”

The company reported implant units were down 3 per cent to 34,083 - developed markets were in line with the previous year while emerging market volumes declined.

“After four years of strong growth driven by a combination of market growth and share gains, our developed markets units were in line with last year, while emerging markets units declined,” said Mr Howitt. 

"The US and Germany lost market share following a competitor product launch. Sales however returned to growth following the launch of the Nucleus Profile Plus Series cochlear implant in Europe in mid May and the US in late June.

“The Nucleus Profile Plus Series cochlear implant has been well received by the market and has driven an uplift in sales since its launch late in FY19.”

The company said the Japanese market delivered strong demand following the expansion of indications and funding for cochlear implants in late 2017.

Emerging markets units declined, with around 700 fewer Chinese Central Government tender units than last year and very significant declines in Argentina and Turkey driven by recession and currency devaluation, it said.

“A key component of our strategy in emerging markets is to build our direct presence, which improves our knowledge and influence in these markets, providing a base for future growth. In FY19 we acquired distributors in some key emerging markets,” said Mr Howitt.

The company said it continues to focus on 'technology leadership' by investing around 12 per cent of sales revenue on R&D.

It described the lack of a consistent treatment pathway for diagnosing and treating adults as one of its key challenges.

"For many adults who are clear candidates, the pathway to cochlear implants is often haphazard with the vast majority unaware of the existence of this effective option for treating their hearing loss," it said.

Mr Howitt continued, “Cochlear continues to work to build grass roots awareness with candidates including through its successful direct-to-consumer marketing activities. We have focused on building referrals from the hearing aid channel in the US through the establishment of the Cochlear Provider Network, which links surgeons with hearing aid clinics, while building professional awareness through improved education.

“We are also encouraging initiatives within the professional community, including leading cochlear implant surgeons and audiologists, to develop a consensus on the appropriate treatment pathway for adults with severe to profound sensorineural hearing loss, with solid progress made this year. In March, an independent steering committee and panel of 30 audiologists and ENT surgeons across 13 countries, reached a consensus that could lay the foundations for the creation of international clinical practice guidelines for cochlear implantation, including patient identification, referral, implantation and rehabilitation.”

The company said it expects to deliver reported net profit of $290-300 million for the current year, a 9-13 per cent increase on 2019.

Mr Howitt said, “We expect strong growth in cochlear implant units in FY20, driven by a number of new products launched late in FY19 and the continued investment in market awareness and access activities. While still early in the year, we have seen an uplift in sales since the launch of the Nucleus Profile Plus Series cochlear implant which is currently being rolled out across the developed markets as regulatory approvals are received."