Cochlear (ASX:COH) has reported a 9 per cent increase in sales revenue for the six months to the end of December 2019 driven by a 14 per cent rise in implant revenue.
The company said the number of implant units was up 13 per cent during the period to 18,894, with developed markets up 7 per cent and emerging market volumes up over 20 per cent.
Reported net profit increased by 23 per cent to $157.7 million. The company said this includes $25 million in non-cash after-tax gains from the revaluation of innovation fund investments.
According to Cochlear’s CEO and President, Dig Howitt, “The business delivered a 9% increase in sales revenue (5% in CC) with underlying net profit in line with HY19. The highlight was the strong growth in cochlear implant revenue with lower than expected Acoustics sales.”
Mr Howitt said, “The Nucleus Profile Plus Series cochlear implant has been well-received by the market since its launch late in FY19 with developed market units growing by 7%. The US rebounded strongly, growing units by over 10%, with improvements in market share since the launch. Western Europe also experienced an improvement in momentum with availability of the new implant expanding across the half. Units increased by 5% with growth weighted to the second quarter.”
He said while market share is growing in Western Europe, market growth continues to be challenging with many countries limited by funding caps or restrictive indications.
“We continue to build our market access capability to assist in removing barriers to growth. Over the past few years there has been an expansion of clinical indications and reimbursement for cochlear implants across many countries including Japan (Oct17), the UK (Mar19) and Belgium (Aug19), more than doubling the total addressable market for implants in each market. While these changes take time to flow through to referral behaviour, we are experiencing a strong lift in demand in Japan.
“Emerging markets provide a long-term growth opportunity as awareness of and affordability for cochlear implants expands. The result reflects the benefits of investments made over many years to strengthen Cochlear’s presence across all regions,” added Mr Howitt.
Cochlear said its financial year 2020 guidance of $270-$290 million represents a 2-9 per cent increase in underlying net profit, with strong cochlear implant growth to be partly offset by the impact of the coronavirus on sales in China. The company recently revised down its guidance by around $30 million in response to its expected impact.