Cochlear Limited (ASX: COH) has wrapped up the first half of FY25 with solid revenue growth, fueled by demand for its cochlear and acoustic implants. However, a slowdown in Services revenue tempered overall results.
Key Takeaways from HY25
- Sales revenue: $1.17 billion (up 5%, or 6% in constant currency).
- Cochlear implant revenue: $724.5M (up 13% in CC, with 25,390 units sold).
- Acoustic implants: $140.4M (up 22% in CC).
- Services revenue: $305M (down 12% in CC, after a strong HY24).
- Underlying net profit: $206M (up 7%, or 1% in CC).
- Interim dividend: $2.15 per share (up 8%, payout ratio at 68%).
Implant Growth Fuels Revenue
Cochlear implant revenue surged 13% in constant currency, with strong demand from adults and seniors across developed markets like the US and Asia Pacific. Emerging markets also contributed, although tender volumes were lower than expected.
Acoustic implants were a standout performer, up 22%, thanks to Osia® Implant sales and expansion into France, Italy, and emerging markets.
Meanwhile, Services revenue dipped 12%, following an earlier surge from the Nucleus® 8 Sound Processor launch in FY23. Lower upgrade rates and economic pressures in the US contributed to the decline.
Strong Cash Flow, Strategic Investments
Cochlear maintains a strong balance sheet, with net cash of $383M. The company continues to invest heavily in R&D, allocating 12% of sales revenue to innovation. It has also expanded its cloud and ERP system investment, now budgeting $250M over the next three years.
Outlook for FY25: New Products Incoming
Cochlear is gearing up for a major product launch in mid-2025, including a next-gen cochlear implant and off-the-ear sound processor. This could boost Services revenue heading into FY26.
However, the company expects full-year profit to land at the lower end of its $410M–$430M guidance due to weaker Services sales and higher cloud-related investments.
Despite these short-term challenges, strong implant sales, new product launches, and global market expansion should keep Cochlear well-positioned for long-term growth.
