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Highlights
- Revenue Growth: Sales revenue rose 5% to $1.17 billion, driven by implant and acoustics sales.
- Services Weakness: Revenue from the Services segment fell 13%, dragging down overall performance.
- Lowered Profit Outlook: Full-year net profit expected at the lower end of $410–$430 million, below market expectations.
Cochlear Ltd (ASX:COH) shares tumbled 10% on Friday morning, falling to $274.95, following the release of its half-year financial results. Despite reporting revenue and profit growth, the hearing implant manufacturer’s lowered profit guidance for FY 2025 spooked investors, leading to a significant sell-off.
Steady Revenue Growth but Mixed Segment Performance
For the six months ending December 31, Cochlear posted a 5% increase in sales revenue to $1.17 billion, with underlying net profit rising 7% to $206 million.
The company’s growth was driven by its Cochlear Implant and Acoustics segments, while weakness in the Services business weighed on overall performance:
- Cochlear Implant revenue grew 12% to $724.5 million, with unit sales up 5%. The adult and senior segments were the key drivers, particularly in the US and Asia-Pacific, though demand for children declined slightly after a prior year.
- Acoustics revenue surged 21% to $140.4 million, fueled by increased adoption of the Cochlear Osia implant, particularly in the US and new markets like France and Italy.
- Services revenue declined 13% to $305 million, reflecting lower upgrade rates and financial pressures in the US limiting patient spending on new technology.
Guidance Disappoints Market Expectations
The biggest factor behind today’s share price drop is Cochlear’s weaker-than-expected profit outlook. The company now expects its full-year net profit to be at the lower end of its $410 million to $430 million range, citing reduced Services revenue and increased investments in cloud infrastructure.
This projection fell short of analyst expectations, leading to investor concerns over slower earnings growth in the near term.
Investor Reaction and Outlook
Despite a higher interim dividend of $2.15 per share (up 8%), the market’s focus has been on the weaker guidance.