Cochlear has warned investors it expects the continuing restrictions on elective surgeries here and offshore will see slower growth in hearing implant sales for the year to June.
Cochlear has been battling its way back to pre-pandemic surgery levels ever since the pandemic whacked its business two years ago by the postponement or stopping of elective surgeries which included installing its implants.
The delays to elective surgeries were initially a health/social distancing measure but then morphed into a way for governments to free up hospital capacity to treat thousands of extra cases of Covid delta and then Omicron.
On Tuesday it told investors that while it lifted sales of implant units by 7% overall, there had been a 2% drop in unit volumes in developed markets.
While these were tracking ahead of pre-pandemic levels Cochlear noted volume declines were most notable across the United States, where both the Delta and Omicron surges saw operating theatres running below capacity.
European nations were seeing a solid rebound, but “the rate of recovery, however, continues to vary by country with intermittent COVID‐related restrictions reducing overall operating theatre capacity”, the company said.
Australian volumes were also hit by elective surgery shutdowns especially IN NSW, Victoria and the ACT.
While the company reported a 12% jump in constant currency revenues to $815 million for the six months to December, statutory net profit slid 30% to $169.3 million compared with the same half last year.
The company’s underlying net profit, which excludes “one-off” financial items, was up 26% at $157.5 million from the December, 2020 half year.
Despite all the uncertainty, shareholders will see an interim dividend of $1.55 a share, up 35% from the $1.15 paid for the December, 2020 half.
That increase more than any comments is a sign of the underlying optimism at Cochlear about the rest of the year. Contrast that big rise to steady payouts at Coles, Seven Group and Monadelphous, all of whom reported solid results for the half year.
The company confirmed its full-year underlying profit guidance, which is expected to come in at between $265 and $285 million, with second half trading tracking in line with the first half so far.
“Operating theatre capacity is also being affected by hospital staffing shortages, an issue that emerged during the second quarter, and which may impact capacity for the balance of the half.
“As a result, we expect a lower rate of growth for Cochlear implants for the year than originally forecast with growth weighted to Services and Acoustics,” the company said in its earnings report.
The services and acoustics divisions include revenue for items like accessories and sound processor upgrades for patients who already have hearing implants.
“A more material disruption from COVID that significantly impacts sales remains a risk factor that does not form part of guidance. Despite the ongoing disruption to surgeries caused by COVID, we continue to be confident of the resilience of our hearing implant business over the longer term,” the company warned.
Investors liked the update, took the warning about sluggish growth in its stride and sent the shares up 9% to $207.37 which was a very solid result on a day when the wider market was under intense pressure from Russians’ provocative antics in Ukraine.
