Cochlear chief calls for debate on COVID shutdowns on citizens' health

Cochlear chief executive Dig Howitt says Australia needs a public debate about the impacts of COVID-19 lockdowns on the overall health of citizens, as policymakers and businesses stare down months of economic disruption from the virus.

Speaking to The Sydney Morning Herald and The Age after unveiling the company's 2020 financial results on Tuesday, Mr Howitt said finding the "optimum trade-off" between the economic and health implications of shutdowns was "too hard for one person to solve".

Cochlear chief executive Dig Howitt had previously warned that COVID-19 would impact the company's financials. Credit: Dominic Lorrimer

"We need to be able to have a public debate. It's not something where there is an obvious right answer. We need to have [the discussion] publicly and with data," he said.

Mr Howitt said beyond weighing up virus case numbers and economic impacts, a third dimension was starting to emerge which was important to consider: the overall health of citizens.

"The other thing that is starting to be talked about is that there’s a trade-off between the openness of the economy and people’s overall health. Whether that is mental health, or that people are just deferring routine checkups. By avoiding routine checkups, we’re building up a health debt," he said.

The hearing implant giant posted a $238.3 million net loss for 2020 after costs piled up from coronavirus shutdowns and a long-running patent litigation case.

The $13 billion biotech revealed its sales revenue declined 6 per cent for the 2020 financial year to $1.4 billion as global shutdowns of elective surgery due to coronavirus led to a 22 per cent sales drop in the second half of the year. That drop in sales meant the company's underlying net profit was down by 42 per cent to $153.8 million.

The business also had to pay $416.3 million in litigation expenses after losing a patent infringement case in the US in March which resulted in damages being awarded to two competitors. 

The expense brought the company's overall net loss to $238.3 million, a 187 per cent turnaround from last year's $276.7 million profit.

Cochlear shares rose almost 10 per cent to $218.02 in late afternoon trading.

Cochlear had warned of a hit to its profit as early as April when the company's implant sales revenue dropped 60 per cent. On Tuesday the company confirmed volumes of cochlear implant sales and surgeries were returning in developed markets but that risks remained due to the pandemic uncertainty.

"While the resumption of elective surgeries is a positive, we caution that there is still risk, noting second waves of COVID-19 cases are likely to remain a reality for some time and may result in new restrictions to elective surgeries complicating recovery plans and timing," the company said in an update to investors.

Cochlear shored up its balance sheet earlier this year with a $1.1 billion capital raising and Mr Howitt said the business was continuing to accelerate its research and development spending in the face of pandemic conditions.

"It's important because we can continue to improve hearing outcomes," he said.

Cochlear received Food and Drug Administration Approval for an app-based servicing tool called Remote Check, which the company is hoping will form part of a longer-term "structural change" towards telehealth and connected care technology that does not require hearing implant users to go into a clinic for assistance.

The business will not provide profit guidance for the 2021 year due to the uncertainty of the COVID-19 recovery globally.

Head of equities research at $12 billion funds manager Ausbil, Nicholas Condoleon, said it was understandable that the company didn't provide a clearer outlook. "I thought it was a pretty pragmatic view. Obviously the recovery path [for the business] is going to be dictated by the virus to a large extent," he said.

Earnings per share dropped 183 per cent compared to last year — 2019 earnings were $4.80 per share compared with 2020's loss of $4.00.

No final dividend was declared.