Cochlear confirms 2024 profit guidance

CEO Dig Howitt says there is still significant, unmet and addressable clinical need for cochlear and acoustic implants, underpinning the company’s growth.

The boss of bionic ear implant company Cochlear has reiterated the strong underlying growth engines of significant, unmet and addressable clinical need for cochlear and acoustic implants that should underpin the long-term profitability of the business.

Chief executive Dig Howitt told shareholders of the $16.7bn company on Tuesday that he expected market share gains from fiscal 2023 to stabilise and for there to be fewer Covid-19 related backlog surgeries, fuelling further implants this year.

In August, Mr Howitt said a pandemic-fuelled backlog of elective surgeries had largely been cleared – a move that sparked a 4 per cent jump in the company annual profit to $300.5m for 2023.

This would all feed into “solid market growth” in the year ahead, he said.

“At this stage, we expect solid market growth rates to drive high single digit growth in our cochlear implant units for fiscal 2024.”

Addressing shareholders at its annual meeting, Mr Howitt also highlighted the company’s strong balance sheet and the opportunities for further growth and value for shareholders, underpinned by the still unmet demand for implants.

“As we look to the future, we remain confident of the opportunity to grow our markets. There remains a significant, unmet and addressable clinical need for cochlear and acoustic implants that we expect to continue to underpin the long-term sustainable growth of the business.

“Our clear growth opportunity and strategy, combined with a strong balance sheet, mean we are well-placed to create value for our stakeholders now, and over the long term.”

Cochlear also reiterated its earnings guidance on Thursday, with the group reiterating that it expects a 16-23 per cent rise in its underlying profit in constant currency terms and not including any impact from the proposed acquisition of Oticon Medical cochlear implant business.

Mr Howitt said the services segment was expected to perform strongly, with continuing strong demand for upgrades to the Nucleus 8 Sound Processor. Acoustics growth rates are expected to be lower than 2023, however, with continuing growth from the rollout of the Osia 2 System to be moderated by a smaller contribution from upgrades to the Baha 6 Max Sound Processor.

The board’s dividend policy continues to target a 70 per cent payout of underlying profit, Mr Howitt said.

For fiscal 2023, Cochlear posted a revenue jump of 17 per cent to $1.94bn, beating analyst estimates of $1.2bn.

Sales in developed markets grew 15 per cent after Nucleus 8 was launched in Western Europe from October and the US in November. Emerging markets also recorded strong growth, with sales jumping 20 per cent, with India and Latin America driving most of the gains. Services revenue vaulted 18 per cent to a record $239.9m.

In August, Cochlear launched its next generation Cochlear Osia System, the first and only active bone conduction system that allows patients to undergo MRI scans without the need for surgery. It has been launched in the US and will roll out to other markets as regulatory approvals are attained.

“Looking to the coming years, we are excited about the development pipeline. We have a full suite of new products and services being developed that aim to improve hearing outcomes even further and integrate even more seamlessly into the lives of our recipients,” Mr Howitt said.

He added that Cochlear had commenced a progressive on-market share buyback program in March with the aim of reducing the cash balance to around $200 million over a number of years.

“This buyback program aligns with the interests of our shareholders by reducing shares on issue, providing gradual accretion in earnings per share and dividends per share over the long term.”