Cochlear’s new implant system offers direct streaming of phone calls and memory settings
The Aussie biotech has warned on its business in developed markets as it expects a turnaround in services revenue in FY26.
Slower-than-expected sales growth over the past few months has led hearing implants giant Cochlear to cut its FY25 underlying profit expectations.
The near-$18bn group is now guiding to an underlying net profit of between $390m and $400m, comparing to its FY24 result of $386.6m.
At the time of its first-half results release in February, Cochlear had forecast the figure to be at the lower end of its $410m to $430m guidance range provided in August 2024, incorporating a lower contribution from services revenue and higher cloud-related investment.
Therefore, based on the midpoints it is roughly 5 per cent downgrade.
The group now expects a “low double-digits decline” (compared to its earlier forecast of a single digit decline) in its services revenue for FY25 after two years of strong growth following the launch of the Nucleus 8 Sound Processor.
Services revenue is expected to lift in FY26 in response to its work on identifying and connecting with recipients who could benefit from the latest sound processing technology, including the introduction of its new off-the-ear Nucleus Kanso 3 Sound Processor.
Cochlear implant unit sales are still expected to increase by around 10 per cent for FY25, with growth weighted to the emerging markets. But, the higher-value developed markets have been impacted by slower-than-expected market growth and a small loss of market share in a few countries, the group told investors.
The final result, due on August 15, is subject to June trading, audit review and board approval.
The downgrade comes after a “life changing” new product from Cochlear was launched, which will allow implant users to stream mobile calls directly to their devices and upgrade their implants like any other smart device in future.
The Nucleus Nexa System, designed and manufactured in Australia, launches on June 16 across Asia-Pacific and Europe following successful trials with 12 Australian patients earlier this year.
Built around the company’s new Nexos chip, the system features upgradeable firmware which enables added features over time. It also includes built-in memory, allowing users who lose or damage external sound processors to transfer their personalised settings to replacement devices.
Melbourne accountant Stephen Dyt, one of the first to trial the new product, describes the improvement as “not just chalk and cheese, it’s chalk and ostrich”.
“It’s unbelievably different,” Mr Dyt told The Australian. “I kept waiting for it to sound normal to me, but then I realised that my old normal was rubbish … I’m hearing sounds I’ve honestly never heard before in my life, such as the swishing of leaves in a tree.”
Mr Dyt, who was diagnosed with hearing loss at age six, says the technology has transformed his professional life. “I have many Teams and Zoom calls … I can hear everyone way better than ever before.”
Professor Robert Briggs, otologist and medical director of the Melbourne cochlear implant program who implanted Mr Dyt’s system, emphasised the transformative potential.
“This can be really life changing for people. It allows them to get back to work, to communicate with friends and family,” he said.
Professor Briggs noted children as young as 12 months with hearing loss can benefit significantly, as they can “develop normal speech and be really equivalent to their normal hearing peers”.
Cochlear chief executive Dig Howitt said the Nexa System was a concept “20 years in the making” and reflects the company’s long-term commitment to research and development.
“We’ve spent over $3bn on R&D over time, we spend four per cent of our revenue each year in R&D,” Mr Howitt said. “Innovation like this just shows what Australian companies are capable of.”
In February, Cochlear reported an underlying net profit of $206m, a 7 per cent rise.
Cochlear, however, still faces challenges, citing the lack of a clear clinical path to referral.
People realise they should check on things such as their cholesterol as they age, according to Mr Howitt, but often do not want to come to terms with declining hearing capabilities.
For Mr Dyt, whose family has a history of hearing loss, the new technology offers hope for younger relatives beginning to experience degenerative hearing.
“I would have loved to have seen my grandmother with these,” said Mr Dyton. “She described her deafness as being stuck in a box. I was born in an era where I can get a cochlear implant and not be stuck in that box.”
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Originally published as Cochlear’s new implant system offers direct streaming of phone calls and memory settings
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