Cochlear hearing implants rebound back to pre-pandemic levels; shares inch higher
Cochlear's revenue rose 10% amid a rebound in hearing plants and recovery in surgery deferrals
Source: iStock
Mentioned
KEY POINTS
- Cochlear revenues rose 10% thanks to a rebound across all three business divisions: Implants, Services and Acoustics
- Statutory profits fell -11% reflecting $101.8m worth of one-off benefits from FY21
- Cochlear expects to grow underlying profits by 5-10% in FY23
Demand for Cochlear's (ASX: COH) hearing implants rebounded back above pre-pandemic levels in FY22, at 38,182 units compared to 34,083 units in FY19.
The US market did most of the heavy lifting, with implant volumes up 20% compared to pre-covid levels, while markets including UK and Australia remain impacted by elective surgery deferrals and labour shortages.
Underlying profits rose 18% to $277m which was ahead of Morgans expectations of $274.7m. The broker was rather cautious about the stock heading into earnings season, saying that "the growth trajectory remains at the mercy of covid impacts and constrained operating theatres, but these issues appear more temporary than structural."
Results at a glance:
Full year | 2022 | 2021 | % change |
|---|---|---|---|
Revenue ($m) | 1,641.1 | 1,493.3 | 10 |
Gross margin (%) | 75 | 73 | 2 pts |
Operating expenses ($m) | 868.4 | 755.2 | 15 |
Underlying net profit ($m) | 277.0 | 234.0 | 18 |
Statutory net profit ($m) | 289.1 | 323.8 | -11 |
Final dividend (cps) | 145 | 140 | 4 |
Total dividends (cps) | 300 | 255 | 18 |
Source: Cochlear | Table Market Index
Well-rounded growth
Cochlear implant sales rose 3% to $953.2m or 57% of Group revenues. Services and Acoustics segments drove most of the top-line growth, with revenues up 15% and 28% respectively.
Commenting on services growth, Cochlear said "sound processor upgrade revenue experienced strong growth, particularly in the first half, following the restricted access to clinics during COVID lockdowns."
New products and a recovery from covid-related surgery delays supported the outsized 28% revenue growth for the Acoustics segment. In FY22, Cochlear released two near hearing performance products, the Osia 2 System and Baha 6 Max Sound Processor.
Note: Statutory profits fell reflecting $101.8m worth of one-off benefits in FY21.
FY23 outlook
Cochlear said it expects to deliver underlying profit of $290m to $305m in FY23, up 5-10% compared to FY22. Adjusted for cloud computing-related expenses, profit growth would increase to 8-13%.
FY23 net profit is expected to skew towards the second-half as Cochlear expects "trading conditions to progressively improve across the year." But warned that "intermittent covid-related hospital or region-specific electric surgery restrictions likely to continue."
Cochlear share price chart
