Cochlear (COH) H2 2025 earnings summary

Executive summary

• Sales revenue grew 4% year-over-year to $2,356m, with net profit up 1% and a stable or increased dividend.

• Cochlear implant revenue rose 9%, with 12% growth in systems and over 53,000 people receiving implants globally.

• Services revenue declined 10%, mainly due to a smaller eligible base and U.S. consumer hesitancy.

• The Nexa system, a 20-year R&D effort, launched globally, offering significant technological advancements and competitive differentiation.

• Employee engagement remained strong at 80%, and 99% renewable energy use was achieved at manufacturing facilities.

Financial highlights

• Sales revenue up 3% in constant currency; gross margin declined by 1 percentage point to 74%.

• Operating expenses rose 5%, slightly ahead of revenue growth, with a $50 million reduction in employee short-term incentive provision.

• Operating cash flow declined by $150 million, mainly due to higher working capital and tax payments.

• Inventory increased $108 million ahead of product launches; trade receivables up $90 million.

• CapEx totaled $103 million, focused on manufacturing capacity expansion in Lane Cove and Kuala Lumpur.

Outlook and guidance

• FY2026 net profit guidance: $435–$460 million (11–17% reported growth; 5–11% excluding cloud costs).

• Developed markets expected to see over 10% unit growth, weighted to the second half due to Nexa rollout.

• Gross margin guided to remain around 74%, with R&D as a higher proportion of sales.

• Cloud investment of ~$80 million after tax planned for ERP and manufacturing systems.

• Long-term sales revenue growth target remains at 10%.