Cochlear (COH) investor relations material

Executive summary

• Revenue grew 4% to $2,356m and net profit rose 1% year-over-year, with 9% growth in cochlear implant revenue and 12% growth in systems.

• Services revenue declined 10%, mainly due to a smaller eligible base and US consumer uncertainty, but stabilization is expected with modest growth in FY26.

• Strong growth in emerging markets (over 20%), but lower-tier volume and volume-based pricing in China present headwinds for revenue and profit.

• The Nexa system, a major product launch after 20 years of R&D, is expected to drive future growth and competitive advantage.

• Over 53,000 people received cochlear or acoustic implants, delivering an estimated net societal benefit of over $9 billion.

Financial highlights

• Sales revenue increased 3% in constant currency; gross margin declined by 1 percentage point to 74% due to emerging market mix and Chengdu facility ramp-up.

• Operating expenses rose 5%, slightly ahead of revenue, with continued R&D investment; $50M reduction in employee short-term incentive provision due to below-target results.

• Net margin pre-cloud was 18%, underlying net profit margin 17%.

• Operating cash flow declined by $150M, mainly from higher working capital and tax payments; net cash at year-end was $276m.

• CapEx was $103M, focused on capacity expansion in Lane Cove and Kuala Lumpur.

Outlook and guidance

• FY26 net profit guidance of $435M–$460M (11–17% reported growth); excluding cloud, 5–11% growth on underlying basis.

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

• Emerging markets to deliver strong unit growth but modest revenue/profit due to low-tier mix and China headwinds.

• Gross margin to remain around 74%, with R&D spend to rise as a proportion of sales; net profit margin just below 18% as STI provision is rebuilt.

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