Cochlear (COH) H2 2025 earnings summary

Executive summary

• Sales revenue grew 4% (3% in constant currency) to $2,356 million for FY25, with underlying net profit up 1% to $392 million and statutory net profit up 9% to $389 million year-over-year.

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

• Strong 9% growth in cochlear implant revenue, with 12% growth in systems, especially in developed and emerging markets.

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

• Employee engagement remained strong at 80%, with significant progress in environmental responsibility, including 99% renewable energy use at manufacturing facilities.

Financial highlights

• Gross margin was 74%, down 1 percentage point year-over-year; underlying net profit margin was 17% (18% pre-cloud investment).

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

• Operating cash flow and free cash flow declined, mainly due to higher working capital and inventory build ahead of product launches.

• Inventory increased $108 million; working capital rose to 30% of sales revenue due to inventory and receivables.

• CapEx totaled $103 million, focused on manufacturing capacity expansion in Australia and Malaysia.

Outlook and guidance

• FY26 underlying net profit guidance is $435–460 million, representing 11–17% growth on FY25, or 5–11% on a cloud-adjusted basis.

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

• Emerging markets to deliver strong unit growth but with a higher mix of lower-tier products, especially in China, creating revenue and margin headwinds.

• Services and acoustics revenue expected to return to growth, with double-digit growth in acoustics from Osia and Baha 7 launches.

• Gross margin guided to remain around 74%, with R&D investment at ~13% of sales revenue.