Demant (DEMANT) Investor Update summary

Strategic decision

• Intended divestment of Oticon Medical’s cochlear implant and bone anchored hearing systems businesses to Cochlear for DKK 850m; decision followed a review of strategic options and investment requirements.

• The path to global leadership in hearing implants was judged unachievable within a reasonable timeframe without disproportionate investment and significant dilution of profitability.

Transaction and patient transition

• Consideration comprises DKK 700m cash at closing and DKK 150m within 18 months; closing expected in H2 2022, subject to regulatory approvals, customary conditions and worker consultations.

• Cochlear committed to supporting existing Oticon Medical patients now and in the future, maintaining access to current technology during transition and developing next-generation processors and services.

Financial impact and outlook

• In 2021, Hearing Implants generated DKK 512m revenue and DKK -117m EBIT, reducing EBIT margin by 1.2 percentage points; excluding the segment, EBIT margin was 19.6%.

• Hearing Implants will be reported as a discontinued operation; 2022 EBIT outlook for continuing operations rises to DKK 3,600–3,900m from DKK 3,450–3,750m, while other outlook metrics are unchanged.

• Discontinued operations are expected to record a 2022 after-tax loss of DKK 150–200m; medium- to long-term outlook is unchanged.