Cochlear downgrades FY25 earnings guidance, unveils smart cochlear implant system

Cochlear Ltd has lowered its earnings guidance amid slower-than-expected sales growth, just as it unveils the Nucleus Nexa System, its world-first smart cochlear implant with upgradeable firmware.

While the guidance revision initially sent shares down by nearly 9%, the stock has since rebounded, as investors weigh the potential of the new technology alongside the company's updated financial outlook.

A new offering in cochlear implants

Cochlear's Nucleus Nexa System introduces several new features, including upgradeable firmware that allows recipients to access future updates for both the implant and sound processor.

The Nucleus 8 Nexa Sound Processor, powered by a new rechargeable battery, is smaller and lighter than its predecessor, with an all-day battery life. The system also incorporates internal memory, enabling recipients to store their personalised hearing settings on the implant, which can be transferred to any compatible sound processor, potentially reducing the need for frequent clinic visits.

Cochlear CEO Dig Howitt said the system is the result of a 20-year investment in research and development.

“The Nucleus Nexa System builds upon Cochlear's industry-leading portfolio of electrodes, which are designed to optimise the electrode-neural interface and protect cochlea health and opens the door to even greater hearing potential for patients into the future,” he said.

FY25 earnings guidance downgraded

In a separate announcement on Thursday, Cochlear updated its earnings guidance for the 2025 financial year, citing slower-than-expected sales growth in recent months. The company now forecasts underlying net profit to range between $390 million and $400 million, a downgrade from previous expectations.

The revision is primarily due to weak growth in the Services revenue segment, which is now expected to decline by low double digits for FY25, compared to an earlier forecast of a single-digit decline. While Cochlear remains optimistic about future revenue growth with its introduction of the Nucleus Kanso 3 Sound Processor, the updated guidance reflects the challenges it faces in certain markets.

Despite this, the company expects cochlear implant units to increase by around 10% in FY25, with growth primarily driven by emerging markets. However, growth in developed markets has been hampered by slower market expansion and a slight loss of market share in some countries.

Cochlear shares see a slight bounce

Cochlear shares fell nearly 9% following the announcement of the guidance downgrade, but as of 1 pm AEST on Thursday, the stock had recovered to around $271, suggesting a positive investor reaction to the long-term prospects of the Nucleus Nexa System and Cochlear’s growth in emerging markets.

The company will provide further details in its full-year results, which are scheduled for release on August 15.