Image source: Shutterstock

Highlights:

  • Cochlear shares dropped 9% after the company revised its FY25 profit guidance downward.

  • FY25 underlying net profit is now forecast between $390 million and $400 million, slightly above FY24’s $387 million.

  • The company announced the launch of the world’s first smart cochlear implant system — the Nucleus Nexa System — which offers future firmware upgrades without hardware replacement.

Cochlear Ltd (ASX:COH) shares fell significantly on Thursday, trading 9% lower in the morning session at $246.52. The sell-off was triggered by a downgrade in the company’s earnings guidance for the financial year ending 30 June 2025.

Revised Outlook for FY25

The hearing implant manufacturer announced that it now expects its underlying net profit for FY25 to be in the range of $390 million to $400 million. This represents only a modest increase compared to FY24’s profit of $387 million and falls short of its earlier projection, which forecasted earnings at the lower end of a $410 million to $430 million range.

The revision reflects a sharper-than-expected decline in its Services segment. While the company had initially anticipated a single-digit revenue drop in Services following growth from the Nucleus 8 Sound Processor rollout, that decline is now forecasted to be in the low double digits.

Management attributed the downgraded guidance to reduced growth in developed markets and a minor loss of market share in select countries. Despite this, the company maintained its outlook for implant unit volumes to grow by around 10%, although this growth is weighted toward lower-margin emerging markets.

Future Recovery Expected in FY26

Cochlear indicated that strategic initiatives are in place to stimulate a recovery in FY26. These include efforts to boost service uptake, notably through the recently launched off-the-ear Kanso 3 Sound Processor. The company believes such innovations will help stabilise and grow revenue in the next fiscal year.

Launch of the Nucleus Nexa System

In a separate announcement, Cochlear unveiled the world’s first smart cochlear implant system — the Nucleus Nexa System. This next-generation solution introduces upgradeable firmware capabilities, enabling users to receive future software enhancements without the need to replace hardware.

The new system includes the Nucleus 8 Nexa Sound Processor, which Cochlear claims is the smallest and lightest available in the market. It features an all-day battery life and built-in internal memory that stores user hearing settings directly on the implant. This design aims to enhance user convenience and reduce the frequency of clinic visits.

Cochlear describes the Nexa System as a major step forward in patient care, with a focus on future-ready technology integration and long-term device functionality.