Cochlear is one of the world’s leading medical device businesses. Cochlear designs, manufactures and supplies the Nucleus cochlear implant, the Hybrid electro-acoustic implant and the Baha bone conduction implant. Graeme Clark invented the first device in 1982, allowing first-user Graham Carrick to hear for the first time for 17 years. Some of the most recent modifications allow users to play sound from their phone directly into their implant.
Cochlear said that there has been a “significant” decline in surgeries across major markets. The company was expecting this decline.
Sales revenue across the business dropped around 60% in April 2020 with cochlear and acoustic implants most severely affected. Cochlear implant unit sales declined by approximately 80% across developed countries with most elective surgeries cancelled in US and Western Europe.
The market was expecting this, it’s why the Cochlear share price is down 28% from 19 February 2020.
Thankfully, Chinese surgeries recommenced in late February and continued to recover throughout April. Surgeries are now running close to pre-coronavirus run-rates.
Cochlear’s Services business, which represents about 30% of regular revenue has also been hurt, with April sales dropping by 30%.
The company’s remote servicing capability, including Cochlear Link and Remote Check, assists clinicians and recipients.
What’s Cochlear doing?
It has significantly reduced non-essential spending and capital expenditure until there is a sustained increase in surgeries. It has frozen hiring and implemented temporary pay reductions for leadership.
Cochlear is still investing in R&D and its liquidity has been strengthened with a $1.1 billion capital raising and a $225 million increase in debt facilities.
Is the Cochlear share price a buy?
With economies starting to open again, it seems Cochlear may have already faced the worst of it. It’s going to take time for life to get back to normal, but a second wave could cause more restrictions on surgeries.