Cochlear’s HY26: 1% Revenue Rise, 9% Profit Drop Amid Contract Delays

Modest Revenue Growth Amid Transition Challenges

Cochlear Limited’s half-year results for the six months ending December 2025 reveal a company navigating the complexities of launching its next-generation cochlear implant system. Sales revenue edged up 1% to $1.176 billion, reflecting steady demand despite a challenging contracting environment. However, underlying net profit declined 9% to $195 million, primarily due to a longer-than-anticipated contract renewal process for the Nucleus® Nexa system, the world’s first smart cochlear implant with upgradeable firmware.

Nucleus Nexa System – Innovation Meets Market Realities

The transition to the Nucleus Nexa implant system, initiated in June 2025, has been a focal point for Cochlear. While the product has been well received by professionals and recipients, with market share gains evident by year-end, the contracting process; particularly in developed markets; proved more protracted than expected. This delay, coupled with modest price increases, tempered revenue growth in the first half. Notably, key markets saw approximately 10% year-on-year growth in cochlear implant units during November and December, with 80% of units sold in December being the new Nexa system.

Operational Highlights and Market Segments

Developed markets experienced low single-digit revenue growth, while emerging markets saw a volume increase exceeding 15%, albeit with a revenue decline due to a higher proportion of lower-tier product sales, especially in China. Services revenue dipped slightly by 1% in constant currency terms, with growth in developed markets offset by declines in emerging regions. Acoustic implants faced a 3% revenue decline, impacted by competitive pressures in the US and UK, though Western Europe and Australia showed solid growth.

Strategic Focus and Sustainability Commitments

Cochlear continues to invest significantly in research and development, allocating around 13% of sales revenue to innovation and pipeline development. The company is also restructuring parts of its organisation to enhance operational effectiveness and better serve the evolving needs of its market. Sustainability remains a core pillar, with commitments to net-zero carbon emissions in operations by 2030 and across the value chain by 2050, alongside efforts to grow the hearing implant market by helping at least 8% more people hear each year.

Outlook – Strong Second Half and FX Sensitivity

Looking ahead, Cochlear expects a robust second half driven by the broad availability of the Nexa system, growth in Services, and improved momentum in Acoustics. The company maintains its full-year underlying net profit guidance at the lower end of $435-460 million, factoring in the first half’s contracting delays. Foreign exchange rates pose a notable risk; if the Australian dollar remains at current levels, underlying net profit could be reduced by approximately $30 million. Cochlear’s strategic priorities remain focused on sustainable growth, market leadership, and delivering lifetime hearing solutions to a growing global population.