The Cochlear Limited (ASX: COH) share price is crashing lower on Monday after becoming the latest company to withdraw its earnings guidance.
The hearing solutions company's shares are down 18% to $176.73 at the time of writing.
What did Cochlear announce?
This morning Cochlear announced that it would be withdrawing its guidance in response to the spread of coronavirus (COVID-19).
The company notes that the spread of the virus has caused a growing number of countries to defer elective surgeries, including cochlear implant surgeries.
CEO and President, Dig Howitt, explained: "Since the update we provided on 18 February, we have seen COVID-19 spread rapidly across many countries. We are now seeing a growing number of health authorities either recommend or enforce surgery deferrals."
This is particularly the case in the United States where the US Surgeon General has just urged hospitals and healthcare systems to consider suspending elective surgical procedures. This has been done in an effort to reduce the strain on the healthcare system until the rate of infection of COVID-19 is under control.
What will the impact be?
Cochlear expects the aforementioned actions to impact surgeries in its major markets, particularly the US and Western Europe.
As a result, Mr Howitt expects Cochlear "to experience a significant decline in sales in the immediate future."
"There is a high level of uncertainty surrounding the impact of COVID-19 in terms of the extent and duration of the reduction in surgeries and the ability for recipients to access sound processor upgrades. As a result, we are not in a position to provide an earnings outlook to the market at this time and withdraw our earnings guidance for FY20," he added.
The company notes that it has a conservatively geared balance sheet and headroom in existing debt facilities. It is also confident it can arrange increased debt facilities to assist with meeting future cash requirements.
Cochlear is also reducing all non-essential spending and capital expenditure for the balance of the financial year. In addition, the business has implemented a hiring freeze.
The chief executive remains positive on the future, though. Noting that the "longer-term opportunity to grow our markets remains unchanged and we have a strong balance sheet that enables the business to weather the expected short-term decline in demand caused by COVID-19."
Other companies withdrawing their guidance today because of the coronavirus outbreak include media and advertising company oOh!Media Ltd (ASX: OML) and travel technology company Serko Ltd (ASX: SKO).
