The Cochlear Limited (ASX: COH) share price is edging lower after providing an update this morning.
At the time of writing the hearing solutions company's shares are down slightly to $181.22.
What did Cochlear announce?
This morning Cochlear released an update on the tough trading conditions it is facing because of the pandemic.
According to the release, as was forewarned in March, the company has experienced a substantial, temporary negative impact on cochlear implant surgeries in the US and Western Europe as hospitals prioritise their COVID-19 responses.
During the month of April, sales revenue across the business fell by ~60% on the prior corresponding period. The sales of cochlear and acoustic implants were the most severely affected.
Cochlear implant unit sales declined by ~80% across developed markets, with most elective surgeries postponed across the US and Western Europe. In addition to this, the company notes that many ear, nose, throat (ENT) surgeons have been diverted to help treat COVID-19 patients.
Positively, in China things are recovering quickly. Surgeries recommenced in late February and continued to recover throughout April.
As a result, surgeries are now running close to pre-virus run rates despite Beijing, the largest surgery centre, remaining largely closed to elective surgery. Though, the majority of cochlear implants in China are for children.
Also being impacted by the pandemic is the Services business, which represents around 30% of business-as-usual revenue. Its sales declined by ~30% during the month of April.
Management advised that while many recipients have been able to access sound processor upgrades remotely, clinic closures have delayed access for other users.
In light of these sales declines, Cochlear is currently cash flow negative and expects to continue being so for the coming months.
However, thanks to its recent capital raising, an increase in its debt facilities, and its cost cutting, management believes its liquidity position is strong enough to navigate these tough times.
Outlook.
Management expects the immediate term to be tough for the company but remains very positive on its long term outlook.
CEO & President, Dig Howitt said, "Longer-term, there remains a significant, unmet and addressable clinical need for cochlear and acoustic implants that is expected to continue to underpin the long-term sustainable growth of the business. Following the capital raising and expansion of debt facilities, we have strengthened our balance sheet and liquidity position, which enables the business to weather the expected temporary decline in demand caused by COVID-19, while continuing to progress the R&D pipeline."
