The Cochlear Ltd (ASX: COH) share price is in focus today after the hearing implant leader posted FY26 results showing underlying net profit reached $322 million, matching the upper end of revised guidance, while sales revenue rose 2% in constant currency to $2.34 billion.
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What did Cochlear Ltd report?
- Sales revenue up 2% in constant currency to $2,343.4 million
- Underlying net profit of $322.4 million, down 22% year-on-year
- Gross margin fell from 74% to 71% due to sales mix and production variances
- Final ordinary dividend of $1.30 per share (85% franked), bringing FY26 dividends to $3.45 per share (down 20%)
- Operating cash flow climbed to $368.0 million, up $130 million on FY25
- R&D spend increased 15% as investment in product pipeline ramped up
What else do investors need to know?
Cochlear advanced its strategy with the launch of the Nucleus Nexa System, the first smart cochlear implant boasting upgradeable firmware, which quickly made up over 95% of implant sales in developed markets. Despite this success, gross margins were impacted by a greater mix of lower-priced units in emerging markets and by softer demand, particularly in Western Europe and parts of Asia.
The company continued to focus on managing fixed costs, freeing up capacity for $25 million of extra investment planned for FY27. Free cash flow also rose markedly, while net cash decreased, partly from continued cloud investment and dividends. The on-market share buyback program remained inactive as net cash sat below the company's preferred level.
What's next for Cochlear?
Looking ahead to FY27, Cochlear expects low single-digit constant currency revenue growth and underlying net profit between $330 million and $350 million. Management aims to lift developed market adult growth rates through greater medical engagement and scaling of referral pathways, supported by ongoing investment in R&D and innovation.
The dividend policy will continue targeting a 70% payout of underlying net profit. Gross margins are expected to remain similar to FY26, with ongoing cost discipline and further restructuring costs factored into the company's outlook.
Cochlear Ltd share price snapshot
The Cochlear share price has been one of the worst performers on the S&P/ASX 200 index (ASX: XJO) over the past 12 months with a decline of 55%.
