The Cochlear Limited (ASX: COH) share price is pushing higher on Tuesday after the release of its first quarter update.
At the time of writing, the hearing solutions company's shares are up 1.5% to $220.64.
How did Cochlear perform in the first quarter?
For the three months ended 30 September, Cochlear revealed that its cochlear implant revenue was 94% of what it achieved a year earlier in constant currency.
It notes that unit volumes declined by 14%, with developed markets growing low single‐digits while emerging markets were down around 40%.
Pleasingly, the company's Services revenue continues to recover. First quarter revenue (in constant currency) was around 86% of what it reported in the prior corresponding period.
It was a similar story for Acoustics revenue, which was approximately 89% of the revenue it achieved a year earlier. Management notes the strong uptake of the Cochlear Osia 2 System in the US and the resumption of acoustic surgeries in the UK.
How are different markets performing?
Management advised that trading activity continues to be mixed because of the COVID-19 pandemic.
In developed markets, the US, Germany and Korea are showing good growth on last year. Whereas European markets, including the UK, Italy and Spain, have been regaining momentum more recently as clinics re‐open and surgical throughput grows.
Pleasingly, its new candidate pipeline is rebuilding quickly with clinical assessments close to pre‐COVID‐19 levels in many markets. In addition, the company has experienced solid lead generation from its direct‐to‐consumer activities.
However, while current developed market surgery momentum is positive, the company has warned that there is still a lot of uncertainty. Especially given recent second and third waves of COVID‐19. This may result in new restrictions to elective surgery, complicating recovery plans and timing.
Over in developing markets, surgeries in China are growing but most other countries remain well behind last year. Management warned that there continues to be uncertainty over the time it will take for some emerging markets to recover.
New product excitement.
Cochlear's CEO & President Dig Howitt, commented: "We continue to be pleased with the pace of recovery across our developed markets. We have a suite of new products that are just starting to be launched and are generating excitement and great feedback. Our investment priorities this year will be focused on strengthening our competitive position and continuing to invest in many of our growth programs to set ourselves up for FY22."
Cochlear also advised that it expects to benefit from the recently announced changes to the R&D tax concession.
It notes that the combination of the lifting of the $100 million cap and the increase in the concession rate would have increased the FY 2020 deductible amount from $8.5 million to $16.2 million after tax. The change will be effective from 1 Jul 2021.
