Cochlear Ltd (ASX: COH) shares are falling on Tuesday morning after the hearing implant giant gave investors another issue to digest.
The Cochlear share price is currently down 2.12% to $142.05 after the company confirmed it has been hit with a shareholder class action.
It's another setback in what has already been a difficult year, with Cochlear shares down around 50% over the past 12 months.
The stock has recovered from its April low of $88.74, but remains well below the $296.50 reached over the past year.
So, what exactly is the class action about?
Image source: Getty Images
Why are Cochlear shares falling?
In its latest ASX announcement, Cochlear revealed that it has been hit with a class action in the Supreme Court of Victoria.
The claim involves investors who bought Cochlear shares between 15 August 2025 and 21 April 2026, when the company was providing its FY26 profit guidance.
Cochlear didn't say too much about the case this morning, other than confirming it denies the allegations and plans to defend itself.
However, litigation firm Echo Law has provided a bit more detail.
It claims Cochlear engaged in misleading or deceptive conduct and failed to meet its continuous disclosure obligations.
Basically, the case centres on what Cochlear told investors about its FY26 profit outlook, and whether enough information was provided along the way.
And the dates are worth keeping in mind.
The period ends on 21 April, just one day before Cochlear slashed its profit guidance and its shares crashed more than 40%.
What happened in April?
The class action comes after a brutal few months for Cochlear shareholders.
On 22 April, the company cut its FY26 underlying net profit guidance to between $290 million and $330 million.
That was a big drop from its original forecast of between $435 million and $460 million.
Investors didn't take the news well, with Cochlear shares tanking over 40% on the day to close at $99.58.
At the time, Cochlear blamed weaker implant demand, hospital capacity constraints, and fewer patient referrals across developed and emerging markets.
Uncertainty in the Middle East also weighed on sales, while lower production volumes and currency movements added to the pressure.
It wasn't the first warning either.
Back in February, Cochlear had already told investors that FY26 profit was likely to come in at the lower end of its original guidance range.
Where does Cochlear go from here?
Despite the problems earlier this year, Cochlear has managed to recover a decent chunk of its April losses.
The company eventually reported FY26 underlying net profit of $322.4 million, down 22% from the previous year.
Looking ahead, Cochlear expects underlying net profit of between $330 million and $350 million in FY27, representing growth of around 2% to 9%.
There are some positives heading into the new financial year as well.
The Nucleus Nexa implant represented more than 95% of developed market implant sales by June, while Cochlear expects further product launches during FY27.
