Cochlear Ltd Acquires Oticon Medical’s Neuro Cochlear Implant Business

Australia-based Cochlear Ltd has completed its acquisition of Oticon Medical’s Neuro cochlear implant (CI) system from Demant, a leading Danish hearing aid manufacturer and parent group of Oticon Medical, for a zero headline purchase price.

The acquisition follows regulatory hurdles that prevented the additional sale of Demant’s Ponto bone-anchored hearing systems (BAHS) to Cochlear. Last June, the UK's Competition and Markets Authority (CMA) approved the sale of Oticon Medical’s cochlear implant business to Cochlear, but blocked the sale of its BAHS system due to competitive concerns.

“We welcome Oticon Medical’s cochlear implant customers to Cochlear and remain committed to supporting the long-term hearing outcomes of these 20,000 patients,” said Cochlear CEO and President Dig Howitt in a press statement. “Customers are our priority as we work closely with Demant for a smooth transition.

“Driven by our mission to innovate and deliver a lifetime of hearing outcomes,” continued Howitt, “we will seek to provide Oticon Medical’s cochlear implant customers continued support with a lifetime of hearing solutions. We will develop and commercialise next generation sound processors and services to enable the vast majority of customers to transition to Cochlear’s technology platform over time. We will also support customers with continued access to repairs and replacements of current Oticon Medical cochlear implant technology for as long as feasible.”

Cochlear Ltd says Oticon Medical’s cochlear implant business will be integrated into the company over the next few months.

Demant’s original deal with Cochlear, announced in April 2022, entailed the complete divestment of Oticon Medical for DKK 850 million (US$120 million). After that deal was effectively blocked by the CME and other regulatory authorities, the two companies came together on a transfer of only Oticon Medical's cochlear implant system.

Cochlear Ltd is the global market leader in hearing implants with its Baha 6 and Osia 2 bone conduction implants and Nucleus cochlear implants.The Cochlear Nucleus system alone has about a half-million users worldwide. Founded in 2009, it's estimated Oticon Medical has around 20,000 cochlear and 55,000 acoustic implant users.

Cochlear expects to incur integration costs in FY24 of around $30 million pre-tax, primarily related to restructuring. This amount will be reported as a non-recurring significant item, with no impact on Cochlear’s FY24 underlying net profit guidance of $385-400 million.

Demant has undergone a portfolio cleaning of less profitable business units in recent years to improve its profitability and concentrate on its core hearing aid, retail, and hearing care diagnostics divisions. In 2021, it divested its FrontRow communications division, and it is now reported to be looking at divesting EPOS, its enterprise headset division.