The Wall Street Journal reported that Sonova Holding AG, parent of worldwide hearing aid market leader Phonak and other brands of hearing-aid and hearing-implant suppliers, will speed up an ongoing reorganization and cut staff by as many as 100 employees following the decision by its subsidiary Advanced Bionics (AB) to pull its cochlear implant products off the market until product quality issues are resolved. In November, the U.S Food and Drug Administration (FDA) announced that Advanced Bionics is voluntarily recalling its HiRes 90K cochlear implant device following two instances of a malfunction that required the surgical implant’s removal after “recipients experienced severe pain, overly loud sounds and/or shocking sensations at 8-10 days after initial activation of their device.”
According to the Wall Street Journal story, the recall could create a revenue shortfall of as much as $62.5 million USD if it continues for as long as six months — a small fraction of Sonova’s more than $1.5 billion USD in annual revenue. Financial analyst reactions to the recall and to Sonova’s overall financials have varied, most recently with the stock sliding on a downgrade to “underperform” by Cheuvreux investment analysts on Jan. 14 and bouncing back on a subsequent upgrade to “buy” by BofA Merrill Lynch analysts on Jan. 19.
Sonova’s chief financial officer gave a bullish presentation at the Helvea Swiss Equities Conference in Bad Ragaz, Switzerland on Jan. 14 in which he predicted unit-sales growth for all Sonova brands of between four and five percent and organic revenue growth of between eight and ten percent, with strong profit margins, for the 2010/2011 fiscal year.