Cochlear Limited (COH) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the Cochlear Limited announcement conference call. [Operator Instructions] I would now like to hand the conference over to Mr. Dig Howitt, CEO. Please go ahead.

Good morning, everyone. Thank you for joining. Today, obviously, we've released just a trading update, given we're now some 6 weeks or 2 months in to seeing the impact of COVID-19 across the world. And I thought I'd just say a few brief -- make a few brief comments upfront, and then open up for questions. I think, just the broad summary is that we are -- what we're seeing happen is very much in line with our expectations. It's a very significant and very rapid decline in surgeries across developed markets. Also a decline in services, but less of a decline. We are starting to see some signs of some countries starting to -- going to restart surgery. It's very -- there's still enormous amount of uncertainty. So we don't know yet at what rate these countries will restart. We expect children to be given a priority as we restart, but we're not sure so much about adults yet. So I think that restart is happening a little bit ahead of when we had expected. However, there is still a significant risk. And as we outlined in the release, in Japan, in particular, and in Singapore, we've actually seen surgeries, after coming back, decline again. And obviously, there is further risk in that. So we're only a small way into this. There's still enormous amount of uncertainty. I think things are happening. The reduction happened in line with our expectations. We'll restart perhaps a little bit ahead, but it's still very difficult to determine exactly what the outlook would be. And that will vary by country. I think that's the other thing we're seeing is that different countries are working at different rates. And even within countries, and certainly the larger countries, we're seeing hospitals take different approaches and also move at different rates. So with that, I'm going to just stop there and hand it over -- open up for questions.

[Operator Instructions] Your first question today comes from Saul Hadassin with UBS.

Dig, can you hear me?

Yes, I can, Saul.

Just a quick one for me. The -- you mentioned in the release that, clearly, pediatrics is seen as a more acute type of surgery as opposed to a nonurgent procedure. Can you just remind us roughly what percentage of units sold as at, say, the end of first half '20 would have been pediatric implants for kids less than, say, 2 years as opposed to the older adolescents and adult population?

Yes. Yes, Saul. So it varies by country. So in emerging markets, it's 90% of our surgeries are in -- for children. I know some of them would be over 2 years, but children. Then in Germany, Australia and the U.S., 25% of our surgeries are in children. And then for most of the rest of the developed markets, it's 50% children, 50% adults.

Okay. And a difficult one to maybe answer. But if indeed elective surgeries return at a faster pace in key regions than what you had anticipated and remain there, and surgeries are dealt with appropriately, even if there are second, third and fourth waves, I mean can you considerably see yourself in a position where you're effectively undergeared and there's essentially the potential for capital management at some point in the next 6 to 12 months having raised -- increased the raising offer?

Look, I think it's, Saul, too early to tell that now. I would be surprised if we even know that in 6 months' time. Look, I think the path out of this is probably longer than that, given what we've seen so far is the impact -- the health impact and the impact on hospitals. What we haven't really seen yet is the economic impact and what that may or may not mean. So I think it will be a while before we know just where exactly we'll end up at the end of this and how long it will take for sort of revenue to return to where we were back in February.

Your next question comes from Steve Wheen with Evans & Partners.

I was just wanting to see if you could give some further color on the U.S. and what you're seeing there. Is April -- the month of April kind of appearing like as bad as it gets, and that it's improving from here? I mean I know it's early, but are you seeing signs of improvement in the U.S. specifically?

We are seeing signs of improvement in parts of the U.S. So virtually, all of the U.S. shut down in April, and we're starting to see some improvements. So should that continue, then April would be the bottom for the U.S. However, I think the risk of second wave infections, everything we're hearing and reading is quite significant. So it's too early to be sure with that at this stage. And we really are, in the U.S., particularly, seeing significant differences between hospitals and even hospitals in the same city, where we've seen in some cities, the hospital is opening up and doing surgeries in May and other hospitals closed by a shutdown and still not giving us an indication of when they will restart. So it's both -- there's both some regional issues and local hospital issues that impact what demand will look like.

Yes. Great. And I guess also within the U.S., have you come across or found any tangible milestones around the recovery rates in adults? Because clearly, that's what's been driving your growth in more recent times. Just trying to get an indication as to any little bright spots yet for the adult population.

Yes. So overall, too early to tell. And at this stage, all we have is some anecdotes, and too few anecdotes to draw any conclusions from that. And those anecdotes range from older people saying, "I want to stay out of the hospital," to older people leaving home saying, "I've had enough of isolation." Not being able to hear and getting into clinics saying, "I'll just move to get it -- I need to get my hearing back." But it's a handful of each at the moment. So it's too hard to draw any conclusions out of this. But something we're going to monitor closely is just how this people behavior change, if at all, as a result of time in isolation and so on.

Yes. So at this stage, an expectation that the growth -- or the decline in growth that you've seen in cochlear implants for April extending for a further 2 months at that same level, you'd be suggesting that, that's perhaps a bit too conservative. Is that right?

Certainly, across the developed markets, what we're seeing at the moment, it probably is a bit conservative, but there's still significant risk. I could say Japan is a great example of a country that looked like it was going through this pretty well without much an impact in surgery, and then just recently seen a significant decline. So good signs, but I'm very, very cautious even to forecast over the next 2 months based on the signs that we've seen so far.

Understood. And just lastly from me, it's kind of a little bit clearer from outside the fence on the top line. But I guess, where it becomes a little bit muddier is just on the cost line, particularly in regard to the assistance programs that you may or may not be receiving across various geographies. Have you got any way that we can factor that in or contemplate what sort of offsets you're getting to your cost base, either through things like JobKeeper programs or equivalent programs elsewhere in the world?

Let me try to give you a little bit on that. It's still early days, and the total magnitude of government assistance that we will receive around the world will be very small. Since some European companies are indicating that the government is just sort of covering up to 20% of their cost base, it's absolutely nothing like that for us. It's a very small -- it's welcome, but it's a very small number. We have significantly reduced all our discretionary spending. But we are, as we've been clear, working to keep our permanent workforce. And people make up roughly 2/3 of our global cost base. So there's limits on how much we'll take out. And so you'll see some reductions in cost, but it's not huge reductions when you add all those things together. And that's because we're working to prepare to come out of this and be able to support our customers strongly and be able to drive growth and drive awareness, and make sure we're in a very strong competitive position as things do recover.

Your next question comes from Sean Laaman with Morgan Stanley.

Dig, with respect to Beijing, any sort of insights or granularity on when the handbrakes might come off there? And if you're able, what kind of magnitude of drag is it on the rest of China?

Yes. So look, we're seeing some signs in Beijing. And I think maybe in June, we might start to see hospitals opening up there. And certainly -- so we haven't -- never given out what proportion of China is Beijing, but it's certainly the biggest surgery center in terms of a location or a city. But China is still very big and there's a lot of big cities. So it's the biggest part, but still relatively small compared to the total market. So we're very pleased with how we're going across the rest of China and very pleased with the bounce back in surgeries and what we can see in the pipeline. And we're hopeful that, that will continue and -- as Beijing comes up in -- hopefully in June.

Sure. And one follow-up, just on the U.S. market. So -- I mean you've given us the skews, thank you, on pediatrics versus the older demographics. But of those older demographics, sort of how much -- how many of the patients would be broadly covered by Medicare and potentially insulated for any drop-off in broader insurance because of the poor economic outlook?

Good question, and it's a hard one to know right now. But of the adult component in the U.S., which is sort of 75% of our surgeries in the U.S., it's a bit over half of that are in the over 65s. So they should be -- have Medicare coverage. But it's something we're watching. It's just what's the impact on insurance, whether there's copays, whether it's people's willingness to -- or ability to pay those copays, it's just still too early to tell and that's where us -- what's -- one of the things that's still uncertain here is the broader economic impact and just what that does to people's spending habits and behavior over time.

Your next question comes from David Stanton with Jefferies.

So my question follows up from Sean's question, if you don't mind. We have seen this increase in unemployment in the U.S., and presumably that's going to lead to increased applications for Medicaid. It's more about the pediatric population, though. How much of -- I don't know, too, it's much easier to cover children under Medicaid. How much of your business has been Medicaid in the past in the U.S.? And where might that get to? And is there a differential pricing for a Medicaid implant compared to, I guess, a commercial-insured implant in the U.S. for you?

So we sell at the same price. So our prices don't vary by whether it's insurance or Medicaid or Medicare in the U.S. Hospital reimbursement can be different from those 3 different sources, and that can have an impact on the hospital's surgery mix and -- to manage their income. It's -- look, it -- on the broader issue of just what proportion is Medicaid and where is that going to go, it's actually hard to know right now how much that will change. Because you say, people are losing their jobs and losing insurance, then more people end up on Medicaid. What we don't know yet is just what does that mean for us. But typically, Medicaid would run a smaller part of our surgery base, but it could grow, as you say, if unemployment increases and the fall -- the level of insurance falls.

And just to be clear on the -- just a follow-up, just to be clear, on the hospital reimbursement that you mentioned, that's not pricing for you. That's pricing for a hospital that charges Medicaid essentially for the surgery. Is that right?

Yes, yes. That's right. So the hospital will get a certain amount of money from Medicaid, Medicare or insurance. Our price for the device doesn't change.

Yes. Historically, your predecessor used to say that it was -- Medicaid was about mid-teens of the U.S. Is that -- has that changed very much?

Sorry, mid-teens in terms of the...

Volume.

Volume? Look, obviously, I haven't looked at that recently. It's probably around there. But it's -- certainly it's not a huge part, given where just the mix of the surgeries and then the sources of reimbursement.

Your next question comes from John Deakin-Bell with Citigroup.

Dig, just a question on the services business, you said it's 30% down in April. Is that skewed in more -- in one geography more than the other? Is it worse than that in the U.S. versus Europe? Or how does that look?

Yes, John, good question. It's skewed a bit to countries where we can sell upgrades directly, i.e., without the clinic being open. So the U.S. is one of those. Japan and China are countries that fit in that basket. Those were -- so they've been a bit stronger than Western Europe, where often we need to go through the clinic. I think we've been working on ways to be able to provide upgrades without the clinics being open in some countries where that hasn't been the case in the past, so that's work in progress. And I think the other thing on services that's unclear is, is there a bit of a lag from the clinics closing? So surgeries, when they stop surgeries, then obviously, the surgeries stop straight away. With upgrades, there's a bit -- a little bit of a lead time of people going into clinics, being -- coming aware of upgrades then us shipping them out. So the 30% down in April, we're quite happy with. But it could -- services could fall a little bit further over the next few months if people's access to the clinic is an important part of triggering them to get an upgrade, which we know -- we're pretty sure is in some countries. What we're not sure about is the overall mix of that across the globe.

Understand. Just one follow-up in terms of actually accessing the clinics and the -- and -- look, I'm just thinking more around the launch of the Osia product. And has that just been possible until this opens up and that a bunch of the U.S. med tech companies have said its -- that the salespeople just can't get access to the hospitals.

Yes. It's certainly, from an Osia surgery perspective, like the -- our CI surgery, it's virtually stopped, but we're starting to see a few orders. We've done quite a bit of online training of surgeons and audiologists on Osia in the -- over the last 6 weeks to try to prepare ourselves for when things do open up. And one thing that is -- has happened as a result of clinics closing is that the professionals have had some time, and we've been trying to use some of that time on education and training. And so obviously, it's certainly one of the opportunities that we've done that. And I think that's -- from the feedback we're getting, that's been certainly helpful from a professionals perspective. But again, in terms of rapid uptake in Osia surgeries, it's certainly too hard to tell yet. And Osia is indicated for -- in the U.S. for people over 12 as well. So again, it is -- will fall more into the adult category. So we're just not quite sure how fast it will go.

Your next question comes from David Low, JPMorgan.

Dig, just a bigger picture question. We've been through economic downturns in the U.S. in the past globally. But could I get you to talk a little bit to what you've seen in terms of impact on people's decision-making, if any at all?

Yes, David, it's -- look, if we look back, we haven't seen significant impacts. So if you look back at 2009, our U.S. business grew strongly, non-tender, and it also coincided with the product launch -- big product launches for us. So it's hard to separate the impact of the product launch versus the economic impact. And otherwise, you've got -- I think for us, in terms of the significant impact to get back to that 2001, and I think our U.S. business was very different that -- being heavily dominated by children. So I think to some degree, we're in uncharted territory from the economic impact, both from just the shape of our business now and what looks like the magnitude of this on the overall economy relative to previous economic downturns. So it's a long way of saying it's very hard to tell right now.

Just on hospital profitability, we're hearing a fair bit about the U.S. elective surgery, 70% of earnings. It's obviously a very challenging period, less perhaps in the way of government support, it's hard to pick that. But where do you think cochlear implants sort of fit on -- if I was the CFO of a hospital, I would be looking at which surgeries to bring back as quickly as I could to try and bring back profitability? Where do cochlear implants fit on that curve?

It's -- it varies by hospital for -- and driven by a couple of things. One is just sort of the pure economics, which is a function of the hospital cost base. And the other one is just where does the -- who has influence within the hospital. So -- and we can see this in hospitals, where we see the CI surgeons have a fair bit of influence. Those ones look like they're going to get CI surgeries going in a pre -- the reasonable rate sooner than other hospitals where the CI surgeon has a bit less influence. So it's a mixture of that economics and influence. Overall in terms of economics, I think cochlear implants are reasonable. Though certainly not the most profitable procedures that hospitals do. But equally, they're not the least profitable either.

All right. Just a last one for me. Could I get some help with the FX hedge book and how that's likely to flow through during this period? Because presumably, without earnings, the hedge book will go into losses given what currencies have done. Just any sense as to how that would likely come through?

Yes. Look, we're looking at that. So obviously, we got -- we set up to hedge our cash flow back into Australia. Without revenue, there isn't that cash flow coming through. And therefore, we'll have hedges but not cash to use those hedges, meaning we've probably going to close those hedges out. So that will have a negative -- sort of a one-off negative financial impact. So it's -- we're looking through that now. It is a one-off. But in terms of the overall outlook, it's something that will happen. But then we'll move forward and it might be, I think, significant in terms of our overall future cash flows and overall valuation, if that makes sense.

Okay. Just one final question. So as we look forward, I mean, the hedge book goes out more than just a 6-month period, you'd be comfortable enough that you've got less hedging into the future and therefore, that can be -- there's likely going to be less of an impact in the future?

Yes. And also, we roll our hedging off over time. So we typically would be pretty reasonably fully hedged for the next 6 months, but then we step it down for the 6 months after that and the 6 months after that. So that it sort of naturally rolls off that we only partially -- we sort of are hedging at 80% plus of our expected cash flows in the next 6 months, but then it rolls off significantly beyond that. So there's some longer run impact, but it's less so, and hopefully, our cash flow returns.

Yes. I hope the earnings will be back by then.

Your next question comes from Lyanne Harrison with Bank of America.

Dig, I just wanted to ask a couple of questions about the European market, given that we've spoken a bit about the U.S. Can you give us an indication of what -- to what extent restarts have occurred or what they look like, particularly for countries like Germany where the number of critical coronavirus cases have been lower?

Yes. Lyanne, so yes, in -- Germany, certainly probably been our -- or had been -- is the strongest of the European countries for us through April. And I think you say that it reflects the sort of overall COVID-19 situation in Germany relative to the other countries. We are seeing some talk of reopening surgeries in other Western European countries. But we'll wait to see through May if that happens. But yes, look, it's still -- apart from Germany, it's still pretty early days from a surgery perspective, although some children are continuing to get surgeries across many countries but in lower -- significantly lower volumes than normal. So therefore, we'd expect that there is some backlog of children, at least, through Western Europe.

Okay. And then just more broadly on, I guess, the funding with the payers' implications and the economics of that. And I know you spoke briefly in response to Dave's question. But how should we think about it in terms, I guess, countries now, particularly, I mean, if we talk more to Europe or Western Europe, putting more funding into coronavirus and propping up the economy. Which country's budgets do you think might be more at risk around cochlear implant funding going into the next few years?

I think it's too early for us to know that yet for several reasons. One, I think, just the situation and the outlook is unclear in terms of the overall impact on economy. Obviously, it's going to be negative. But how negative, not clear yet. Second thing is the cochlear implant component of the health budget is still tiny. And so whether there's an impact on cochlear implants depends much more on where governments or where payers look to focus or their knowledge of where spending goes rather than the overall economics of the country. So I think we just don't know at this stage. I think we'll watch the overall impact on health spending. Again, it's also hard to know. I mean government is obviously going to be under pretty significant budgetary pressure, but equally cutting health budgets as you come out of a health crisis is possibly not easy to explain or the first place to look for savings, too.

Right. And just one last question on the upgrade. So you mentioned there might be a lag on upgrades as those who wanted to get the upgrades aren't being able to visit the clinics. Can you give us an indication on what the lead time might be from a patient visiting a clinic to when they might get an upgrade? So we get a sense as once the economy starts to open up, when we could see other services' revenue start to grow again.

It's actually very huge, both within country and by country. There's many instances where people upgrade on the spot. So they turn up and we see this at our company-owned clinics, they turn up, they're trying to get about an upgrade, and they get an upgrade on the spot. There's others where, and particularly this is the case in the U.S., where there's an insurance approval required, and that could be 60 or -- 60 days or longer sometimes. So they want to get an upgrade and then there's an approval process. So the upgrade that we were selling in April in the U.S., some of those would have been from people who made a decision in January or February and then had to go through insurance process. So we don't sort of -- I don't have the global averages x number of days. And therefore, we should -- we expect to see a fall-off in the middle of May or something -- adding x to the days that things shut down. It's just more that there was significant variability in that time. But we do know that just access to clinics can be an important trigger for some people to get upgrades. Now obviously, we're trying to work more online and having Cochlear Family, and that sort of connections that we've been trying to build helps us make people aware when they're not coming into clinics. But it's too early to say just what impact of all that is. I will say just, as I said earlier, in April, our services revenue was ahead of where we expected. I think all I'm doing is just cautioning it could come off a bit over the next few months rather than rise from there.

[Operator Instructions] Your next question comes from Chris Cooper with Goldman Sachs.

Just coming back on the U.S. payer mix, if you don't mind. So I heard, in reference to a previous question, you mentioned the Medicaid typically might be thought of as something around the sort of mid-teens level. I know you don't have the exact numbers in front of you. But that I believe was in reference to a question specifically on adults. Can I just confirm for children, what percentage would typically be reimbursed under the Medicaid program? And secondly, just on Medicare. I believe you said 50% of your adults are aged over 65, typically in the U.S. Is there anything different about cochlear implants, which makes the deductible or the copay materially different, so typical sort of Part B reimbursement program in the U.S.?

So on the first one on Medicaid. So that does include -- that number is overall, so it does include the children. All right? And then in terms of the copay, as far as we can see, we don't think it's any -- really any different to other interventions. And the biggest factor is the plans that people have and the extent to which they have choice about the copay and how much risk they take by opting for a higher copay and a lower overall cost. They more likely can -- an outcome of this.

That's helpful. And just a question on Japan, specifically, if you don't mind. I think it might be an interesting data point. So my understanding was prior to -- was, I guess, in the earlier phases of this, the market had sort of been relatively less impacted negatively. I think that's the commentary that you shared around the time that you raised some capital. It now sounds as though that's got materially worse again. Can I ask, are you now in a position where it was worse in Japan than in the previous slowdown if you sort of -- I mean in the first phase of the challenges?

So Japan -- yes, Japan actually went through reasonably unaffected, not completely, but reasonably unaffected through the first phases. Surgeries continued. Access to hospital is a bit more restricted, but surgeries will continue at a pretty good rate. But then just in the last -- I think probably in the last 4 weeks, we've seen the -- I think the -- there was a significant reduction in surgery. I think the state of emergency was declared, and some hospitals are closing, people are choosing not to go to hospitals if they are open. So -- as well what we've seen here is a much lighter impact relative to where the country was from a -- sort of a profile of infections. And part of that was that I think the infection -- infections did come back more strongly than had been expected. And I think that just highlights that the risk for us in other countries are of similar occurrence and surgeries restarting, and then slowing again or stopping because hospitals close or because people choose to stay away from hospitals.

Is the decline you're currently seeing in Japan broadly in line with the sort of 80% decline that you saw in April across your other markets?

It's actually not at that level yet, but you could get to that level.

Your next question comes from Hashan De Silva with CLSA.

Just got 2 questions. Thinking longer term, now assuming Medicaid becomes a higher proportion of total sales, do you see a potential for pricing pressure in the U.S.?

Look, I think certainly, I wouldn't want to rule it out. There is potential for pricing pressure. It's just too early to know if that will happen and in what form and to what extent. I mean we've certainly been saying now for a while that in Western Europe, we've seen some pricing pressure and expect some price to fall slowly over time. Our markets are generally pretty competitive, so there's always some level of price tension out there. Whether that increases, it's just too early to tell, and that could be competitively driven. It could be that if the funding mix of the hospital has changed, then they change their approach, too. I think, it's just too hard to make a definitive statement at the moment.

And just on the ramp-up from COVID. Has there been a significant impact to the actual audiologists -- with furloughing of staff? And how do you see this affecting your sales pipeline, particularly for the adult market coming out of the end of it?

Yes. So we certainly -- in the U.S., we are seeing some audiologists and some clinics being furloughed, some clinics being closed to save money. As someone noted earlier, elective surgery is making a significant part of hospital income. They're not getting that income, they're losing quite a bit of money. And so they're acting to reduce costs. So I think the question is do they put all of these people back on as things start to open up or will they try to run at a lower level? And if they run at a lower level, then there will be less clinic capacity. I think -- so we're not quite sure how that will play out. One of the counters to that is our FDA approval of Remote Check. And what Remote Check enables as we roll it out is that the annual clinic checkup that many people did can now be done remotely and take 5 minutes of clinician's time versus nipping from 45 minutes to 1.5 hours of an appointment. So we think, a, that takes pressure off the system, that it should increase capacity and it certainly puts us in a strong competitive position, thinking about the cost of servicing implants from the different companies and where we sit relative to our competitors, given Remote Check and Cochlear then coming out of connectivity programs that we have and continue to -- we'll continue to roll out.

Your final question comes from [ Andrew Yi ], private investor.

So I just wanted to find out, I'm going back off the last question that was mentioned. You talked a lot about the remote servicing capabilities that are now increasing access for a lot of people unable to either visit hospitals or being unwilling to visit hospitals. I'm just wondering, in particular, for China, are there -- are these capabilities there yet? Or is that something that's still in the process?

So they're largely still in process. We do have some facilities in China, but they are -- the key thing here is what's the technology path that we're heading down and what's the broader service offering that we want to offer right across the globe. And certainly, core to that is connected solutions, and connected solutions rely on a sound processor that is able to connect through a smartphone; with that, and the underlying IT infrastructure, it's been possible to run a whole range of connectivity solutions to help remote care, to help people with troubleshooting, to reduce the overall system costs, to increase the convenience for people in terms of maintaining their hearing and improving their hearing over time. So we're rolling that out now country by country. And it's depending on both regulatory approvals and just our in-clinic capacity to work through that change.

Yes, that makes sense. Just one more question, you mentioned China has almost gone back to pre-virus levels in terms of surgeries. I understand that, obviously, there will be some provinces that has -- had second waves and potentially some degree of caution around that. Have you seen that improvement to be quite consistent throughout March and April? Or has there been some kind of stagnation or indeed to that effect towards...

No, that improvement has been consistent through March and April. And yes, we can tell pretty uniform across the country outside of Beijing and to rest -- in Wuhan. So look, it's still early days, but we're pleased with what we have seen.

We do have another question. It comes from Andrew Goodsall with MST Marquee.

I'll be quick. You've been investing in some auto programming software. And I was just wondering whether that gets accelerated or it's -- gets a leg up through this period or can be brought forward?

Look, so certainly, our Remote Check and other connected services are -- will be accelerated because one of the -- there's a number of aspects to rolling something like this out. One is having the technology and the regulatory approvals, and I think we're in pretty good shape there. The second one is that it's quite a change in clinical practice. So there's quite a change process to work through. Now people are much more receptive to that change right now than I think they have been in the past. So that helps speed it up. Out of that, we are and we'll learn quite a bit about which are the features that are most valuable, what are the things that really save time and make this effective. We've already seen some of that from the pilots we've done on Remote Check and made some -- making some improvements in Remote Check as a result of that. So it's a sort of step-by-step process. I think to the extent that there's more automated programming or remote programming, that's going to be -- that's quite seamless, that's going to be further down the track because it's a bigger change, it's bigger from a technology perspective, it's bigger from a regulatory perspective. So there's certainly some opportunity there, but it's still further out compared to the troubleshooting and checking that we've got now which from the data we're seeing is -- I mean indicates that's actually the biggest need, more so than remote programming.

The automation of the programming, you mean specifically...

No, the ability because many -- there's a lot of that sort of chronic phase of care is just -- is a checkup. And then it's sort of tips and tricks and pointers to help people hear better. So it's things like just replacing the microphone cover. It's much more -- it's much easier and much more effective than actually changing the program for people who have had their implant for a few years. And what Remote Check enables to do is it actually -- I think the clinicians saying, I think what you need to do is just change the microphone cover, you don't need a trip to the clinic, we don't need to adjust the MAP.

Yes, yes. And then just any sort of behavior by your competitors that, I guess, might change the market in -- or the landscape going forward? Is it a similar or the same level of commitment in your view? And just whether you've seen any weakness there or change?

I think, you'd have to ask them on their -- on that level of commitment. We're very focused on just what we're doing, and what we're doing is stay connected with recipients, which I think has been outstanding, and to work through candidates and help candidates at a time when they can't get into clinic, and to give them the knowledge and help them prepare for when the clinics do reopen. We've been very focused on those things.

Okay. Yes, I guess, just nothing particularly obvious that's changed at all in the landscape then?

No, nothing particularly obvious, I think.

Thank you. There are no further questions at this time. I'll now hand back to Mr. Howitt for closing remarks.

Okay. Just to say, look, thanks all for joining. And I thought it was important to come up with an update now, just as we've seen what had happened over the last month. And we'll do our best to keep the market informed at the right intervals from -- going forward from here. Thanks for joining.

That does conclude our conference for today. Thank you for participating. You may now disconnect your lines.