Sonova Falls After $7.25 Million Cochlear Verdict: Zurich MoverAllison Connolly
Sonova Holding AG, the world’s largest hearing-aid maker, fell the most in 11 months after a U.S. jury awarded $7.25 million in damages to a customer over a faulty cochlear implant.
Sonova fell as much as 6 percent, the most since May 22 with trading volume 22 percent over the three-month daily average. The stock was down 3.8 percent at 106 Swiss francs at 10:45 a.m. in Zurich, giving the company a market value of 7.1 billion francs ($7.7 billion).
Sonova, which is considering an appeal, may have to adjust its provisions for such claims, which could affect year-end results to be reported May 21, the Staefa, Switzerland-based company said today in a statement. The implant, which malfunctioned due to moisture, was made by Advanced Bionics and part of a voluntary recall in March 2006. Sonova purchased the U.S.-based cochlear-implant maker in 2009 for $489 million.
The award wasn’t included in the company’s forecast for the year ended March 31, which is for a 7 percent to 9 percent gain in sales and a 15 percent to 20 percent increase in earnings before interest, taxes and amortization, based on constant currencies.
The 2006 recall of the HiRes 90K cochlear implants was unrelated to a worldwide recall of the same hearing device in November 2010 because of a malfunction that caused “severe pain, overly loud sounds and/or shocking sensations,” according to the company. Cochlear implants electrically stimulate the hearing nerve in the inner ear which allow the user to perceive sound.
The award from the District Court for the Western District of Kentucky could have a “modestly negative impact” on profit for the year and reduce earnings per share by 1.4 percent, Lisa Clive, an analyst with Sanford C. Bernstein Ltd., said in a note to investors today.