In an investor presentation yesterday, Amplifon announced the exiting of its wholesale business, the Elite Hearing Network, for the reason of its “low-growth, low-margin” nature and the company’s desire to focus on the end-consumer. The presentation also summarized Amplifon’s first-half 2021 results, which included exceptional top-line growth “well above the market,” and outlined its purchase of Bay Audio in Australia, according to CEO Enrico Vita, CFO Gabriele Galli, and Investor Relations Director Francesca Rambaudi.

In Amplifon’s H1 2021 Results presention, the company says the wind-down of Elite is “perfectly in line with the Group’s consumer-centric strategy aimed at delivering a superior proposition directly to the end-customer.” The group currently expects the wind-down to be completed by the end of 2021. Reasons to exit from the Elite business included:

  • Pressure on independents in the US, further increased post-Covid-19 pandemic, will continue to lead to market consolidation;
  • Low added value business with limited opportunity to build further differentiation, and
  • Allows Amplifon to devote all focus, resources, and investment to the two high-growth and high-potential strategic business units: Miracle Ear and Amplifon Hearing Health Care (AHHC).

The ultimate goal for the wind-down of Elite is to transform “the US business to focus on end-consumer, leveraging its unique assets and brands in the two fastest growing channels, retail and managed care,” says the report.

When asked for a comment, the company told Hearing Review, “The US is a key market for Amplifon. Given the Americas region’s crucial role in our global, consumer-centric strategy, we have invested considerably in the region in the past few years and will continue pursuing significant investments in the months and years to come. This decision, which fully aligns with our longer-term strategy, will allow Amplifon to focus our resources and investments on our businesses that directly serve people with hearing care needs: Miracle-Ear, with a combination of franchised and directly managed points of care, and Amplifon Hearing Health Care in the managed care segment. Elite’s members will continue to have access to business opportunities through AHHC, and we look forward to continuing this important partnership.”

The Elite Hearing Network has been a part of Amplifon since 2002, and has approximately 740 members, including audiologists, hearing aid specialists, and ENTs, at 1,900 locations, according to the company. The report shows that in the “last [several] years Elite has been dilutive to Amplifon’s fast-growing and profitable business,” accounting for only 3.4% of the group’s consolidated sales and 1.4% of its operating performance (EBITDA). Elite had revenues of $78.2 million in 2019 before the pandemic, which fell by 23.7% to $59.7 million in 2020. When compared to the first-half of pre-pandemic 2019, Elite’s revenues are currently at -13.9%. Amplifon expects the wind-down to negatively impact the company by about 10 million euros (US$11.9 million).

Hearing Review recently reported the US hearing aid market increased in units (not revenue) by 13.5% in the first half compared with 2019. When looking at the second quarter of 2021, hearing aid sales increased by 185.3% compared to 2020 and by 18.2% compared to 2019 during the same period.

Excellent Q2 2021 and purchase of Bay Audio. Amplifon says it had a tremendous second quarter with over 15% organic growth versus the second quarter of 2019. In total for the first half, the company reported a 58.0% increase in revenues versus 2020 and 17.1% versus 2019 for the same period at constant exchange rates. In the Americas, Amplifon generated 39% organic sales growth compared to the second quarter of 2019. In the US, the company reported strong organic growth for Miracle Ear, boosted by the PJC Hearing consolidation, and strong performance of AHHC. Elite’s performance was negative as noted above.

Amplifon also announced its second-largest purchase ever: Bay Audio, a private independent hearing care provider with reportedly over 100 points of sale on the East Coast of Australia. According to the company, Bay Audio is expected to have AU$100 million (US$74 million) in revenues this year. It notes that the acquisition “perfectly complements Amplifon’s current presence, creating an idea platform, with Amplifon and Attune, to offer the highest quality hearing care in the country.” It also cites Bay Audio’s “innovative retail model, strong brand, recognized premium positioning and high growth and profitable business profile.” The addition of Bay Audio is estimated to grow group sales by about 3%.