IntriCon Corporation, a Minnesota-based designer, developer, manufacturer and distributor of miniature and micro-miniature body-worn devices, announced that it has acquired a 20% stake in DeKalb, Ill-based Hearing Help Express, a direct-to-consumer mail order hearing aid provider.
IntriCon expects to exercise its option to acquire the remaining 80% of Hearing Help Express before the end of the year. Terms of the transaction, assuming exercise of the option, include approximately $1.3 million in cash, guarantee of a $2 million note, and an earn-out.
“Untreated hearing loss in the United States is a substantial problem, and high device costs have created significant barriers to access for most Americans,” said Mark Gorder, president and chief executive officer of IntriCon. “Hearing Help Express offers a lower-priced alternative for consumers to purchase devices directly—circumventing layers of costs associated with the conventional hearing aid channel.”
Gorder reported that Hearing Help Express has two decades of experience and a proven track record of excellent customer care. This acquisition gives IntriCon direct access to the emerging value-based hearing healthcare market and a platform we can build on by leveraging our own technically advanced devices and making targeted investments in management, marketing and advertising—and ultimately incorporating an online component.”
Purchasing Hearing Help Express is a key evolution in IntriCon’s value-based hearing healthcare (VBHH) strategy. Over the last decade, the company has invested in the technical and low-cost manufacturing (establishing facilities in Singapore and Indonesia) to design and build superior devices and fitting solutions to address the estimated $1 billion annual value hearing health market. With the addition of Hearing Help Express, IntriCon now has the channel infrastructure to directly reach the consumer and—importantly for millions of consumers—the ability to offer high-quality hearing healthcare at a fraction of the cost.
“Through our VBHH initiatives and tests, we have formed alliances with other key partners, which have given us experience and key learnings as we move aggressively into a more consumer-facing role,” said Gorder. “Our Hearing Help Express purchase provides an efficient, established direct-to-consumer channel that we can build on and expand via technology—and one that’s complementary with many of our existing relationships.”
?According to Gorder, the company expects that Hearing Help Express and the direct-to-consumer channel will become an increasing contributor to IntriCon’s sales and earnings—and the company will use this opportunity to accelerate its business. Near term, IntriCon is intently focused on the following:
- Identifying a vice president candidate to lead Hearing Help Express—a search firm has been engaged and the process is currently under way;
- Once leadership is in place, enhancing Hearing Help Express’ sales and marketing capability, and ramping up advertising—a tactic historically proven to drive sales; and
- Introducing IntriCon’s digital hearing aids and other technical advancements to Hearing Help Express’ customer base—currently Hearing Help Express offers primarily analog products.
“We’re at a pivotal point in the evolution of the hearing health industry,” said Gorder. “Fundamental change is needed and we’re excited about the opportunity that we created through thoughtful hard work and planning: a chance to deliver superior outcomes-based affordable hearing healthcare. We’ll accomplish this by combining state-of-the-art devices and software technology at a much lower cost directly to consumers across the country, many of whom have not been able to afford care previously. We expect that capitalizing on this opportunity will lead to both a very bright future for IntriCon and to long-term growth in shareholder value.”
Headquartered in Arden Hills, Minnesota, IntriCon Corporation helps medical, healthcare and professional communications companies meet the rising demand for smaller, more intelligent and better connected devices. IntriCon has facilities in the United States, Asia, the United Kingdom and Europe.