According to statistics generated by the Hearing Industries Association (HIA), Washington, DC, net unit hearing aid sales in the United States increased by 8.8% in the third quarter (Q3) of 2016 compared to the same period last year, and have increased by 9.6% overall through September (Figure 1). The third quarter gains come on the heels of nearly double-digit (10.1% and 9.7%) increases in the first two quarters of the year, and build on a relatively strong base of sales during the same period in 2015. Last year, hearing aid unit sales increased by 7.2% (full year).Once again, commercial/private-sector sales outpaced what might be seen as a relatively static period of unit growth at the Department of Veterans Affairs (VA), which still accounts for almost one-fifth (19.9%) of all units dispensed in the US. The private sector experienced an 11.2% increase in unit sales during Q3, after strong sales increases of 10.8% and 12.8% in Q1 and Q2, respectively. This made for an 11.6% overall unit growth rate through September.
In contrast, the VA experienced unit gains of only 0.4% in both Q2 and Q3, which followed a 5.3% increase during Q1—for a 2% overall increase over last year. This represents a fairly pronounced slowdown in VA dispensing activity that started toward the middle of 2015; prior to that time, the VA had been posting fairly consistent double-digit quarterly gains since mid-2013.
Revenue increases likely lower than unit growth. While the HIA statistics for private/commercial sector unit sales are excellent, they come with some necessary caveats. First, these statistics include the sales at Costco and other mass retailers (but not SAMs Club), and thus do not represent just private-practice unit sales. Costco alone was estimated by The Hearing Review to constitute about 11% of the US hearing aid market in 2015, and the retail giant’s sales may be growing at much higher rates than the estimated 20-25% clip of the past 6-7 years. Second, two significant hearing aid manufacturers, Intricon and Hansaton, started reporting unit sales to the HIA statistical program for the first time in January, and are almost certainly responsible for several percentage points in gains for the commercial market.
Even given this, the numbers are still encouraging. Anecdotal evidence from conversations with dispensers point to favorable conditions for most private practices, and some larger distributors appear to be experiencing excellent unit sales growth. However, as noted in previous articles, average sales prices (ASP) are falling—and falling fairly dramatically for the economy/basic lines (by about 12% in just over 2 years), which are particularly under pressure from Big Box retailers and other sources. Thus, factoring in all of the above, the actual revenue gains for private practices are likely to be much lower than the 11.6% overall unit sales growth figure for the private sector.
Styles still shifting to RIC and wireless devices. Through September, BTE hearing aids made up 81.1% of all sales in 2016, with RIC- and RITE-style hearing aids (a subset of BTEs) continuing to make gains and now constituting 65.6% of all hearing aids dispensed. More than two-thirds (66.4%) of hearing aids sold in the private sector are RIC/RITEs, compared to 62.4% in the VA. Nearly 9 in 10 (87.8%) hearing aids contained wireless technology.
Average hearing aid return for credit (RFC) rates in Q3 were identical to those of the previous two quarters: 18.0%. This is comparable to recent historical RFCs. It should be noted that manufacturers have significantly different methods for counting RFCs than dispensing professionals, with the inclusion of any units that are replaced, remade, or exchanged; in contrast, most dispensing professionals usually do not count into their RFC rates exchanges/remakes, as well as instances where a patient may have tried more than one set of aids (a frowned-upon practice since it dramatically increases the overall cost of hearing aid production).
At its current pace of about 10% growth, the US hearing aid market should come in just shy of 3.7 million net units distributed by the end of 2016. —KES