The Sound of Growth: Hearing Aid Sales Strong in Q3 2023 as Markets Normalize

The keywords for U.S. hearing aid sales in 2023 appear to be "normalized" and "stabilized." You can find these two descriptions peppering corporate reports and within the summaries of CEOs describing their sales and finances.

In 2023, after uncharacteristically flat sales in 2022 (0.8% increase in units), unit growth has increased by 6.6% through the third quarter and HearingTracker projects it will end up just over 7% on the year. Net unit commercial sales of hearing aids in 2023, excluding over-the-counter (OTC) hearing aids, have been 7.1%, 3.3%, and 10.5% during the first three quarters of the year, respectively, according to statistics generated by the Hearing Industries Assn (HIA), Washington, DC. It should be noted that market analysts have reported slightly higher US quarterly unit growth rates of 9%, 5%, and 12% for the first three quarters, respectively, possibly reflecting the inclusion of OTC sales.

The statistics do suggest a return to a more normal and stable U.S. market growth of 4-6%, the historic average for the past 10 years, with 2023 ending up slightly on the higher end. Through the first three quarters of 2023, commercial sales (which include big box but do not include OTC sales) are 6.8% higher than last year at this time. Dispensing activity at the U.S. Department of Veterans Affairs (VA) increased by 5.6% through the first three quarters.

Last year’s flat growth was largely due to economic headwinds combined with a tough comparison base in 2021—a year that saw a surge and recovery in sales from pent-up demand following the pandemic. The see-saw increases and decreases in year-over-year sales percentages have now appeared to stabilize.

Hearing Aid Companies Report Strong Unit Sales and Revenues

Several recent corporate financial reports reflect strong North American and mostly good global hearing aid sales during the first three quarters of 2023. However, companies with headset divisions are still suffering from the sales hangover caused by frenzied demand during the pandemic.

Demant

The maker of Oticon, Sonic, and Philips brand hearing aids, Demant reported organic growth of 13% in the third quarter, and the company upgraded its projections to 12-13% organic growth from its earlier-in-the-year 6-10%. Its latest flagship hearing aid, Oticon Real, was launched in February. “Our Hearing Healthcare business segment continues to be in very good shape, delivering an impressive double-digit organic growth rate, particularly lifted by Hearing Aids that generated 25% organic growth in sales to external customers in Q3,” stated President and CEO Søren Nielsen. “I attribute our success to the innovative and broad product portfolio—Oticon Real is doing very well—and our strong focus on customer collaboration and personalized care. Demant has gained significant market share over the last quarters in a normalized hearing healthcare market, but we still see negative effects of the results in Communications on the Group’s performance due to the decision to wind down our Gaming activities as well as to a weak market for audio solutions. Nonetheless, we have delivered strong profitability and cash flow, allowing us to continue to invest in developing our life-changing hearing healthcare solutions.” Demant and its Philips brand also took advantage of new sales at Costco after Sonova pulled its products out of the retailer in late 2022.

GN Hearing

The parent group of ReSound, Beltone, Jabra, and Audigy, GN Hearing grew its organic sales by 15% in both the second and third quarters. GN’s sales were “driven by strong performance of ReSound OMNIA resulting in continued significant market share gains in a stable growing hearing aid market” said the company in its Q3 2023 financial report. In fact, the hearing division’s strong sales helped compensate for lackluster (-8% organic growth) sales in the GN Audio division and during a critical period earlier this year when speculation was swirling over GN Store Nord’s debt load due to the Audio division’s purchase of e-gaming giant SteelSeries in January 2022 for $1.2 billion. It appears to have resolved this issue, and more recently launched ReSound Nexia, the first hearing aid with Auracast broadcasting technology. The company is in the process of consolidating its GN Hearing and GN Audio divisions into one unified company with the aim of leveraging synergies and reducing costs. It also recently sold and now rents its headquarters in Ballerup, Denmark, to free up about $70 million. As with Demant's Philips brand, GN's sales of the Jabra Enhance Pro 10 at Costco have benefitted from the absence of Sonova products in the store.

Sonova

The global market leader in hearing aid units with its Phonak and Unitron brands, as well as Advanced Bionics implants and Sennheiser audio products, reported in May an overall 2022/23 fiscal year-end sales increase of 11.4% in Swiss francs and a 9.5% increase (local currency) in the U.S. The company says sales were driven by the Lumity flagship line and its 2022 acquisition of the Alpaca Audiology network—and without the benefit of Costco sales which may have constituted as much as 3% of Sonova’s total group sales. Phonak continues to make up the majority of VA units dispensed. Sonova CEO Arnd Kaldowski stated in May: “We continued to execute our growth strategy: We advanced innovation with the launch of the Phonak Lumity platform and significantly expanded our Audiological Care network.” At the outset of 2023, the company launched its Sennheiser Conversation Clear Plus earbuds and also completed the acquisition of the HYSOUND Group in China which has about 200 clinics in over 20 provinces and 70 cities. Then in mid-June, Sonova launched its first OTC hearing aids: Sennheiser All-Day Clear and All-Day Clear Slim. Sonova will report its half-year fiscal 2023/24 results on Tuesday, November 21.

Amplifon

In October, Amplifon—which owns Miracle Ear and Amplifion Hearing Healthcare benefits— reported a 9.7% revenue increase (at constant exchange rates) for the first three quarters of 2023 with an 11.4% increase in Q3. Amplifon CEO Enrico Vita touted “a record organic growth achieved despite a demand in Europe which remains subdued. We are continuing to invest significantly in our international network through continuous acquisitions and we have now exceeded 9,500 stores, strengthening our presence in core markets like North America, France, Germany and China. In the latter we now have more than 300 points of sale, becoming one of the country’s main players in just five years of operation.” Amplifon says it has acquired about 220 new points of sale worldwide since the beginning of the year. Even with the above, market analysts were “disappointed” that Amplifon’s sales earnings were not more.

What about OTC hearing aid sales?

From my conversations with a limited number of people who have insights into the OTC hearing aid market, some of the more established companies—particularly those utilizing a blended model approach (i.e., OTC with the option of professionally assisted telecare for onboarding, adjustments, and assistance)—seem to be doing very well. As noted by GN, JabraEnhance.com (formerly Lively) showed continued strong performance with 17% growth, a decrease from the previous report.

But low-cost OTC hearing aid providers may also be prospering: as recently pointed out by HearingTracker Founder Abram Bailey, AuD, Audien is now reporting on its website "500,000+ Happy Ears" from its devices that are sold for $100-$500. Although that probably includes sales going back to 2016, that's still a lot of hearing devices.

I’m aware of no available statistics that provide a comprehensive snapshot of OTC unit sales in the United States. Opinions about unit volumes vary greatly, as noted in my 2022 market summary, with estimates ranging from less than a few hundred thousand to well over one million units; HIA briefly reported members' OTC unit sales but stopped doing so after recognizing the statistics represented only a sliver of the overall sales in this category.

So, how many OTC hearing aids are being sold? My “cocktail-napkin” estimate is that OTC sales in the U.S. will exceed 800,000 units this year—although it’s extremely difficult to calculate for devices sold only within the United States and return rates (i.e., net sales). One of my most trusted sources estimates it’s more like 1.1 million units. Taking this range of sales with a 35% return-for-credit rate would imply OTC sales make up about 11%-14% of total US commercial hearing aid unit sales (excluding VA) in 2023. Again, I emphasize these are highly speculative numbers that could be way off the mark. (My friend Andrew Bellavia has also published an excellent article on this subject.)

As I noted after CES 2022, the traditional prescription-fit and OTC markets are probably two distinct entities, with the former generally serving older adults who view hearing aids as a medical necessity and have a greater need for all-day use, and the latter serving a younger population with milder losses and more “situational listening” goals (work meetings, restaurants, etc.).

OTC hearing aids, as a product class, reached its first official birthday on October 17, 2023. Most would agree it is still evolving and has not yet achieved what the FDA envisioned regarding affordability and accessibility when crafting the final legislation (also see HIA's recent observations about OTC hearing aids after one year).

To my knowledge, no company has yet to crack the sub-$800 threshold with a device that offers consumers rechargeability, audio streaming, and good sound quality, as well as an intuitive app interface—in other words, a device that doubles as an earbud for music listening and phone calls while having good hearing aid functionality. The product that might come closest to this description is the Apple Airpod Pro, which at $250, is a hearable and not an OTC hearing aid, has a relatively short usage time, and (uncharacteristic for Apple) doesn’t offer a particularly intuitive interface for using it as an assistive hearing device.

However, OTC hearing aid technology, app interfaces, features, pricing, and online hearing tests continue to evolve (e.g., see the Intricon-Tuned partnership). What role artificial intelligence will play in future OTC hearing devices is also an intriguing subject, as is the advent of Auracast broadcasting technology.

But three things seem clear at this point:

1. The US hearing aid market during 2023 has mostly normalized, with a projected year-end unit gain above 7%.
2. Hearing aid manufacturers have been doing well, introducing new products and continuing to create and buy up more points of sale.
3. While OTC hearing aids are probably starting to find their niche and have great opportunity, they are not at this point seriously jeopardizing or cannibalizing professionally dispensed hearing aid sales—lending credence to the idea that these are two distinct markets for two different consumer types.