ARDEN HILLS, MINNESOTA — IntriCon Corporation recently released its financial results for the first quarter, ending on March 31, 2020. In addition to the financial report, the company also announced the acquisition of Emerald Medical Services and an “accelerated restructuring”of its Hearing Help Express retail business.
“The impact of the COVID-19 pandemic has been extraordinary. At IntriCon, we quickly responded by shifting our operations to best ensure the health of our employees and their families, while maintaining operation-critical processes essential to supporting our customers, their patients, and our on-going business” commented Mark Gorder, president and CEO of IntriCon.
“During this period we also completed a number of actions that we believe will significantly transform our organization and best position us for long term growth by focusing on what we do best – delivering complex micro-miniature medical devices that require specialized design expertise and high production volumes. These actions included the acquisition of Emerald Medical Services, which immediately expands our medical market opportunity and diversifies our customer base.
–Mark Gorder, president and CEO of IntriCon
“Following our decision last quarter to discontinue direct-to-consumer initiatives in the hearing health market, we accelerated a restructuring within our Hearing Help Express business to further focus resources on partnership opportunities and substantially reduce the associated losses,” continued Gorder. “We also took actions to restructure other areas of our global workforce to further streamline our resources to best align with current priorities”
The company’s reported Hearing Health revenue was $3.9 million for the first quarter of 2020, compared to $7.0 million in the prior-year first quarter. The revenue decline during the first quarter was “largely attributed to the absence of hi HealthInnovations revenue and COVID-19 impact on the Legacy hearing health channel”.
United Healthcare, which had worked with IntriCon to supply hearing aids to its subscribers through its hi HealthInnovations subsidiary since 2012, now supplies hearing aids through its UnitedHealthcare Hearing brand, with devices manufactured by Sonova.
“I’m intrigued by Intricon’s more tailored focus on providing an ecosystem of care platform–hearing aids, self-fitting software, and customer care–to hearing aid retailers. The move will help differentiate their hearing aids from lower cost competitors. I also anticipate that the hearing aid retailers who would potentially subscribe to Intricon’s care platform will appreciate the fact that Intricon has decided to discontinue direct-to-consumer initiatives.”–Nancy M. Williams, President, Auditory Insight
First Quarter Financial Highlights:
- Revenue of $21.5 million
- Revenue from largest medical customer declined 21.2% year-over-year
- Gross margin of 21.3%
- Net loss per diluted share of $0.22 versus net income of $0.08 per diluted share in the prior year period
- Enacted measures designed to ensure business continuity, reduce operating expense, and preserve cash as the ongoing COVID-19 pandemic impacts revenue
Recent Operational Highlights:
- Acquired Emerald Medical Services Pte. Ltd., a privately held provider of joint development medical device manufacturing services for complex catheter applications
- Completed a global net workforce reduction of 25 positions resulting in an annual, net cost savings of approximately $1.5 million
- Accelerated the Hearing Help Express restructuring to focus on partnerships in the hearing health market, resulting in an approximately $2.0 million reduction in consumer advertising expense in 2020 as compared to 2019 and a workforce reduction resulting in an annual, net cost savings of approximately $900,000
- Enhanced our leadership team with two key additions with extensive organization development expertise
- Heather Rider joined IntriCon’s board of directors in March
- Sara Hill joined the company’s executive team as Chief Human Resource Officer
“I’m proud of the substantial progress the IntriCon team has made on the priorities we established for the year, including continuing to meet the volume demands of Medtronic’s diabetes business; accelerating market and customer diversification; pursuing partnerships in hearing health; and adjusting our organizational structure to address opportunities in high growth markets,” added Gorder.
IntriCon withdrew its previously announced annual guidance for 2020 on April 7, 2020. “Given the uncertain scope and duration of the COVID-19 pandemic, the company remains unable to accurately estimate the impact of the pandemic on its future operations and financial results.”
About IntriCon Corporation
Headquartered in Arden Hills, Minn., IntriCon Corporation designs, develops and manufactures miniature interventional, implantable and body-worn devices. These advanced products help 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, and Europe. The company’s common stock trades under the symbol “IIN” on the NASDAQ Global Market.