With it being a slow news day, we thought we would profile a lesser known name that has been making a strong move of late: IntriCon (IIN). It's a supplier of miniature and micro-miniature body-worn devices. Its expertise is focused on three main markets: medical, hearing health and professional audio.
IIN combines ultra-miniature mechanical and electronics capabilities with its proprietary technology, including ultra-low-power (ULP) wireless and digital signal processing (DSP) capabilities. In its Medical segment, IIN has a strong presence in the diabetes market via its partnership with Medtronic (MDT) to make their wireless continuous glucose monitors (CGM), sensors and accessories.
Its Hearing Health segment provides miniature hearing aids and its Professional Audio segment provides miniature audio devices for use in aviation, fire, law enforcement, safety, military and the performing arts.
The stock has been ramping since IIN reported strong Q3 results in early November. Its Medical segment saw revenue jump 68% YoY in Q3, primarily driven by the continued ramp of Medtronic's MiniMed 640G and 670G wireless glucose monitoring systems. IIN's Hearing Health segment sales increased 54% in Q3, helped by a 94% increase in direct-to-insurance sales.
IIN remains very well positioned with Medtronic long-term, providing both CGM and sensor assembly. Of note, Medtronic expects to increase sensor production capacity by the spring, which should drive significantly higher sensor assembly sales in 2018.
Of note, IIN's Hearing segment got a boost on the legislative front when, in August 2017, President Trump signed the FDA Reauthorization Act, which includes the OTC Hearing Aid Act of 2017. The legislation will enable adults with mild- to moderate-hearing loss to access OTC hearing aids without being seen by a hearing care professional.
Nearly 30 mln Americans experience age-related hearing loss, including over half of adults between the ages of 70 to 79. Yet only a small share of Americans with hearing loss (around 14%) use hearing aids, primarily due to their high cost ($2,400/ear). This should provide greater public access to OTC hearing aids at a lower cost, which is good for IIN.
In terms of recent news, IIN recently closed on its acquisition of Hearing Help Express (HHE), acquiring the remaining 80% it did not already own. It was a small transaction, but the importance of it is that HHE is primarily a direct-to-consumer mail order hearing aid provider. HHE offers a lower-priced alternative for consumers to purchase devices directly -- circumventing layers of costs associated with the conventional hearing aid channel. IIN has been wanting to build up its direct-to-consumer offerings, so HHE is a good fit in that regard.
Looking ahead, the company feels its future is bright. Its medical business is thriving and IIN continues to gain momentum in value hearing health. With that said, the company is small as it is forecasting Q4 revenue of $22-23 mln but it is profitable. For 2018, revenue is expected to grow to $100-104 mln, up from $88.1-89.1 mln in 2017.