Hearing Aid Sales Flatten in Second and Third Quarters of 2022
Net unit hearing aid sales in the United States fell slightly (-0.8%) in the third quarter compared to the same period last year, according to statistics generated by the Hearing Industries Association (HIA), Washington, DC—probably reflecting a gradual expenditure of pent-up demand following the bumper post-pandemic sales experienced during 2021. Private/commercial unit sales (which include mass merchandisers) in the third quarter decreased -3.2%, while dispensing activity at the Department of Veterans Affairs (VA) increased by 11.6%.†
Through the first three-quarters of 2022, total U.S. hearing aid sales have increased by 1.9%, with private/commercial sales being flat (0.3% increase) and VA units increasing by 10%. The VA currently constitutes 18% of all units sold in the U.S.
U.S. net hearing aid unit sales from 2016 to present, with blue bars representing private practice/commercial unit volume (including mass merchandisers) and red bars representing VA units. Percentages at the top of each bar are changes in unit sales compared to the same quarter in the previous year, and the red percentages on top of the graph are the annual percentage increase/decrease versus the previous year. *2022 sales for Q1-Q3. Source: HIA.
It would appear hearing aid sales are hitting the pause button. But any analysis of the 2022 HIA statistics must consider the spike in 2021 sales which serves as this year’s comparison base. Predictably, hearing aid sales have tapered off since the 185.3% unit increase during the initial market recovery that began in Q2 2021, followed by increases of 20.7% and 16.6% in Q3 and Q4 of last year, respectively.
In the first quarter of 2022, hearing aid sales increased by 7.8%, then essentially fell flat with sales of -0.6% in Q2 and -0.8% in Q3.
Comparing 2022 Hearing Aid Sales to Pre-pandemic Sales in 2019
Given the unusual sales comparison base in 2021, this year’s HIA statistics might be better analyzed against those of pre-pandemic 2019. When comparing the first three quarters of 2022 sales with those of 2019, total unit sales have increased by 15.6%, with the private market growing by 17.5% and the VA by 7.4%.
Because of its unique patient population and service centers, VA dispensing was hit disproportionately hard by the pandemic then recovered much more slowly than the commercial market; the VA dispensed about 6,000 fewer hearing aids in 2021 than in pre-pandemic 2019, while the commercial sector dispensed over a half-million more. This suggests the VA should still be dealing with a lot of veterans who need hearing help. Not surprisingly, we are now seeing the VA exhibit greater dispensing activity in 2022, with 10% unit growth in the first three quarters compared to the same period last year.
As I noted in the May 2021 Hearing Review annual market update, “The larger question is if the slightly lower sales growth for the private sector during Q4 2021 (an 8.7% increase as opposed to much larger increases in Q2 and Q3 2021) is due to the gradual exhaustion of pent-up demand or simply a pause in double-digit growth.” The answer to this question is still debatable because more factors are now involved.
Are the Economy and the Prospect of OTCs Flattening Hearing Aid Sales?
Besides an exhaustion of pent-up demand, two other possible explanations for flat sales during the past two quarters are the economy and the advent of over-the-counter (OTC) hearing aids which are a new FDA class of devices officially available on October 17.
Seniors may be tightening their belts, as retirement accounts have taken a hit from a slumping stock market (currently down 25%) and inflation (up 9%) that makes it harder to keep afloat if you’re on a fixed income. Additionally, it’s possible that would-be hearing aid buyers are sitting on their wallets, waiting to see what the new OTC hearing aids might offer in features and prices. Although there has been a lot of media coverage regarding OTC, it appears that—if, indeed, there are consumers waiting for OTC—they may be on the sidelines for a while until a large number of brands and models are offered.
As Tarik Zukic observed this week at the German EUHA Congress, the hearing industry’s largest trade show, the two new Sony OTC products have a strong resemblance to the “Signia Active Pro and Signia Silk, traditional hearing aid products that were introduced quite some time ago.” This suggests OTC may evolve much like digital signal processing (DSP) did in the late-1990s—with the first models largely replicating and modestly tweaking what we already know works, in this case in-the-ear (ITE) and receiver-in-the-canal (RIC) hearing aids.
I’m skeptical about consumers delaying purchases because they’re waiting for OTC; anecdotally, I haven’t heard dispensing professionals complain about empty appointment calendars. With a recession and more inflationary pressure, that certainly could change. But given the healthy amount of market growth experienced since the pandemic, it appears—at least for the moment—the U.S. hearing healthcare market is still progressing at the higher end of its historical annual growth of 3-5%. For the private/commercial market, there were 17.5% more unit sales in the first three quarters of this year compared with the same period during pre-pandemic 2019. This amounts to a 3-year compound annual growth rate (CAGR) of about 5%.
So, taking the long view, U.S. sales are actually pretty good—for now.
We have what looks like a global economic swoon, a brutal and worrisome war in Europe that may result in a continuing oil shortage on the cusp of winter, and budget-sapping inflation. In a recent conversation with GN North America President Scott Davis, we both agreed that inflation is currently the most worrisome factor for U.S. seniors on a fixed income: inflation cuts into the long-term value of assets and current purchasing power.
While I’ve made the case several times before that hearing healthcare is uniquely resistant to recessions because people who realize they have a hearing loss rightly view it as a medical problem, HearingTracker predicts hearing aid sales will remain relatively flat or decline modestly in the next couple quarters. Based on the current year’s sales and previous history, 2022 year-end unit sales should approximate those of last year at around 4.71 million units (about 18,000 fewer units than in 2021, a nominal difference).
Although 2022 U.S. hearing aid sales have flattened (-0.6% in Q2 and -0.8 in Q3) after first quarter gains of 7.8%, these reduced percentages are largely the result of having a strong comparison base due to the bumper sales growth and pent-up demand in 2021 following the pandemic. Total hearing aid sales in the first three quarters of this year have increased by 1.9% over 2021, mainly due to strengthening VA sales. The economy and OTC hearing aid sales remain wild cards. But, when taking the long view, the hearing aid market has a 3-year compound annual growth rate of about 5% since pre-pandemic 2019, which is at the high end of its historic average growth rate of 3-5%.
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† In Q3 2022, a total of 56,476 units were dispensed under Medicaid (4.5% of all US units), and these are not included in this analysis.