Phonak Marvel Bluetooth Hearing Aids Power Sonova Success
Powered by the successful launch of Phonak Marvel hearing aids, which offer universal Bluetooth connectivity, Sonova Group reported healthy increases in revenue and profit for its 2018/19 fiscal year.
Sonova, the world's largest hearing aid manufacturer, reported sales of CHF 2.76 billion ($2.73 billion USD), an increase of 4.4% in Swiss francs or 4.1% in local currencies over the prior year. Earnings for the year were CHF 0.59 billion ($0.58 billion USD), a 7.7% increase in Swiss francs and 6.7% in local currencies.
Sonova sells multiple brands of hearing aids through independent hearing health practices as well as its own network of hearing aid retail outlets. It sells cochlear implants and implant sound processors through independent audiological and surgical implant clinics. (Source: Sonova annual report)
Bluetooth hearing aids drive revenue increase
Sonova CEO Arnd Kaldowski said the new Bluetooth hearing aids met the growing market demand for comprehensive connectivity with mobile phones and other wireless devices. "The product was excellently received by our customers and enabled a substantial acceleration in organic growth in the hearing instruments business in the second half of the business year," he said. "At the same time, we made good progress in sales execution in our audiological care business."
Phonak Marvel hearing aids utilize an advanced chip technology that enables wireless connectivity to Android phones, iPhones, and all other Bluetooth products. Following the November 2018 Marvel introduction, organic growth accelerated to 7.0% in the second half of the fiscal year, the company said.
Sonova also reported strong financial performance across its other businesses. Sonova's three business segments include: hearing aids sold wholesale through independent hearing care practices (Phonak, Unitron and Hansaton brands); a global network of retail stores owned by Sonova that provides products and services directly to consumers; and Advanced Bionics cochlear implants.
Hearing aids reach new customers
Europe led the way in hearing aid sales, with revenue growing at a double-digit rate in the second half of the year. The entire EMEA region (Europe, Middle East and Africa) posted an 8.3% revenue increase in local currencies for the year.
Sales increases in the U.S. were slower. But Sonova noted that patients in the U.S. Veterans Affairs (VA) hospital system, the largest dispenser of hearing aids in the U.S., have held off on purchases as they awaited the introduction of Marvel hearing aids in the VA this spring. The company also said introduction of next-generation Sonova Brio-brand products at the Costco store network, another leading U.S. sales channel, is expected to drive sales increases going forward.
Retail network restructuring bears fruit
In the Sonova retail network, Europe also led the way. Full integration of outlets in the AudioNova network, which Sonova acquired in 2016, resulted in revenue increases with higher margins.
Sales increases in the U.S. were less as Sonova completed a restructuring of its retail operations. But the company noted its U.S. retail outlets, which include the Connect Hearing network, registered increases in same-store sales following the restructuring.
Cochlear implants gain ground
Sonova reported the Advanced Bionics cochlear implants business posted a 6.3% revenue increase, in local currencies, following the launch of the HiRes™ Ultra 3D implant in September 2018. The new implant features an innovative magnet design that allows cochlear implant recipients to undergo MRI scans without the need to surgically remove the magnet. And the company said it expects sales in the coming year to be powered by integration of Sonova's universal Bluetooth connectivity technology into Advanced Bionics cochlear implants.
R&D investments for future products and services
Sonova said it maintained research and development spending at a rate of 5.4% of sales in the 2018/19 fiscal year. It said its focus will be on strategic technologies that will deliver new premium products and features, including eSolutions, more wireless connectivity, more rechargeable hearing aid options, and constant improvements in hearing aid sound processing.
“With the successful launch of Phonak Marvel, Sonova reinforced its position as an innovation leader," said Kaldowski. "I am confident that we are strongly positioned for further profitable growth.”