Welcome, everyone, to the IHS webinar. The U.S. Hearing Aid Industry Trends and Updates, sponsored by Oticon. I'm your moderator, Leslie Staniszewski. I'm IHS's Director of Marketing. Thank you for joining us today. Before we get started, I want to share a few housekeeping items for our session today. We are recording today's webinar, so it can be offered on demand through the IHS website in the future. Closed captioning is available and can be turned on using the Zoom toolbar, as shown on the screen. Today's webinar is available for attendees to earn one continuing education credit through the International Hearing Society. The CE quiz and information about how to receive credit can be found on the IHS website at IHSinfo.org on the webinar page. Click on the webinar banner on the IHS homepage or choose webinars from the navigation menu. Links to the IHS webinar page are being added to the chat box in this session. The slides for today's presentation are also available to download from that same page. Feel free to take a moment now to do so, if you would like. Tomorrow, you will receive an email from IHS with a brief survey about today's webinar. We appreciate the few moments it will take you to complete the survey. Your feedback is incredibly helpful, and we look forward to hearing from you. As we continue to create valuable content for the hearing health care community. And finally, today's presentation is sponsored by Oticon, and represents their view on industry trends and changes. The content today has been specially developed for you by Oticon, and may not necessarily reflect IHS's policy and stand on hearing health care issues. And now, on to our presenter. Hearing health care is constantly evolving as new innovations develop. To share his valuable insights with us today about the state of the hearing health care industry, we welcome Gary Rosenblum, President of Oticon and Chairman of Hearing Industries Association. Gary has been President of Oticon, Inc. since October of 2016. He is responsible for leading the U.S. Oticon organization, consisting of its sales, marketing, customer experience, training, audiology, and business development teams. He brings a rich understanding of how customers and consumers are adapting to a changing health care environment. Prior to Oticon, Gary ran several medical device and consumer health care businesses for Fortune 500 companies, including Johnson & Johnson, Abbott Labs, and Pfizer. Gary earned his MBA from Cornell University and his BA in Psychology and History from Washington University in St. Louis. In 2021, Gary assumed chairmanship of the Hearing Industries Association, the national trade association representing global manufacturers advancing hearing technology, public policy, patient safety, and education. I think it's safe to say we've got an expert on our hands today. As you can see, Gary has much to cover with us today. At the end of Gary's presentation, we'll move on to a Q&A session. On your bottom menu, you'll see icons for chat and Q&A. We ask that you keep general conversation in the chat box and enter all questions, which you can send in at any time during the presentation, in the Q&A box. And now, let's welcome our presenter. Gary, take it away. Take it away. Thank you so much. Great to be here. Hope everybody's having a great summer. I just want to introduce myself. I am Gary Rosenblum. I'm president of Oticon. I'm going to get my presentation started. Give me one second. All right, here we go. So, it is fantastic to be with you guys today. Hopefully, you can see my screen and hopefully you can hear me well. It's been an interesting year so far. I don't want to jump into the slides just yet. I want to talk about what's going on with our industry. You're seeing in the news about inflation. You're seeing challenges overseas and a lot of disruption to the global supply chain and that sort of thing. I would say that those things that you see in the news are definitely affecting the hearing aid industry. I'll be very clear about that in my presentation. It's a lot tougher to get products made these days. It's a lot tougher to get products shipped and get product over to you all who are obviously treating patients every day. So, it's been a real challenge, but I would say that, and I think hopefully this is a takeaway from today's presentation, is that I think our industry is quite resilient and we're faring a lot better than other industries. And I'll explain why that is in a little bit. But again, I just want to make sure everyone's enjoying their summer. And I think the takeaway here also is that all is not lost. Things are actually very, very positive for us in the foreseeable future. And again, even specific stuff that's going on with our industry, like last year was about the Build Back Better Act and potentially having hearing aids covered by Medicare. And that was possibly good, possibly not so good, depending on reimbursement rates. Right now, we're obviously about to see the release of OTC hearing aids. And I know it's been a long time coming. It's actually been going on now for really seven years. I think it was first teed up in 2015 in the PCAST study, or even actually before that one, I'm sure it was thought of as a new category by some industry partners. So that's going to release and that is going to obviously have an impact. In my opinion, it'll actually be a positive impact and I'll explain why that is in a little while. So with that, I just want to give you and level set the room or level set wherever you are, if you're in your car or if you're at home watching this. I think our industry is poised for greatness. I think this year is a little bit of a blip, frankly, and I'll explain why there's really nothing to fear that. One of the things that is so critical about the hearing aid industry in the United States and why it's really different from other countries is that we have the highest prices in the world, but we also have the highest satisfaction rates in the world. And that's not satisfaction rates related to my product or any of my competitors' product. It's satisfaction rate on the job that you all are doing in that you'll see some stats from me in a little while, but it's floating around 85, 95 percent, which is 20 points ahead of even Mercedes-Benz. So what you guys do every day is even by people who don't buy the hearing aid in your office is considered very, very high level of service and very, very positive response. And because of that, our industry is really fit for growth in the future. All right, so let's jump in. Some of you may not know me, so I'm going to give you a little bit of background about me and who I am, what I'm all about, and then we'll jump into the rest of the agenda. So first of all, as I mentioned this in the beginning, I've been with Oticon since 2016, so about five and a half years. The way I describe myself, I don't actually describe myself this way when someone asks me what I do. I don't say I'm a patient-focused medical device business professional, but I think that's a good way to kind of round out what my background is because my experience has been in consumer health care, working with big brands, like I worked on Chapstick and Robitussin, and I ran Centrum for the United States earlier in my career, and I shift over to more health-oriented medical devices. I worked in diabetes care for many, many years for Johnson & Johnson, did some even harder core medical devices like surgical supplies. Then in 2016, I was fortunate enough to be recruited to run the Oticon organization, and I can tell you that it has been a fantastic ride for the last five and a half years. I am hooked on this industry. I love it. It is a really, really interesting industry. One of the things that I think is so cool about it is that when I look back at my experience at J&J, at Johnson & Johnson, my five biggest customers took up about 90% of my business. Now, the customer base is so fragmented, which is actually a good thing, is that there are so many entrepreneurs out there, many of whom are obviously listening to this call, and it is these groups, this group of customers that I really enjoy working with. That makes it a very, very interesting job. There are always new things that pop up every day, but I also feel really good about what the hearing care world does, and one of the first videos that I watched or actual experiences that I had coming to Oticon five and a half years ago was an experience where someone tried one of Oticon's products, and they felt like they had a disability. They used the word disability, and they no longer have a disability. Of course, it is not necessarily the right definition for what the change is to hearing loss, but to see tears in this woman's eyes and to understand what it is that our customers like yourselves are doing every day is a wonderful thing. It helps me sleep very well at night, and it keeps me very interested in doing what I am doing. That is the background about my professional experience. Here is the family. I have a son, Ari, my daughter, Ayla, and Moxie, our Labradoodle, and my wife, Naomi. We live in Princeton, New Jersey. Let's jump into the industry update. I really hope, obviously, I prefer to be in a room when I present this type of stuff because I love to get the interaction. Hopefully, we will have a good way to interact at the end of this presentation today so I can answer any questions that you have. I will buzz through these slides, and then we will get to the Q&A. The first thing that I wanted to share with you is a boring PowerPoint slide of a graph, but I wanted to share what is interesting about this because there is some intrinsically fascinating things about this. The numbers on the bottom of the slide are wrong. I apologize for that. It should be 2019, 2020, and then 2021. Bear with me. In 2019, the industry did about 4.2 million hearing aids. That is the far left graph or bar. That was a pretty steady increase over 2019, about a 5-6% increase. In 2020, which is the middle bar, you can see how much the market dropped, which was about 18%. That was a pretty significant drop, but much less than we thought it was going to be considering it was the year of COVID. In 2021, which is incorrect again on the slide, the number was 4.7 million. What is interesting about this is that we would have expected 2021 to be a lot higher than it was considering how many hearing aids did not get sold in 2020. Again, 18% left. When you think about it, if you look at it this way, these numbers are correct. I apologize for that. In 2019, in 2020, if COVID had not happened, the way that the industry grows in terms of the number of hearing aids that get sold, we should have sold 4.4 million hearing aids if COVID had not happened. If you toggle back here, it is 3.4 versus 4.4 in that middle bar, the 2020 year. That means that literally a million hearing aids did not get sold in 2020, which you would expect based on the rise of baby boomers and the amount of people entering our category, we would have expected that to come back. It did come back in 2021. 2021 was a very, very solid year, but not all of it came back. What it says is there is still a significant amount of patients out there that are in need of your care. I think 2022 is actually stifling a little bit of that because of the inflation that we are seeing. Next thing I wanted to share with you is where hearing aids are actually being sold and how they are being paid for. Obviously, I think this group especially is dealing with the rise of managed care. I totally get that. The important question or comment here is that private pay still represents a significant amount of the hearing aids that are being purchased, 66% to be exact. Given the fact that managed care is rising, it is still rising to a level that is manageable, in my opinion, if I am a private practice owner. There is still a significant amount of private pay patients that are walking in the door. Medicaid, about 5%, and then, of course, VA represents the rest. Let's move on to this one, which is probably the best place to go. I will talk about 2022 for a second, and then we will go into this slide, which represents the number of recent entrants that have entered the category for hearing aids. 2022 has been an interesting year. 2022 has essentially been flat for the year. We saw a little bit of an increase in the first quarter and second quarter, but really, since June and July, the overall hearing aid business for the US this year has been relatively flat. I think that is actually OK, because what it means is that the inflation that we are seeing is not affecting us as much as we would expect. An 8% or 9% inflation rate, CPI stats that came out last month, which is consumer price index, said that prices were growing at about 9%. The fact that we are seeing, yes, there is an inflation effect, but the fact that the hearing aid industry is not in decline is a very, very positive development. Speaking of developments, I wanted to share this, which is recent entrants into the category of hearing aids or over-the-counter or I should say hearing care in general. Now, some of these are apps. Some of these are actual device manufacturers. Some of these are retailers. What is going on is something that I have been tracking very carefully, because I am a New Yorker, and by being a New Yorker, I am essentially paranoid. I also care about what is going on in my industry. What is interesting is that there has not been a lot of success coming out of these new entrants. You guys have heard that Bose has left the industry about a month ago. Actually, two days ago, they announced an alliance with Lexi, which is a Walgreens over-the-counter. I should call it direct-to-consumer. It is not so over-the-counter. It is a direct-to-consumer solution. Lively, I am sure you know about. Eargo has had their own problems with their Department of Justice investigation. Noople actually was an app that recently just closed their doors. Sonic Cloud, Mimi, Neuromod, these are all upstarts that really have not made a lot of traction yet. We are tracking them as a company and as HIA to see how these things are taking hold. What I would say, though, is that the traditional way of addressing hearing loss, where a patient actually walks into a person's office and is treated by a hearing care professional is still the most popular way and the most appropriate way to get your hearing checked and obviously your hearing loss addressed. It is not that we are seeing a significant shift away from that based on these new entrants that are entering the category. I thought it was important to talk about that a little bit because you guys are probably seeing this stuff in the news all the time, as do I. When you see new entrants, of course, sometimes it makes you nervous. Sometimes it makes you excited because it is going to bring new patients into the category. Can me as a manufacturer partner with this organization? Are they a competitor? Are they a complement to my business? These are all things that we think about when we see these new entrants. The bottom line is that we have not seen much of them take hold. I will tell you that Eargo actually did sell over 120,000 hearing aids two years ago, but a lot of that came from a lot of marketing spend, meaning they spent a lot of money to actually get these patients into their pipeline. They have not been profitable. They have never been profitable based on their own public filings. Then, of course, with the Department of Justice investigation, that has not necessarily gone too well for them. Their stock prices dropped to under a dollar. Again, I am not here to talk negatively about Eargo. The reason I bring it up is that this is just not an easy industry to get into. You think about the business concept of a barrier to entry. You are not in a situation where you are creating a behind-the-counter Advil or ibuprofen. You are just developing the same exact product, which is a pill, and putting it on the shelf at Walgreens. It is a much more different scenario when it comes to hearing aids because you have the care element, which is really probably the most important reason why, in my opinion, OTC is not going to really affect our industry very much in a negative way. In a positive way, it will definitely bring people into the category who will ultimately probably seek the help that you guys provide. Let us talk a little bit about key trends. This is my favorite slide. I know it is a little bit of an eyesore, but I want to just hone in on the x-axis of the graph, which tells you the years that babies were born in the United States. If I direct your attention to 1950, which is on the bottom left of your screen, 1950 was one of the highest birth rate years in the history of the United States. Fast forward 72 years, we are where we are. Somebody who is 72 years old, who was born in 1950, they are existing now in 2022, the current state that we are in. Look at what happens after 1950. Look at those birth rates, how quickly they skyrocket to the highest birth rates ever in the history of the United States in 1957, 1958. So what that means is the folks who are sort of in the, call it the hearing aid sweet spot, which is 1960, I'm sorry, somebody who's 65 to 75, they are now, the most amount of people in the history of the United States are actually turning these ages and they will definitely be in need of our care. So it's actually a very, very positive development for our industry. You know, you have other medical device industries where the people entering the category are actually decreasing every year. In our case, it's the opposite and it's an exponential growth that we're gonna see really over the next 10 years. So I'm excited about that. Hopefully that makes sense. All right, so now let's talk about key trends that are driving industry growth. And again, it talks about, I'm gonna talk about this in the context of baby boomers as well, but there's other things that are actually driving even more interest in our category. So some of you may have seen me do this presentation before and I'm sorry if I'm telling you the story for the third time, but it's such a great story and I think it's cool to talk about. So I have an 82 year old mom who I'm very close with and she has an acoustic neuroma. And back in the 1980s when I was a teenager and she was, you know, she didn't have her acoustic neuroma back then. She would ask me almost every night if I could program the VCR for her because she couldn't figure it out. You know, she ended up showing me the tape, Oprah or Dynasty or something like that. And the, you know, the interesting about my mom who was not very tech savvy back in the 80s, now she has an acoustic neuroma, but she has an Oticon More, she has an Oticon Ponto, she has a Kinect Clip and she has a remote control and she programs a lot of the stuff herself. So the point of me telling you this is that seniors are becoming a lot more savvy. They're walking into offices with a lot more information at their disposal because they know what they need and they know what they want and we have to respect them and treat them as such because they're extremely savvy people and they can actually help us to aid them in their care rather than assuming they don't know anything. So what I've seen, especially in my five and a half years is that seniors walking into these offices are extremely smart and really want the best technology and they're gonna have a lot of questions about it. So it's something that we think about at Oticon when it comes to what the products that we're developing. Aging population, of course, this is critical. And I just talked about that on the previous slide in terms of how important baby boomers are, but I think hopefully that, you know, that 1950 statistic really encapsulates what we're about to experience as an industry. It's a very, very positive thing. Global effect of untreated hearing loss. I think, you know, I think we all on this phone, on this call know about the Lancet study from 2017, probably the most, you know, let's call it the watershed moment for identifying how important it is to treat hearing loss, that it's addressable. In terms of staving off cognitive decline, one of the most addressable areas to do that is by treating your hearing loss. So at Oticon, again, we are very focused on, of course, brain health. Brain hearing has been one of the most important elements of our brand equity for many, many years, but also that connects to the importance of addressing cognitive decline. All right. Thanks, Chelsea. Chelsea is keeping me on track here. Connectivity and digitalization. Of course, this is critical for us. You know, I think after the first internet connected hearing aid came out, connectivity has been a very, very important feature for every hearing aid manufacturer. It's a, you know, it's a cost of doing business now. It's an essential. But how do we make connectivity even better? How do we make the sound quality of your phone calls or your watching Netflix through your hearing aids, making that even better so the sound quality is improved? Digitalization, of course, is also critical for us in terms of understanding how we can use digitalization to look at data coming from hearing aids to understand how to improve hearing aids for the future. Capturing the customer is also something that we at Oticon are looking at very carefully. We, of course, you know, we support many of our practitioners with marketing, but we also look at ways to enhance local marketing efforts to drive more patients into practices across the United States. So we look at, you know, marketing as national and local, local where you can work with our marketing sales associates but also we think about, you know, a nationwide digital campaigns to really get a lot of interest for our products to drive people to your practices. And the last is new competition. And I think it's actually, I put OTC on there to be a little controversial, but also to mention how important it is that, and how positive I think OTC will be. Now, Oticon specifically will not be getting into the OTC business. We are very focused on the medical model. That's been, again, our core brand equity for almost 117 years or 118 years, I should say. And we're not necessarily in the business of creating hearing aids where a hearing care professional is not involved. And we're totally cool with the fact that there will be those competitors out there. But what we're excited about is the fact that it will probably bring new patients into the category and hopefully shrink the distance between the day that a patient is diagnosed and the day that they actually are fitted with a hearing aid. So we look at it as a very, very positive thing and we're very supportive of it, as is HIA. HIA has been very supportive of OTC since the beginning, even though the media is kind of painting a negative picture of us as, you know, as an oligopoly or a cartel and we're actually stifling OTC. It's not the case at all. So we're actually very supportive of them. All right, quick legislative overview, which I thought was important for you guys to understand. This is the boring stuff. I apologize, but it's really critical for you to know what we're doing at HIA. I am the chairman. I'll be chairman for another year. My term is up in July of next year, but we have a pretty packed agenda for the next year. So this is what we're generally focused on. First is to educate Congress on HIA's position on OTC. So again, I've walked into many meetings with Congress people, both Senate and House people, and both Democrat and Republican believe that the Hearing Industry Association and hearing aid manufacturers are anti-OTC. And that is not the case at all. When we originally came out with an opinion, we were very supportive of it for mild hearing loss. We said that we were not supportive of it for moderate hearing loss because of the potential comorbidity risk. But they kind of construed that, that we are sort of stifling it and stopping it from happening. And there was a recent article that came out from Elizabeth Warren's office, which said that we're creating this letter writing campaign that stopped up the public commentary period once the guidelines were in draft form, which was completely not true. So a lot of politics around this legislation. And frankly, I can't wait for it to get released so that all of the stuff that's happening in the media can get behind us and we can get on with our lives because we're consistently being painted as a very negative industry. And it's really not the case at all. And it also puts practitioners in a negative light. It somehow convinces the public that seniors are being gouged, which is not the case at all. They assume that manufacturers are charging $6,000 for hearing aids. And of course, that's not the case. They're not understanding the business model. A manufacturer sells to an audiologist or a hearing instrument specialist, and they sell to a consumer. All of that has been very confused by the media and we need OTC to get behind us so we can just get back to focusing on what's really important, which is taking care of patients. So educating the HIA's position on OTC is critical. The other thing that's important here was the comments that we put into the public comment period about game limits and output levels. We wanted them to exist. We thought that was important from a safety and efficacy perspective. We were very, very clear about that in our public comments. It doesn't look like the FDA is going to react positively to that, but we did what we had to do. I think it's okay. I don't think it's a knockout punch, but it may mean that if OTC devices come out without the game limits or output level sort of limits themselves, there could be some harmed patients out there. Okay, the other thing that was really important related to OTC was the importance of a hearing professional and understanding and addressing hearing loss. I think that was an absolutely important element in this. And again, we just don't know how the FDA will respond. How we want them to respond is by saying in labeling, in any type of communication, that if any type of problems occur, please go and see your hearing care professional. So hopefully that will be included in the marketing guidelines and the labeling guidelines of the OTC guidelines that come out. Likely it's going to come out in, my guess is September, October. Okay, so Medicare expansion is the next one. Convey HIA's position on Medicare expansion. So last year was an interesting year with the Build Back Better Act that was never, or Bill, I should say, was never obviously signed into law. Positive there was including hearing benefits in Medicare expansion. What most people don't realize is that if Medicare was to be covered by, I'm sorry, if hearing aids were to be covered by Medicare, there would be a significant reimbursement challenge because of competitive bidding. Competitive bidding is a process by which the CMS, which is the Center for Medicaid and Medicare Services, actually puts the business up for bid every three years. And providers actually have to bid on what is the reimbursement rate that they can accept. And if that reimbursement rate is, then that reimbursement rate in other categories in which I've worked has been extremely low. So basically in some cases, you could have providers who are issuing bids just to win the business, even though they won't make a profit on it. And that is a really, really big issue. I don't think OTC is a problem at all. I do think competitive bidding is a major problem. So luckily the Build Back Better Act did not pass, but what I would ask you is to really keep your eyes on competitive bidding if hearing care is being considered for coverage again, because competitive bidding can be very, very detrimental to our industry. The last is minimizing the behavior of bad actors. There are many, many companies out there that are making false claims about their hearing aids, whether or not it's FDA approved or cleared or covered. They make a lot of claims that are completely untrue. And unfortunately, because we've been in this gray area with OTC, the FDA has been very lax about enforcing some of the marketing guidelines and the messaging guidelines with respect to what you can say in advertising. So you've got probably a thousand companies on the internet saying that they have over-the-counter hearing aids for sale. By the way, over-the-counter hearing aids don't exist yet. It will not exist until the final rule is published by the FDA. So every single one of those sites that says that they're selling over-the-counter hearing aids, they are falsely advertising that. So we, of course, at HIA, we'll be working with the FDA to clamp down on that. FTC as well, that's the Federal Trade Commission, which covers consumer protection. But FDA, but also, and probably even more effectively, is working with state attorneys general. And these guys are the lions of consumer protection. They're gonna do a lot more for consumers in certain states than the FDA ever will. I'll be very honest with you. The FDA is very slow and they don't enforce things very well. State attorneys general do. They impose fines, in some cases prison time, threats, cease and desist orders, et cetera. They are very, very good about getting stuff done in their individual state. Now, here's my ask to you, is if you do see some of these bad actors out there, somebody on late night TV talking about over-the-counter hearing aids or hearing aids that work just as good as traditional hearing aids, or have the best hearing aid on the planet for only $69.99, you have to look at that and you'd have to go to your state attorney general and complain about this because ultimately it could be harming patients. So that's probably a much more effective way to address bad actors. But we at HIA will also be doing it at the national level, but at the state level as well. All right, hopefully that makes sense. All right, so what I wanna do next is talk about some consumer insights. So every, it depends on the year. Sometimes every three years, sometimes every two years, sometimes every four years, HIA commissions a study called MarketTrack. And MarketTrack basically is a classic survey of patient behavior. It's only the patient, I'm sorry, it's not just the patients, it's the some HCPs, but it's mostly patients and how patients are interacting with hearing care. And it's probably about 75,000 patients that are actually contacted. So it's a fairly robust study and a lot of questions are asked. And the original presentation is 204 pages. So we're gonna go through all 204 of those pages right now. No, I'm joking, of course. What I did was I pulled out what I thought were the five most interesting, call it tidbits or facts from that study. And I'll share that with you right now, all right? Okay, so the first is talking about how patients rate the experience with HCPs overall. And what's interesting about this slide is that it talks about hearing aid owners, people who actually purchased hearing aids, but also people who went to see a hearing instrument specialist, but didn't buy hearing aids. And how did they feel about the experience? And in most cases, you can see here, did the HCP provide realistic expectations on what hearing aids can and cannot do? 80% said, absolutely. Owners said 85%, non-owners said 65%. So still a high number of people who did not buy hearing aids believe that they had a pretty positive experience. Did the HCP consider your needs and abilities when recommending specific hearing aids? Yes, very high marks there. And again, even for non-owners, 59%, pretty good there. Pretty good score there. Did the HCP allow you to take just the steps you want, meaning just to get a test, try, et cetera? Again, really good scores, provide a variety of listening situations in and around the office. Again, solid scores there. And then on the flip side, they asked, did the HCP seem to be more focused on making the sale rather than finding a solution? That doesn't seem to be the case. It seems like in most cases, you know, about 75% of the time, the hearing care professional is very focused on patient care and not so much about selling hearing aids. This one is also one that I thought was really relevant for the OTC discussion. So the question is, how many visits did it take to get the hearing aid to sound right? Now, if you're buying an over-the-counter hearing aid at CVS or Best Buy, okay, are you gonna have to go back and talk to the guys in the blue shirts about the hearing aid that doesn't sound right? It's gonna be a little bit challenging. You need a hearing care professional to actually work with you to get your hearing aid to work effectively, especially for current hearing aid owners. You know, even, I'm sorry, even for past or non-owners. Now, the point here is even for a current hearing aid owner, you know, most take two to three visits, but for a past or non-owner, it takes a lot more. So, you know, I think it's interesting to see how important it is to develop that relationship with your HCP. So, all right, let's keep going. Satisfaction rates, I talked about this before. You know, I think some of the OTC stuff and some of the, let's call it the new business models, have dropped the overall professional satisfaction rate a little bit. But if you look here, these are the different market track years. So, again, it's about every three or four years that we do market track. And, you know, for non-owners, it's still a very high percentage, 73%. But for hearing aid owners, it's over 90%. You know, so it's great to see the level of satisfaction rate here. Now, this is always amazing to me because, you know, I work for a global company and I see the satisfaction rates all over the world and I see the prices all over the world in terms of what the actual patient, the price that the patient pays. And it is much, much higher in the United States. And yet the satisfaction rate is much higher elsewhere. I mean, hearing aids are about half the price that they are in Japan, but the satisfaction rate is about a third of the level that it is in the United States. So it's really cool to see what you guys are doing every single day, that you're actually delivering a tremendous level of service to get this level of satisfaction. As I mentioned before, Mercedes-Benz has a satisfaction rate of about 70%. So you're doing better than the Benzes out there. So good job. And this was another interesting one that was unique for the study that we did this year, which was, hold on a second, just gonna check in with Chelsea. 10 minutes left, Chelsea, we're doing great, thank you. I wanna make sure we have enough time for Q&A. All right, so that's why I skipped those two slides earlier is to make sure we cover the good stuff. This was interesting. I think it's important to know that there's obviously been a little bit of a shift in the hearing aid world when it comes to the traditional fitted by person or has the person self-fitted the hearing aid or has it been fitted remotely by an HCP? I know Oticon released our remote care solution right in the middle of COVID and probably about, I think it was March of 2020 when we released remote care. But this is also lively, this is also ergo. So there are some remotely fitted patients out there, about 12%, which was higher than I thought it was going to be. So a significant development in terms of how patients are actually being fitted. So a total of almost 20% of patients now who are not being fitted in person by an HCP. This one was an interesting one from a sales perspective. We looked at what is the age of a current hearing aid? And it says that there's a lot of hearing aids out there, 13% of the hearing aids out there that are being used that are more than six years old. So it means that there's an opportunity to pursue people out of warranty opportunities. But it also says that drilling into your database and bringing your patients back is a critical way to drive your business forward. So there's still a lot of opportunity out there of patients who are ready for their second or third pair. Another interesting stat that I thought was critical was about third-party awareness. And hearing aid insurance, believe it or not, exists much, much more than patients think, okay? So typically, you will get hearing aid insurance through Medicare Advantage plans. And these days, Medicare Advantage plans, probably about 95% of them have a hearing aid benefit. So if you think about it, there's probably about 45% of Medicare beneficiaries, these are people over 65, who use Medicare Advantage. Of those 45%, 95% of them have a hearing aid benefit in their overall package of medical insurance. You probably have about 40% of the people in the United States that are not aware or probably are a little aware that they have a potential benefit for getting either a discount or even fully zero out-of-pocket hearing aids. So as you can see here, there is a significant amount of just lack of awareness about hearing insurance in general. Which brings me to my next slide, which was, you know, probably this is sort of the money slide, which is, you know, what is the motivation to buy? And what is the experience that would most motivate a hearing aid purchase? And believe it or not, you know, I thought the second one here was going to be number one, which is a hearing test that makes it clear to me that I need one. 31% of people said that motivates them. But 44% said having insurance that would cover some or more of the cost, which is very interesting in that people, again, there's a significant lack of awareness about hearing aid insurance out there. And the number one reason why people will buy a hearing aid is having insurance. So clearly, there's a gap there in the communication and letting people just be aware that they actually may have a benefit that would cover a hearing aid purchase. All right, so in summary, just a couple of things that I just wanted to share with you, which I think are important when it comes to 2022. Headwinds, clearly inflation is going, is impacting our business. And I talked a little bit about this before, but I'll say this again. You know, all the growth that the industry is seeing this year is coming from just pent-up demand in the VA. It's not happening in the commercial market at all. So when you think about the US hearing aid markets broken up into commercial market, which is independent practitioners, hospitals, and sort of the retail market, which includes manufacturer-owned retail as well as Costco and SANS, and then you have the VA. The VA has essentially driven all the growth this year. So as I said, inflation and other stuff going on across the globe is definitely affecting the expected growth this year. Now, again, you need to juxtapose that with the fact that we're not declining, that the industry is essentially flat when many other industries are in much worse shape than ours is. So the fact that we are flat versus 2021, which was a phenomenal year, it actually says that our industry is quite resilient. OTC, DTC may have an impact. It may have a headwind impact. I don't know. I don't think it will. I think it'll actually bring people into the category, but it's something I wanted to say. New entrants may affect us, may actually hurt the business a little bit. Some new regulation may as well. But I also look at the tailwinds. These are things that are going to drive our business. Baby boomers, savviness, I talked about this before. New technologies. I mean, Oticon has a product launch happening in a few weeks. We are launching products every six months as an industry, not just Oticon. This is plenty of new technologies entering the industry all the time, which is so ironic because this was one of the arguments for OTC was that the hearing aid industry is not bringing up, bringing out new innovation. Could not be further from the truth. There's new innovation happening constantly. Every six months you're seeing new technologies being launched from all of the big six or big five manufacturers that are out there. New regulation. I put this on there because OTC may actually clean up some of the ankle biters that are out there. There may be regulation that is included in the OTC guidelines that will kick some folks out of the hearing aid world because they don't want to spend the money to actually abide by the new regulation and new rules. So that could actually be a very positive thing for the industry. And new entrants, there's always new entrants brings new life and new excitement to the category. So hopefully that will be a tailwind as well. One last thing just to talk about Oticon for a minute. And I think we're going to get to Q&A in one second. Yep, there it is. So I'm going to, this is the final slide. So something that, this is something that I brought to the table five and a half years ago that my team is very, very focused on, which hopefully you've seen us do in the industry, but we fight the bad actors as a, as an organization. There's a lot of online selling that goes on and people are buying hearing aids off the gray market and then reselling them at a much lower retail price online. We are, we have a whole organization of people that will potentially stop that where we will actually secret shop those sites. And we will, so we will buy those hearing aids, figure out where they're getting them from, and then go to those, those HCPs that are, that are buying them just to resell them and then shut those HCPs down. So we are very much focused on our distribution policy where people are buying hearing aids from us because they're going to resell them to patients. They're not going to resell them to other practitioners. We're not in the game for DTC or OTC. We are very much focused on the medical model. That is who we are as a brand. We will continue to stay that course because we believe that's the best way to address hearing loss. We look at our customers as partners. We really don't look at them as customers, frankly. This is not a transactional relationship that we have with you. It's very much about how do we work with our partners to help them grow their business because by helping them grow their business, our business is going to grow. It's a very mutually appropriate relationship that we have with the folks that are buying hearing aids from us. Customer experience is a never-ending journey. We're not great at it. We're fixing it right now. Hold times are too long, in my opinion, when you call it a con. We've gotten a lot better recently. We have an abandonment rate of about 6%, which means that 6% of the people who are calling in are then hanging up on us because they didn't reach us. Unacceptable, in my opinion. We want to get that to below 4%, even 3%. When you call us, you're going to reach somebody immediately. We're working on that one. Stay tuned on that one. Training is also very important to us as an organization because it's not just about training our customers as to how to use our products, but also training our customers as to how to sell those products and train their patients on our products as well. It's critical for us. I think that wraps it up. Chelsea, how did I do? I think I'm right at the buzzer. Two minutes. Perfect timing. Before we get to Q&A, I just wanted to thank you for the time today. Again, hopefully, you're hearing it in my voice that this is a really exciting industry to be in. I think 2022, as I said, is a bump in the road, and this road is going straight up the mountain. It is a really exciting place to be, especially because of the number of patients that are coming into our category. You should be very excited about that. Over to you, Leslie. Thank you very much, Gary. Let's take some questions. We have quite a few from the audience, so we will get through as many as we can. Just a reminder to our attendees, enter your questions into the Q&A box at the bottom of your screen. We'll take as many as we can. Our first question is from Andrew. Does 66% of private hearing aids sold consist of big box stores like Costco? If so, what is the breakdown of the types of offices within the 66% of private sales? Great question. I don't have the stats right in front of me, but I'm going to be very close. Of the 66%, probably less than 10% of that comes from Costco. It does not include Sam's because Sam's does not report its data to HIA. The only data that you'd see there from a big box retailer would be from Costco. Of that 66%, about less than 10%, probably 9% is coming from Costco. The rest is from manufacturers retail, which is probably about 20%. Then you've got, let's call it large medical like Kaiser and ENT and Allergy and other large chains. That's probably another 20%. The rest is independent. Your classic independent practitioner that may have one, two, three, four clinics that they're operating. Hopefully that answers that question. Okay. Another question. Do you believe that self-fitting hearing aids can be improved with better phone apps? Do you have information about the reasons for people not enjoying self-fitting hearing aids? Yeah. It's a tough question because there really hasn't been very many self-fitting hearing aids out there yet. Yes, I do believe that the improvements will be made through phone apps, of course, because they'll be able to analyze the data better and better every year. However, there's been so few of them on the market. I think the first is the Bose DeNovo device and sound control as well. But frankly, the self-fitting concept, in my opinion, is limited. When you think about the software that is used by hearing care professionals like yourselves to really fine tune, not just the hearing aids, but each side of the person's head. Every ear is different and every ear canal is different. Therefore, the sensory neural experience is going to be different for every single patient. I just don't believe that a self-fitting environment will allow that to ever get to the level that is experienced after going through a hearing aid exam and a sound booth and actually working with a hearing care professional like yourselves. So yes, I think it will improve. Will it improve enough to compete effectively with traditional hearing aids? Absolutely not. Okay. Let's go to Erin. With a changing landscape in healthcare affordability, do you believe lowering the consumer cost of hearing aids is the responsibility of the manufacturer or the provider? That's a tough one because we don't set price for the consumer. So, I mean, I'm going to sound like I'm being a stickler here, but we have no responsibility there because we don't sell directly to the consumer. But I know where you're going with this, which is can we lower our prices so that you can lower your prices to the consumer? You know, it's a tough one. I wouldn't say it's probably the responsibility of either one. It's probably a collaboration over a period of time. Now, you have that juxtaposed with innovation. And in my opinion, I feel very strongly about this, that you have to pay for innovation, right? The better the products are, the higher the price they should be because you're paying for better technology, better care, et cetera. You know, so it's a tough one. Now, we also have a five price system in the United States, which allows for some flexibility there. So, you know, it's a tough question. I'd have to probably say it's both. And I know that sounds really political, but it's about the partnership between the manufacturer and the HCP. Okay. Thank you. Jocelyn, first she says, thank you for doing the webinar, Gary. She's curious, how is Oticon working to distinguish its devices from OTC from a technical standpoint? Yeah, great question. So, Oticon's bread and butter is our audiology. And this is not just me talking. If you go to the UBS study, which polls 300 or 400 audiologists every year and asks them, what's the most important thing about prescribing a hearing aid? And they say sound quality. And they ask the next question, which hearing aids deliver the best sound quality? It's for the last five years, it's been Oticon. So we pride ourselves on that. And the reason why I believe that we differentiate ourselves is how patients perform in difficult listening environments. And there's been a lot of studies that have been done that says that, you know, an OTC hearing aid does just as well as a traditional hearing aid when the patient is tested in a sound booth. Okay. But is the patient tested in a crowded restaurant with changing dynamic sound changes through the environment? And I will hang my hat on the fact that what Oticon does better than anybody else, and especially better than OTC, is delivering a fantastic sound signal in a difficult listening environment. And we will continue to hone in on that as a brand, as a company, because it's what's made us so successful. Okay. We have a couple more minutes left. Kevin is asking, could you restate your concern about open bidding with regards to potential Medicare coverage legislation? Absolutely. Yeah. It's a great question because competitive bidding is this foreign thing that not a lot of people know about. I only know it really well because I experienced it when I worked at J&J in diabetes care. Okay. So let me, maybe if I can explain it in the context of a different category, it might be a little bit more clear. So competitive bidding is a program that is run by CMS. Competitive is the Center for Medicaid and Medicare Services. And for certain categories, typically these categories are DME categories, durable medical equipment categories. They will essentially put the business up for bid. So in the case of diabetes care, this was a 50 test strip box of blood glucose monitor strips or diabetes testing strips. And you can imagine a lot of seniors have type two diabetes and a lot of them were buying these products. And the reimbursement rate for, to a practitioner. So a doctor or a nurse or a pharmacy that was selling these test strips was $36 a box of 50 test strips. That was the revenue that the practitioner was receiving. When CMS put the business up for bid via competitive bidding, they sent out essentially an RFP and they said to these providers, these are doctors, nurses, pharmacies, they said, okay, give us your best bid. And that bid was for what is the reimbursement rate that you will accept from us? Okay. And the reimbursement rate always for Medicare is, you know, it's 80% covered by CMS. And then there's a, there's a 20% allowable to the patient and the, or 20% out of pocket for the patient. So that $34 per box of test strips after the competitive bidding process went through, went from $34 to $10 and 71 cents. Okay. So if you think about this and that, so basically what they were receiving, what every single practitioner was receiving was about 72% less revenue from their Medicare patients. And it was brutal. And three of the manufacturers left the business and one got sold. A lot of people left the business completely. And it was a real, it was a real problem. And it was not really thought about in terms of how it may affect innovation, how it may affect patient care. It was basically CMS saying, how do we save money? Right. So in the case of hearing aids, you know, imagine that a pair of hearing aids, the reimbursement level that you get from CMS is $900 or a thousand dollars. So just for the purposes of this conversation, say that reimbursement, that is the revenue that you're getting from CMS. An example there is like for, for VA computer community care network, probably the average reimbursement is about 17, $1,800. So they may, maybe they may use that model. So say they, they set it at a thousand dollars for actually fitting that patient for, with hearing aids. Every three years, they rebid the business and the practitioners that want to stay in the business of treating Medicare patients, okay, would then resubmit bids and CMS then accepts the lowest, say, you know, the lowest tranche of bids. So therefore you're, you're in this downward spiral where year one, it's a thousand dollar reimbursement rate. Three years later, it's 900, three years later, it's 800. And it could go as low as, you know, $2 because a practitioner may not even be in the hearing aid business, but they just want to get the patients in to sell them other stuff. So it's a really flawed process that scares the hell out of me, I'll be very honest with you. So by, by including it, it's a very, very dangerous, it's a dangerous like concept for, for hearing care. So I was happy, frankly, I was happy to see that Build Back Better did not move forward with respect to hearing care. Now I'm not against Medicare expansion to hearing aids at all. I'm all for it because it brings patients into the category. The challenge is the details of competitive bidding. And if that happens, it could be really detrimental to our business. Hopefully that makes sense. Thank you, Gary. All right. So that is all the time we have today. Again, thank you, Gary, for this valuable presentation, the U.S. Hearing Aid Industry Trends and Updates sponsored by Oticon. To get in touch with Gary, our presenter, you may email him at Gary at Oticon, O-T-I-C-O-N.com. A reminder for our attendees today, for information on receiving a CE credit for this webinar, visit the IHS website at IHSinfo.org. Click on the webinar banner or the webinar tab on the navigation menu. Also keep an eye out tomorrow for an email from IHS with a survey to provide your feedback on today's webinar. We ask that you take a few moments to answer some brief questions about the quality of today's presentation. And finally, we invite today's attendees to join us in San Antonio, Texas, for our 70th annual IHS Convention and Expo, September 15th through the 17th. It's a great opportunity to earn up to 18 CE credits, to network with hearing professionals from around the world, and enjoy our interactive expo with over 55 vendors. We have two skills labs, and take advantage of our free professional headshot station, excuse me, to freshen up your marketing. Of special interest to our audience today, at the IHS Convention, Gary will join leaders from five other hearing manufacturers for a panel discussion on technologies for tomorrow, sponsored by the Hearing Industries Association. It's a must see session this year. Register today to save with advanced pricing at IHSconvention.org. We'd like to thank Oticon for sponsoring this webinar, to Gary for sharing his insights, and to all of you for joining us today. We'll catch you all at the next IHS webinar. Enjoy the rest of your day.

webinar

Gary Rosenblum

Hearing Industries Association

COVID-19

over-the-counter hearing aids

satisfaction rates

innovation

legislative issues

Medicare

technology