Fair Value Estimates Sustained Despite U.S. Over the Counter Hearing Aids Path

Since 2017, when the U.S. Congress allowed for over the counter (OTC) hearing aid sales, there has been minimal progress in the creation of regulations to enable hearing-impaired Americans to access these low-cost options. On July 9, President Biden prompted the U.S. Department of Health and Human Services via executive order to create a proposal of necessary rules for OTC hearing aid sales within 120 days. This prompted shares of all hearing aid manufacturers to dip as investors apparently fear the prospects of increasing competition and pricing wars. Our take on it is more sanguine--while the new directive does offer an easier pathway for OTC devices to compete, its impact will likely be confined to lower-end devices and largely absorbed by the manufacturers without material damage. We maintain our moat ratings and valuations for all hearing aid companies under our coverage.