IntriCon Completes Acquisition of Hearing Help Express
December 18 2017 - 4:15PM
Business Wire
Company Also Amends Credit Facilities,
Increasing Domestic Borrowing Capacity and Improving Financial
Flexibility
IntriCon Corporation (NASDAQ: IIN), a designer,
developer, manufacturer and distributor of miniature and
micro-miniature body-worn devices, announced that it has completed
its acquisition of Hearing Help Express (HHE), acquiring the
remaining 80-percent stake of the DeKalb, Ill.-based,
direct-to-consumer mail order hearing aid provider. Terms of the
transaction include $650,000 in cash, repayment of approximately
$1.83 million in debt to HHE’s 80-percent holder and an
earn-out.
“Completing this acquisition gives IntriCon direct access to
consumers and the emerging value-based hearing healthcare market,”
said Mark Gorder, president and chief executive officer of
IntriCon. “HHE offers a lower-priced alternative for consumers to
purchase devices directly—circumventing layers of costs associated
with the conventional hearing aid channel.
“Additionally, we continued to be pleased with our HHE traction.
In the 2017 third quarter, hearing aid orders rose 38 percent over
the 2017 second quarter and 82 percent of the devices we’re selling
through HHE are IntriCon devices. We continue to expect sequential
revenue growth in the fourth quarter, and throughout 2018.”
Since taking its initial stake in HHE, IntriCon has made
substantial progress integrating and optimizing the organization.
During the first part of the year, the company relocated the
business, hired a vice president of direct-to-consumer sales and
introduced IntriCon’s digital hearing aids into the HHE portfolio.
Recently, the company reported success driving key third-quarter
metrics over the sequential quarter including:
- A 49 percent increase in new
leads;
- A more than two-fold increase in net
new hearing aid customers;
- 20 percent growth in backlog; and
- A 38 percent increase in hearing aid
orders.
As part of the closing, and previously disclosed, IntriCon
absorbed a portion of the losses allocated to the former majority
owner. These losses totaled approximately $850,000, or ($0.12) per
diluted share, slightly higher than originally anticipated. Losses
incurred by HHE to date include non-cash amortization, acquisition
related costs and operating results, all of which are related to
prior periods and have no future cash impact.
Management continues to anticipate the company’s 2017
fourth-quarter revenue will range between $22.0 million and $23.0
million, compared to $17.7 million in the prior-year period, and
positive pro-forma EPS (excluding the loss of approximately $0.12
per diluted share to absorb the losses previously allocated to the
former HHE majority owner). For the year, this translates to a
revenue range between $88.1 million and $89.1 million, compared to
$68.0 million in 2016. Looking forward to 2018, IntriCon
anticipates continued strong growth, with annual revenues ranging
from $100 million to $104 million.
IntriCon Amends Credit FacilitiesIntriCon also announced
today that it has amended its credit facilities with CIBC Bank USA.
Highlights of the amendment include:
- Extending the maturity of the overall
Loan and Security Agreement from February 2019 to December
2022;
- Increasing IntriCon’s term loan to $6.5
million from its current balance of $4.5 million, amortized in
quarterly principal installments of $250,000—the additional funds
were used to complete the HHE acquisition; and,
- Providing a capex loan facility, where
the company at its election, can draw up to $2.5 million on the
loan for qualifying capex expenditures over the next 12 months,
with monthly amortization commencing after such time.
Concluded Gorder, “CIBC has been a key partner in the growth and
success of IntriCon, and we appreciate their continued support.
This amendment reinforces CIBC’s commitment to our strategic plan
and their belief in our ability to execute our growth initiatives
successfully. The revised lending structure gives us the financial
flexibility to move quickly on value hearing-health opportunities
that arise, and supports our thriving medical business and related
working capital growth requirements.”
About IntriCon CorporationHeadquartered in Arden Hills,
Minn., IntriCon Corporation designs, develops, manufactures and
distributes miniature and micro-miniature body-worn devices. These
advanced products help medical, healthcare and professional
communications companies meet the rising demand for smaller, more
intelligent and better connected devices. IntriCon has facilities
in the United States, Asia, the United Kingdom and Europe. The
company’s common stock trades under the symbol “IIN” on the NASDAQ
Global Market. For more information about IntriCon, visit
www.intricon.com.
Forward-Looking StatementsStatements made in this release
and in IntriCon’s other public filings and releases that are not
historical facts or that include forward-looking terminology are
“forward-looking statements” within the meaning of the Securities
Exchange Act of 1934, as amended. These forward-looking statements
may be affected by known and unknown risks, uncertainties and other
factors that are beyond IntriCon’s control, and may cause
IntriCon’s actual results, performance or achievements to differ
materially from the results, performance and achievements expressed
or implied in the forward-looking statements. These risks,
uncertainties and other factors are detailed from time to time in
the company’s filings with the Securities and Exchange Commission,
including the Annual Report on Form 10-K for the year ended
December 31, 2016. The company disclaims any intent or obligation
to publicly update or revise any forward-looking statements,
regardless of whether new information becomes available, future
developments occur or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20171218006147/en/
At IntriCon:Scott Longval, CFO,
651-604-9526slongval@intricon.comorAt Padilla:Matt
Sullivan, 612-455-1700matt.sullivan@padillaco.com
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