23 Jul Contract from Medtronic Provides Impetus to its Medical Biotelemetry Business
IntriCon Corporation (NASDAQ: IIN), a developer, manufacturer and distributor of miniature body-worn devices in the hearing healthcare and medical biotelemetry field, has secured a four-year Supply Agreement with Medtronic (NYSE: MDT), one of its largest customers. Medtronic is the market leader in Continuous Glucose Monitoring (CGM) Monitoring Arena, with the largest installed base of insulin pumps.
Mark Gorder, president and chief executive officer of IntriCon, comments that
“We were pleased to receive a four-year contract with our largest Medical customer. While this agreement was anticipated in our 2019 guidance, it further fuels our confidence in the significant long-term growth prospects for our Medical Biotelemetry business”.
The company is the exclusive source provider and manufacturer of Medtronic’s MiniMed REAL-Time Transmitter (GST) products, which constitutes IntriCons’ largest product line. In addition, it also provides Continuous Glucose Monitoring (CGM) system accessories such as the Enlite Sensor Assembly, Charger, Serter and Connect.
IntriCon also develops medical coils and micro coils for pacemaker programming and interventional catheter positioning applications using its proprietary technology. It is also the supplier of drug deliver product kits to some of the most prominent medical device companies.
Intricons’ devices integrate ultra-low power (ULP) digital signal processing (DSP) and ULP wireless technology, which makes them a valuable addition to companies with medical and communication equipment needs. By disrupting conventional mechanisms and offering cutting-edge innovation, the company aims to establish a strong presence in the micro and miniature body worn device space.
The company recently entered into a distribution agreement with Puretone Ltd., a UK-based hearing health company that has operations in 75 countries, to distribute IntriCon branded hearing aids into the National Health Service system in the U.K. Furthermore it sold its PC Werth accessory business assets to Warner Tech-care UK LTD. The closure of its operations in U.K will help the company reduce its costs by approximately $1.0 million annually.
Mark Gorder, President and Chief Executive Officer states that
“This shift from direct sales to a distribution model in the UK not only provides us with a reduced cost structure but enables us to better focus our resources on our value-based hearing healthcare opportunities, most notably the large emerging OTC hearing aid market in the US.”
A report by WiseGuy, estimates that the global hearing aid market that is worth approximately USD 7.0 billion in 2017, will grow at a CAGR of 7%, to reach USD 12.1 billion by 2025. Scientific and technological advancements such as miniature technology that combines enhanced improved functionality and aesthetic appeal, wireless technology and noise reduction circuits are driving the growth in the market.
A rising geriatric population coupled with alarming noise pollutions levels, birth defects and ear infections are the primary causes of hearing impairment, which are likely to worsen as time progresses. This has given rise to demand for aids that are cost effective, discreet and offer superior functioning.
The other area that the company is focused on is the Continuous Glucose Monitoring Systems Market, which is likely to reach $4.92 billion by 2024, growing at a CAGR of 22.9%, from $894 million in 2016 as per an estimate by Allied Market Research. This market will witness a significant growth from 415 million patients in 2015 to over 642 million by the year 2040. The primary focus will be on management of the disease, through frequent and regular monitoring, thereby bolstering the sales of CGM systems.
The company’s products are an amalgamation of precision engineering, microelectronics and ULP DSP and/or wireless communication. Its aim is make inroads into the medical biometry business which is a burgeoning market with great potential. Besides Medtronic some of its other prominent clients include Smiths (OTCPK: SMGZY), ICU Medical (NASDAQ: ICUI) etc. IntriCon enjoys a robust Intellectual property rights portfolio, which it plans on expanding further with its continued research and development efforts.
The company’s growth is in tandem with the increasing demand for Medtronics CGM, which is driving the demand for Enlite Sensors. It has opened a new manufacturing facility in Minnesota, to cater to the increasing demand, which will only grow in the future owing to GST replacements and the launch of MiniMed 670G and Guardian connect.
The company recognizes the potential and unmet needs of the medical biometric market, which is now deemed essential for improved diagnostic and therapy. There is also a need for body-worn devices that can facilitate home care and constant monitoring through connectivity such as patients with Diabetes, Cardiac anomalies and those in need of drug delivery. To cater to these diverse needs, on one hand it caters to OEM’s and on the other it offers proprietary platform-based products.
IntriCons’ hearing aid devices are poised to disrupt the market, and capture a lion’s share of the $3 billion market. It has entered into some strategic partnerships which bring great value to the table. The company is looking at overcoming the limitation and inefficiencies of the conventional channels, and is now operating a new direct-to-consumer (DTEC) channel for its equipment, which eliminates the middlemen and makes it affordable.
- IntriCon is operating in an industry which is high growth and has large unmet needs; its technology portfolio is well suited to cater to the needs of the market.
- The company has state-of the art manufacturing capabilities along with a low-cost footprint, which gives it a competitive edge.
- IntriCon has a strong financial standing with ~$45M of cash, and no debt, giving it the stability to pursue strategic partnerships and focus on building a robust pipeline.
- It has established valuable partnerships with prominent players in the medical biotelemetry business and OEM’s such as Medtornic, which augurs well for its future.
- The company is looking to leverage its technology, infrastructure and distribution capabilities to disrupt hearing healthcare market, making inroads into an industry with a $3 billion annual opportunity.
We believe that given its strategic partnership with companies such as Medtronic, Smith and ICU Medicals, and its focus on disrupting the hearing healthcare segment through its technology and distribution strategy, the company is on an accelerated path to success.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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