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Edited Transcript of IIN earnings conference call or presentation 4-Nov-19 10:00pm GMT

Q3 2019 IntriCon Corp Earnings Call

ARDEN HILLS Nov 21, 2019 (Thomson StreetEvents) -- Edited Transcript of IntriCon Corp earnings conference call or presentation Monday, November 4, 2019 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* J. Scott Longval

IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary

* Mark S. Gorder

IntriCon Corporation - CEO, President & Director

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Conference Call Participants

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* Andrew Jacob D'Silva

B. Riley FBR, Inc., Research Division - Senior Analyst

* Jonathan David Block

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst

* Kyle Royal Bauser

Dougherty & Company LLC, Research Division - Senior Research Analyst

* Leigh J. Salvo

Gilmartin Group LLC - MD

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the IntriCon Corp Third Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would like to turn the conference over to your host, Ms. Leigh Salvo, Investor Relations. Please go ahead.

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Leigh J. Salvo, Gilmartin Group LLC - MD [2]

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Thank you. And before we begin, I would like to preface our remarks with the customary safe harbor statement.

Today's conference call contains certain forward-looking statements. These statements are based on the current estimates and assumptions of IntriCon's management and are subject to uncertainty and changes in circumstances. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Actual results may vary materially from the expectations contained in today's call. Important factors that could cause such differences include, among others, those set forth under the headings, Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations in our 10-K filing for the year ended December 31, 2018.

With that, I would now like to introduce IntriCon's CEO, Mark Gorder, for a review of the company's third quarter performance. Scott Longval, the company's COO and CFO, will then cover the financial results in more detail, and we'll open the call for your questions.

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [3]

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Thank you, Leigh, and thank you, everyone, for joining our call today. As we enter the final quarter of 2019, our teams remain vigilant in executing against the priorities we established at the beginning of this year. In short, these priorities include: one, to meet the volume demands of Medtronic; two, to pursue business development opportunities in our Medical Biotelemetry business that leverage our core competencies and diversify our revenue base; three, to seek partnerships with best-in-class entrants in the emerging OTC hearing aid market; and four, to prudently expand our direct sales initiatives with Hearing Help Express while tempering our marketing and advertising programs.

Importantly, I am confident that we are on the right path to expanding our existing market opportunity in our 2 core businesses: Medical Biotelemetry and Hearing Health. As we have mentioned in the past, expanding into new markets where our strength as a microminiature device producer allows us to enhance the mobility and effectiveness of body-worn devices is key to our continued progress. I'd like to take the next few minutes to provide recent highlights in both of our core businesses and our outlook for the remainder of 2019. Scott will then provide a detailed review of our financial performance and thoughts on guidance for the year. We'll then open the call for your questions.

Starting with our Medical Biotelemetry business. Our results in the third quarter continue to reflect the impact of the timing of Medtronic's ongoing global commercial product launch of its 670G. Encouragingly, we anticipate seeing momentum of continuous glucose monitoring adoption and increased penetration in international markets commencing in the next few months following clearance in Germany and other targeted EU countries. We expect the initial ramp up to be gradual with further acceleration in 2020 as customer support, including patient education, rolls out. Looking further out, our recent interactions with the leadership team at Medtronic diabetes group provide us with even more confidence and enthusiasm for our relationship and the exciting developments in the pipeline.

In addition to our commitment to Medtronic, we also made it a priority this year to seek market expansion opportunities that could best leverage our medical biotelemetry design, development and expanded manufacturing capabilities. As we have commented on previously, our other medical business has been expanding, primarily due to our medical coil expertise. Our new business development efforts have identified surgical navigation as a potential growth market that can capitalize on our core technologies, including medical coils. We intend to leverage our micro-coil and value-added micro-coil assembly capabilities by investing in strategic platforms addressing surgical navigation, specifically in the areas of interventional pulmonology and electrophysiology. Leveraging the coordination of our microminiature electronics, precision molding and medical coil technologies into markets that have high growth rates and steep technology curves harbors significant potential for IntriCon. We look forward to sharing more details as these opportunities unfold in the coming quarters.

On the manufacturing front, we have completed the required validations and qualifications in our new facilities and equipment and are now waiting for specific customers to complete their internal validation and qualification. Upon completion of this, we will be operating at approximately 60% capacity. The excess capacity positions us well to meet anticipated demand over the next several years.

Turning to our second core business segment, Hearing Health. We have made many strategic decisions and material adjustments throughout the year to ensure we are best positioned with the right resources and infrastructure to be a significant player in new market opportunities that would result from proposed changes in legislation and open the hearing aid market to over-the-counter sales. The pending guidance from the FDA related to the OTC Hearing Aid Act is expected this month, and we believe will confirm the start of meaningful change in hearing health in 2020.

Given the high cost of hearing aids today, we are excited by the tremendous potential this change could have for hearing-impaired consumers as well as open the market up to those with mild to moderate hearing loss that can't justify the current high cost of hearing aids. We estimate the change in hearing health regulation will create a $3 billion addressable hearing health market in the U.S. by enabling greater penetration of the 30 million-plus hearing-impaired individuals that remain unserved today. Additionally, we are beginning to see international opportunities with those that are seeking alternative sourcing models and nontraditional delivery options.

While we continue to monitor legislative progress, we are making exciting progress with potential partners as well as selectively targeting direct sales opportunities. As we have highlighted in the past, our go-to-market strategy in Hearing Health includes 3 channels: Indirect-to-End-Consumer, Direct-to-End-Consumer and legacy OEM. I'd like to take a few minutes to cover some recent updates in each of these channels.

Starting with Indirect-to-End consumer. In the third quarter, we once again experienced a meaningful decline in revenue associated with the restructuring activity within a large insurance customer's hearing health business. We now believe that this provider's model is pivoted towards a more traditional brick-and-mortar approach to hearing health that no longer aligns with our partnership strategy and approach to reaching the end customer.

As a result, we expect revenues related to this agreement will continue to diminish throughout the remainder of 2019. Despite the short-term revenue decline, this will allow us to reallocate our resources' efforts to enhance our ecosystem -- our consumer-centric ecosystem of care and target other opportunities with the potential for better long-term results.

Partnerships remain a key component of our growth strategy in this segment. We are especially excited about a number of recent developments with potential business market leaders in the consumer electronics space who have, we are aware, are pursuing health care initiatives. Establishing these partnerships would enable us to be a dominant early participant in this emerging, value-based hearing health market.

We are confident that we are taking the right steps to best align IntriCon with high-profile partners that value our ability to deliver superior hearing aids, self-fitting software and customer care to the U.S. market.

Turning to our Direct-to-End-Consumer business. We continue to see Hearing Help Express as a long-term opportunity and are closely monitoring expenses as we optimize our model for entry into the over-the-counter market to directly reach hearing aid customers. Importantly, once the final OTC Hearing Aid Act regulation has been issued, we will be able to deploy technology and customer support to enhance channel efficiency and customer satisfaction.

And finally, legacy OEM revenue, which represents products sold into the traditional hearing health market, continued to decline as anticipated. I am confident that our long history and unique ability to deliver state-of-the-art technologies, including wireless, digital hearing aids and sophisticated self-fitting software solutions, coupled with our customer care competency, positions us to be a significant partner and participate -- and participant in this exciting and expanding market.

In summary, we have an exciting range of growth opportunities ahead of us. We have taken many of the necessary steps to best position IntriCon for success in those markets. In addition to our long-term partnership with Medtronic diabetes group, we are making significant progress identifying partners that can benefit from our medical biotelemetry expertise and will enable us to expand into new growth markets.

And with the upcoming legislative changes that promise to open the door to affordable over-the-counter hearing aids in the U.S., our Hearing Health business segment has the opportunity to see meaningful growth, both indirectly through partners and directly to the end consumer. Supporting this opportunity is a tremendous leadership team and a strong balance sheet.

Now I'd like to turn the call over to Scott to discuss our financials and guidance in more detail.

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [4]

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Thank you, Mark. Turning to our financial results. For the 2019 third quarter, as Mark noted, we reported net revenue of $26.9 million, a decrease of 9% over the prior year period. By core business segment, revenues in our Medical Biotelemetry business for the quarter were $19.1 million, a 1.3% decline year-over-year and represented 71% of total revenue. This decline was largely due to the continued impact of the timing of Medtronic's ongoing global commercial product launch for the 670G insulin pump system, partially offset by increased sales to our medical coil customers.

In our Hearing Health business segment, total revenue in the third quarter was $6.4 million, down 22.5% over the prior year's third quarter. This decrease was largely due to the continued decline in sales to a large insurance customer that Mark referenced earlier in his comments. Within the Hearing Health segment, Indirect-to-End-Consumer revenue was $2.4 million; Direct-to-End-Consumer revenue, through our Hearing Help Express business was $1.5 million; and legacy OEM revenue was $2.4 million.

Third quarter gross margins were 25.2%, down from 31.6% in the prior year third quarter. Gross margins were constrained primarily due to lower volume as well as ongoing validation and qualification expense and excess capacity related to the recent manufacturing expansion to meet the anticipated higher-volume requirements of our existing and future customers.

Operating expenses for the third quarter were $7.2 million compared to $7 million in the prior year period. The increase stemmed from higher noncash stock compensation expense of $648,000 and severance expense, slightly offset by a decrease in advertising expense in our Direct-to-End-Consumer business. We are committed to closely monitoring costs and gaining efficiencies in this segment of our Hearing Health business as we refine our sales model to better align with emerging market opportunities. We posted losses attributed to shareholders of $290,000 or $0.03 per diluted share versus net income attributed to shareholders of $1.9 million or $0.22 per diluted share for the 2018 third quarter.

Turning to our guidance. Due to lower-than-expected diabetes revenue, revenue loss from our largest insurance customer and the impact of our constant reduction in advertising spend at HHE, we now expect full year revenue of 2019 to range between $112 million and $113 million. Full year 2019 gross margin is expected to range between 26.5% and 27%.

Now I'd like to turn the call back over to the operator so Mark and I can take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Jon Block from Stifel.

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Jonathan David Block, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [2]

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Scott, I think the first 1 or maybe 2 is for you. Just to start with the gross margins, I think I'm just surprised at the magnitude of the decrementals. I'm just sort of running some rough math. The revenues were down about $2.7 million year-over-year. The gross profit was down almost an equal amount and arguably, that's with your highest gross margin business being DTC hearing, a greater percent of sales in 3Q '19 versus 3Q '18. So can you just talk about the 3Q '19 gross margins in light of the additional capacity? And maybe most importantly, how we think about it going forward?

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [3]

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Yes, Jon, I think the challenge with looking 2019 over 2018 was the expansion of our manufacturing capacity in 2018. That began kind of midyear. And by the time that we had that fully up and staffed was towards the end of the first part of 2019. So a large part of the deterioration in margin was from the additional overhead cost we had as part of our new expansion and manufacturing footprint. If you also look at a little bit of the makeup of the margin year-over-year, slightly lower on the Direct-to-End-Consumer business which had some minor impact.

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Jonathan David Block, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [4]

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Okay. Got it. I guess I can follow up with you a little bit more off-line.

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [5]

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And maybe I'll just expand on that, Jon. I think importantly, and Mark hit on this, is once we have the final validations and qualifications of the new facility and the equipment from our customers, we'll be at roughly 60% capacity. And so we have the ability to leverage our infrastructure, at which point we'll see a lot of the additional revenue volume that we're anticipating in 2020 to begin to fall in the margin line.

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Jonathan David Block, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [6]

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Okay. And I guess as a quick follow-up to that, the validation and qualification from your customers, is that anticipated, Scott, by the end of this year, 2019, or 1Q 20? Or when do you expect that to occur?

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [7]

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I would say over the next 2 quarters, Jon.

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Jonathan David Block, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [8]

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Okay. And then maybe just a couple of follow-ups. The lower guidance looks like roughly $3 million to $4 million at the top line. Is there a way to just even approximately parse that out of what is attributable to the medical business versus what you earmark for hearing, and I guess within hearing, it's most likely in that IDTEC (sic) [ITEC] business?

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [9]

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Correct. I'd say about 2/3 of it is coming from the medical side, 1/3 of it is coming from the Hearing Health side.

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Jonathan David Block, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [10]

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Okay. All right. And then, Mark, for you. You alluded to some other medical opportunities, pulmonology, electrophysiology. The time lines for those to occur, I mean, you seemed a little bit more detailed this quarter relative to past quarters. I know, however, that you have to be designed into some of these platforms and as a result, it doesn't occur overnight. But just due to you sort of calling out specific opportunities, maybe you can talk to when you think these might take hold?

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [11]

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Good question, Jon. I think if I looked historically a little bit at what we've been doing in the other medical side, we have spoken briefly about our expertise in medical coils, which are used as sensors in interventional catheters, and we have made good strides over the last 3 years developing good customer relationships with several players who are in that market. And because we've -- and you'll recall also that we've brought Doug Pletcher in I think roughly at the end of 2018 with a focus on new business development in the medical area based on our core technologies.

And since we had made significant progress in medical coils, one of the first areas that Doug evaluated was the opportunities in the interventional catheter market. And specifically, we found that we have done very well in interventional pulmonology and to some degree in electrophysiology where we have already developed business relationships with customers in those areas. And since we were farthest along there, it seemed very appropriate that, that would be a great area to look at how do we create a platform that we can build to serve customers in that market, where we can add not only our medical coils but value-added assemblies that generate additional upstream revenue in that market. So the reason we'd given that more detail now is that we see that as an emerging opportunity. It seems to have a very good growth rate and a very steep technology curve that offers significant potential for us.

So I think we will be giving more and more detail out to The Street over the next few quarters as we become clearer as to how our strategy will be to enter that market more forcefully and then make continued investments.

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Jonathan David Block, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [12]

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Okay. Great. Helpful. One last one for me, guys, and then I promise I'll hop back in the queue. But can you also talk a little bit more -- put some more details around some partners for Indirect-to-End-Consumer hearing, calling out consumer electronics. Mark, at a high level, how would a partnership with one of those players look? How would it be structured? And what I mean by that is would it be exclusive where you're sort of tied to one company? Would you expect multiple agreements? Does someone want it exclusively because they want to keep out other potential competitors and consumer electronics companies? Are you guys far enough along in your discussions where you can convey to us how that structure would look?

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [13]

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That's a great question, Jon. I don't -- I want to give a little nuance to that. I don't think we're far enough along to give a detailed description of how such a partnership might work, but I can tell you that we are talking to partners in the -- that are complementary to us that are in the market now, people like Eargo that we've talked about in past calls. We are looking at partners that provide benefits through various plans that could potentially partner with our direct-to-consumer business, insurance companies and the like. We're also looking at branding partners, which include major retailers, drugstores, people like Walgreens, CVS, Specsavers in the U.K.

The interesting thing is that all of these potential partners can be served by the core technologies that we're developing, both on the product side, on our self-fitting software, remote care as well as the things we're doing in the direct-to-consumer business like pick, pack and ship; customer service; and teleaudiology.

And is clear that different partners will value different components in that array of core technologies. So it's not clear to us yet exactly how that will emerge, but we do feel that the investments we've made are putting us in a position to talk to multiple partners and position ourselves in different ways. And I think we have to be prepared to pivot depending on which opportunities appear to be the most advantageous. And I'd say it's premature at this point, but I think some clarity over the next 12 to 18 months will be possible. Does that answer the question, Jon?

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Jonathan David Block, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [14]

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It does, Mark.

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Operator [15]

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Our next question is from Andrew D'Silva from B. Riley FBR.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [16]

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Just to start off, can you let me know what depreciation and amortization, cash flow from operations and CapEx was for the quarter? And then while you're pulling that, well, just looking at the guidance, does it take into account anything beneficial happening with Medtronic out of EU at all? It seems like they announced some progress with the reimbursement being established in Germany. But, like, should we just view things as really in a holding pattern right now until the 780G is out? Or is there some upside that we should be thinking about internationally with the 670 in the interim?

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [17]

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Andy, this is Scott. I'll take the first part of your question. The amortization and depreciation was $820,000 for the quarter. Cash flow from operations was negative $323,000. And CapEx for the quarter was $1,428,000. As it relates to the guidance for the full year, what typically we have seen after Medtronic gets approvals in certain geographic areas, there is a period of educating the medical community, educating their installed base and typically that takes several months. So as we started thinking about how we were going to view the rest of the year, we basically discounted anything from the international market as it related to Medtronic.

Now with all that being said, Mark and I and our executive team had the chance to interface with the leadership team of the diabetes group last -- 2 weeks ago, and I can tell you they are very bullish on their business both domestically and internationally. So we're excited about where they're heading. We're excited about how they are executing on the product pipeline overview that they provided at ADA, and we think this is going to be a great catalyst as we start thinking 2020.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [18]

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Okay. Okay, great. And then as it relates to United, when they put out their announcement related to the EPIC integration and acquisition, they noted that including access to hearing aids at up to like an 80% discount to traditional devices was what they were targeting. Can you just reconcile how they are able to maintain that kind of a discount relative to traditional brick-and-mortar while going into brick-and-mortar and not leveraging either an online or a direct-to-consumer platform similar to what you have?

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [19]

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Andy, this is Mark. I think the -- they're going to be offering a whole range of services and I doubt that all of them will be 80% discount. There will probably be some 80% discount and some not because the EPIC model works through the traditional channel, and they provide subsidies for the consumer. But in many cases, they're buying the more expensive devices. Scott, do you have anything add to that?

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [20]

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No. I think that's what we'll see. And I think most likely, what you'll see out of that model is, Andy, is typically what these large insurance providers will do, which will get access to the networks and then begin to squeeze costs out of that very rapidly. So ultimately, they'll probably be somewhere between the 80% and something a little bit higher.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [21]

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Okay. Okay. That makes sense. And then as it relates to self-fitting, the -- there was a couple or actually just 1 item posted on the Federal Register. I know we're still waiting for a draft guidance to come out, but is that self-fitting documentation, the Code of Federal Regulations provide you with enough confidence or enough of an ability to follow your 510(k) for the self-fitting aspect and kind of move forward knowing that, that's a likely part of the guidance?

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [22]

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Yes, it does, Andy. That's a very good comment because the -- initially, Bose had received a de novo approval from the FDA for their self-fitting technology, but there was not a lot of documentation forthcoming as to exactly what was approved. And that reference you just made clarified a lot of things that were involved in the de novo approval for Bose. And it clearly gives us confidence that what we're doing with our clinical trial for the self-fitting technology that we have will be very well received by the FDA.

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J. Scott Longval, IntriCon Corporation - Executive VP, CFO, COO, Treasurer & Secretary [23]

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I think that, Andy, also -- sorry, Andy, I just want to add that obviously what was posted to the Federal Register was important but I also think our one-on-one discussions with the FDA gives us a lot of confidence on where we're headed with our self-fitting technology as well.

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [24]

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A good point, Scott.

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Andrew Jacob D'Silva, B. Riley FBR, Inc., Research Division - Senior Analyst [25]

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Okay. Good to hear. And just last question from me, just really related to -- outside of self-fitting, now that we have some clarity on that, like what other major points do you really need to get hammered out with the guidance for, one, to understand the indirect partnerships that can be established; and then two, for your direct-to-consumer business, what would you need to see the FDA put out for you to move one direction or another?

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [26]

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Well, I think, the way the regulation is written, if they implement it per the legislation, that allows us to bypass the professional and make the channel more efficient. And when we talk to these potential partners, whether they're retail partners, ITEC partners, et cetera, they're all looking for that clearance because none of them want to get into a regulatory bind with the FDA where they're trying to sell or service a device that's clearly a medical device. And so the OTC designation of mild-to-moderate and no interference from any state are critical. And I think they're going to go forward exactly per the legislation, which will open the market, make it more efficient and drive a lot of innovation.

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Operator [27]

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Our next one is from Kyle Bauser from Dougherty & Company.

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Kyle Royal Bauser, Dougherty & Company LLC, Research Division - Senior Research Analyst [28]

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Just following up on the clinical activity to support the self-fitting 510(k) application. Since the Bose hearing aids will, I'm assuming, be the predicate, will you enroll as many subjects as they did? I think it was 125. And then what sort of follow-up time and end points are you considering for that trial to support the application?

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [29]

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The -- it's a good question. I -- they -- Bose had actually run a couple of different trials. We don't have to run quite as many subjects as Bose. I think we're going to run about 85 subjects. But the FDA is looking for a trial similar in nature to what Bose did. So that requires about 85 subjects. And we're in the process of organizing that and hope to be starting it shortly. And I'm not sure exactly of the timing yet because finding the 85 subjects will be the long pole in the tent. But it certainly shouldn't take more than a few months, or 3 to 4 months.

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Kyle Royal Bauser, Dougherty & Company LLC, Research Division - Senior Research Analyst [30]

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Sure. And so still kind of on track for potential submission, I'd say, in Q1 for a mid-2020 approval.

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [31]

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That's what we're trying to do, yes.

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Kyle Royal Bauser, Dougherty & Company LLC, Research Division - Senior Research Analyst [32]

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Okay. And then following up on Jon's prior question with regard to one of your priorities to seek partnerships in the OTC market. Can you speak a bit more about what you're hearing the appetite is for some of these partners to enter the market? And specifically, if we assume they're in a holding pattern pending the release of this draft OTC regulation, what do you think gives a potential partner the most pause? And I'm thinking about things such as how the FDA might define mild-to-moderate hearing loss or potential clinical requirements for OTC approval. Any color here would be helpful.

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [33]

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I think the biggest issue is that the regulation allows you to use -- to bypass the professional. Because a lot of the retailers, they're not health care providers. They're not going to want to get into the health care business. They're looking for partners to provide that aspect of it. But they want to be able to position these devices in their marketing matrix and be able to sell them without any restriction from the FDA. So that's -- I think that's the thing that's giving them pause. It's the -- it's any interference from any state regulation.

Specifications are going to be relatively straightforward, what it takes to fit a mild to moderate losses. Pretty well-known. The document that Andy referenced is pretty spot on, on what that specification will probably look like in terms of output power and gain and all those kind of things. So the -- I think the critical point will be that they want to be assured there's no regulatory hassles to dispense this device, no interference from any state agencies.

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Operator [34]

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That brings us to the end of the Q&A session of today's call. I will now turn the call over to Mr. Mark Gorder for the closing remarks.

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Mark S. Gorder, IntriCon Corporation - CEO, President & Director [35]

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Thank you, operator. Thank you again for joining our call today. The IntriCon team continues to locate and act upon new opportunities that grow and diversify our business. And I would like to thank them as well as our shareholders for your continued support. We look forward to seeing many of you during upcoming conferences and marketing trips. Have a great evening, and thank you for joining our call.

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Operator [36]

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This concludes today's conference call. Thank you for participating. You may now disconnect.