HearUSA Lashes Back At Siemens With A Lawsuit And Gets Support From A Principal Investor

HearUSA to Siemens: Right back at you! Responding to an SEC filing in which Siemens Hearing Instruments threatened an unfriendly takeover following a dispute over the terms of a loan payment, hearing-aid retail chain HearUSA said it filed a suit in the Supreme Court of the State of New York seeking a declaratory judgment to prevent Siemens from making good on its threat. At the same time, Arcadia Capital Advisors, one of HearUSA’s largest institutional investors, issued a news release supporting HearUSA and accusing Siemens of “a ruse so that they can steal the company at depressed valuations.”

In a Schedule 13D filing on Jan. 18 with the U.S. Securities and Exchange Commission (SEC), Siemens said it was considering exercising an option to buy out HearUSA following the Orlando, Florida-based company’s failure to make a timely debt payment. HearUSA Chairman and CEO Stephen Hansbrough responded immediately, scolding Siemens for a “negative and heavy-handed approach,” before following up with its announcement this week of the New York Supreme Court suit. Arcadia Capital Advisors chimed in with its own public statement, saying Siemens “is choosing to play the role of a bully” and accusing Siemens of trying to acquire HearUSA at a fire-sale price: “The recent SEC filing by Siemens smells strongly of market manipulation,” said Arcadia Capital Managing Director Richard S. Rose. “We believe their actions are a self-serving scare tactic, so don’t be surprised if Siemens comes out with a low-ball offer for the company.” Read more

Siemens Considers An Unfriendly Takeover Of Leading Hearing Aid Retail Chain HearUSA

Siemens AG is considering expanding its footprint in the hearing-aid industry with a potentially unfriendly takeover of HearUSA, one of the largest hearing-aid retailers in the United States. Siemens last year moved to exit the industry when it put its Siemens Hearing Instruments subsidiary up for auction but subsequently reversed course and recommitted to its hearing-aid business. Now, in a Schedule 13D filing on Jan. 18 with the U.S. Securities and Exchange Commission (SEC), it says it is considering exercising an option to buy out Hear USA following the Orlando, Florida-based company’s failure to make a timely debt payment. In the filing, Siemens said that in a Dec. 22 meeting, Hear USA had asked to defer some part of its debt payments scheduled for the end of December (approximately $1.9 million USD) and the end of January (approximately $2.2 million). Siemens, which already has a 14.9 percent stake in HearUSA, indicated in its SEC filing that rather than allow future deferment of debt payments, it would consider acquiring the company.

HearUSA Chairman and CEO Stephen Hansbrough responded quickly with a news release saying that “statements made by Siemens in its Schedule 13D fail to provide all of the facts about our relationship with them and our position.” Indicating that there were disagreements about “legitimate contract issues” that the two parties had yet to resolve, Hansbrough said “we are very disappointed that Siemens has taken this negative and heavy-handed approach.”

Siemens and Hear USA have a long-term relationship, with Siemens providing substantial funding to Hear USA in return for the retailer’s promise to re-sell Siemens’ hearing aids. HearUSA has struggled through the recession to grow profitably, but Hansbrough said in his statement that orders for new hearing aids are running approximately 13 percent ahead of a year ago, and that the company expects to return to profitability in 2011. In the past several years HearUSA has expanded its sales for managed care organizations through its network of more than 2,000 hearing care providers and 176 company-owned retail locations. It is also the administrator of the AARP Hearing Care Program, which reaches millions of potential hearing-aid customers.

HearUSA Banks On Exclusive AARP Contract To Put Hearing Aids In Millions Of U.S. Baby Boomers’ Ears

HearUSA may have found its key to success in retail sales of hearing aids with its exclusive contract with AARP, the 40-million member organization for Baby-Boomer Americans aged 50 and above. In its second-quarter financial report this week, HearUSA said the nationwide roll-out to AARP members that began early this year helped account for a nine percent increase in sales over the first quarter of 2010. Read more

HearUSA Scores Hearing-Aid Distribution Deal With AARP

HearUSA Signs Distribution Deal With AARP

HearUSA, the U.S. chain of hearing-aid retail outlets, scored a major distribution deal with AARP Services, Inc. to offer discounted hearing aids and extended warranties to the nearly 40 million U.S. members of the world’s largest service organization for adults aged 50 and older. Next to an endorsement by Oprah, a distribution deal with AARP is one of the most coveted marketing prizes for companies selling to middle-aged-and-older consumers. AARP has long offered advice on hearing health but has been short on commercial offers for hearing aids to match the discounts it provides for vision products and general health insurance plans. The HearUSA deal should provide similar incentives for seniors to take care of their hearing needs, although the initial press release held back on details of the discounts and other offers that will initially be offered to customers in New Jersey and Florida and later throughout the United States.

The arrangement is good news for Siemens, which is a major investor in HearUSA and supplies most of the hearing-aid products sold by the company. In addition to providing a financial boost to HearUSA, the AARP deal may enable geographic expansion of its retail chain, which currently sells hearing aids through 180 company-owned hearing care centers in 10 states in the U.S. and its Hearing Care Network comprised of over 1,900 affiliated audiologists in 49 states.

HearUSA this week also announced second-quarter net income of $1.1 million, compared to a half-million-dollar loss in the previous quarter. Like other companies in the hearing-aid industry, HearUSA has seen a falloff in sales due to the recession, but cost-control measures in addition to the sale of its Canadian subsidiary boosted both the bottom line and balance sheet in the second quarter of 2009.