Nuheara is seeking to capitalise on the niche between traditional hearing aids and stereo-focused headphones. The company claims to be on a mission to enhance lives by changing the way people hear. The Nuheara website refers to a study in which only 3/10 Americans over the age of 50 that could benefit from a hearing aid currently use one thus highlighting their desired market.

Their two main products as of June 2019 are the iQBuds and iQBuds Boost. The latter includes a patented technology that automatically calibrates the earbuds to your unique hearing profile. They recently released the iQStream TV but it doesn't add that much for mine.

• The iQBuds retail for AU$239 (largely just a competitor to the Apple AirPods)
• The iQBuds Boost retail for AU$649 (trying to disrupt the Hearing Aid community)
• The iQStream TV retails for AU$139 (allows Boost to connect to any TV)

The company has an established relationship throughout the UK with Specsaver. This provides a logical cross-sell opportunity for customers with mild to moderate hearing difficulties. iQBuds Boost was also added to the UK's National Health Services hearing aid supply contract in April 2019.

Competition already exists from audio giants such as Bose in the form of their 'Bose Hearphones'. Unless Nuheara's patented technology is significantly superior I struggle to see them winning a war with the likes of Bose and Sennheiser. A recent announcement found here, highlights management's desire to concentrate on their high end, high value hearing products. An attempt perhaps to focus less on the stereo end of the market and more on the entry-level hearing aid aspect. 

Looking forward, their next product iQBuds Max is set to enter production in Q4 2019 and is set to deliver triple the hearing and five time the processing power of other products in iQbuds family. Unsure of the current price point but I anticipate it being closer to the $1k mark which will firmly put it in the Hearing Aid ballpark.

I haven't looked into their financial position too deeply, however a casual glance at the 2018 report shows a Net Loss After Tax of $7.4m and to me an unjustifiable increase in employee renumeration between 2017 and 2018.

I was intrigued when I thought about how prolific reading glasses are in western culture. With Apple AirPods starting to change our perception on getting about with a device in your ear, there is potential that people may start to accept help for mild to moderate hearing difficulties. I think there is a market here, whether Nuheara can capture it with any form of meaningful moat is the question.

Always unfortunate for a company when their update results in a 16% sell-off. The announcement can be found here.

The why?

The announcement outlines that Nuheara received a "confidential, indicative, non-binding letter of intent from a large multi-national company with respect to the potential acquisition of all issued shares in the company". (current market cap of approx $58m)

This LOI fell through and during that same period, so too did OEM interest in their LiveIQ product. 

To pull this apart, it is promising that a large multinational company flagged interest in what Nuheara are doing however, management showed their hand by putting OEM discussions on hold to consider the take-over bid. They seem willing to sell at the appropriate price.

Either management wasn't satisfied with the price or our 'large multinational company' looked under the hood and weren't happy with what they saw. Full disclosure - not entirely sure how much visibility you get at the LOI stage.

Regardless of what happened behind closed doors, Mr Market was not impressed. At the time of writing we are in the middle of 16.67% sell-off.