Sonova strengthens the Unitron brand and reviews middle ear implant activities

Sonova has been marketing an innovative product and service concept under the Sona brand since November 2009. Sona is a unique solution from both a product and a business model perspective. It includes the world’s first upgradeable hearing instrument, which has gained positive response in the market since business operations began in April 2010. Sona is present in Germany, France, the Netherlands, Switzerland, and the United States to date.

Sonova will further develop this unique product and service concept for people with mild to moderate hearing loss, by integrating its Sona related activities into Unitron Hearing. “This transfer will further strengthen Sona and Unitron by providing more synergies in product and service development as well as in distribution. It is the next step to increase the impact of Sona’s technology while making this innovative solution available to more customers around the globe”, said Alexander Zschokke, Interim CEO of the Sonova Group. “Within Unitron Hearing, the Sona solutions will continue to be an important part of the innovative Sonova product portfolio.” This transfer does not impact the sales or costs related to Sona, nor does it impact Sonova’s sales or EBITA guidance for 2011/12.

Management Change at Unitron

To further strengthen and position Unitron as a strong brand of Sonova, the Group announces the appointment of Jan Metzdorff as new President of Unitron Hearing. Effective immediately, he will succeed Michael Tease, who is leaving Unitron Hearing to take on new professional and personal challenges outside the Group. Jan Metzdorff has been working in the hearing instrument industry for over 14 years and has managed several sales companies during his seven years with Sonova. Since April 2010, he has been responsible for Unitron’s international sales development. “Jan Metzdorff has a profound knowledge of and experience in the hearing aid business and a proven track record,” says Alexander Zschokke. “We are convinced that he is the right person to further develop Unitron’s strong market position.”

Middle ear implant activities in Lonay, Switzerland under review

As part of the further consolidation of the Medical Division of Sonova, the company is evaluating the closure of the Phonak Acoustic Implants site in Lonay, Switzerland, which employs 26 people today working on the middle ear implant Ingenia. The Ingenia device is still in the development stage, does not yet have the CE certification or FDA approval, and is not yet commercially available. Sonova’s mid-term projections for sales and profitability did not include the Ingenia product and therefore, this decision does not affect the company’s outlook.

The decision is pending the outcome of the employee consultation process that has been initiated. The respective authorities have been informed. “An orientation about any organizational or personnel measures will be given only after the consultation period has ended and the results of the employee consultation have been carefully reviewed,” says Alexander Zschokke.

Management believes that, for Sonova, the cochlear implant market provides significant better mid-term opportunities for growth and profitability than the market for middle ear implant products. Therefore, any further development of the middle ear implant technology will take a second priority to the primarily focus of the Medical Division to develop future innovations in cochlear implant products, especially in light of the return to the U.S. market of the existing HiRes 90K product. The proposed decision has no impact of the company’s R&D efforts related to hearing instruments.

Should the decision to close the Lonay facility proceed, the company would also have to write-off the remaining capitalized R&D costs related to Ingenia of CHF 5 million, as a one-time, non-cash impairment charge. Neither the restructuring charges nor the impairment charge would impact the full year guidance on EBITA.

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