Neal St. Anthony
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IntriCon Corp. investors are buying CEO Mark Gorder’s long-term plan to disrupt the hearing-aid industry.

The Arden Hills-based designer and maker of body-worn microelectronics for the hearing and medical-device industry has more than doubled in value this year to $14-plus per share, a market value of about $100 million.

Intricon is the best performing publicly traded company in Minnesota this year.

IntriCon last week posted record earnings of $1.2 million, or 18 cents per share, for the first nine months of the year on revenue of $66.1 million.

“I think it’s going to be worth $25 to $30 per share,” said Beth Lilly, owner of private money manager Crocus Hills Partners, an owner of the stock. “I wasn’t too interested for years. But now there are reasons, including a change in the law [earlier this year]. I think they will get bought [eventually].”

This is not exactly a fast-money play.

Gorder, 70, an electrical engineer out of the University of Minnesota, was a co-founder in 1977 of a small predecessor company. IntriCon has grown to a 675-employee operation, with workers in the Twin Cities, Asia and Europe.

“We are kind of an overnight success story,” quipped Gorder, considered an analytical gentleman of the industry who has accumulated about 10 percent of the stock over the decades. “Reinventing the company has taken us about 10 years.

“We are now seeing the fruits of our labor. We couldn’t have done this five years ago, but we couldn’t wait with our investments. The market has come to us through industry consolidation and technology that has become available for us to implement the strategy.”

IntriCon used to make microelectronic components for others in the medical device and hearing aid ­industry.

It has retained a ­lucrative and growing business that makes sensors for neighboring Medtronic’s wireless glucose monitor and sensor assemblies that is part of Medtronic’s diabetes-management technology system. That so-called “medical business” of IntriCon, largely tied to the Medtronic relationship, grew 68 percent in the third quarter.

Analysts are even more interested in the potential of IntriCon’s emerging “hearing health” business that grew 54 percent in the third quarter ended Sept. 30 compared with last year.

Lilly and others watched with interest in years past as Gorder & Co. set up the technology, infrastructure and partners to take on the established hearing aid industry of five or six global players. Several of them have North American outposts in the Twin Cities.

Last summer, President Donald Trump signed the Food and Drug Administration Reauthorization Act. It includes a provision that allows adults with mild-to-moderate hearing loss to access over-the-counter hearing aids without being seen by a hearing-care professional.

Several of the world’s largest hearing-aid companies, which dominate the hearing market and also are at least partial owners of thousands of retail audiologist shops, opposed the measure. That includes Twin Cities-based Starkey Hearing Technologies and the locally based North American headquarters of Amplifon and ReSound.

They sell hearing aids under various brand names, including Miracle Ear.

Investors have flocked to IntriCon as they saw Gorder put together what supporters believe is a disruptive technology package to allow people with moderate hearing loss to buy a good product, adjust it themselves, using an iPhone or iPad, and pay a few hundred bucks per ear instead of $2,500.

The FDA is now charged with putting together the exact rules governing the over-the-counter systems that could take up to three years.

Gorder believes it will happen faster.

Lilly likens IntriCon’s play to the eyeglass industry, which similarly was disrupted years ago by lower-cost entrants.

And there’s a lot of money to be made in the $11 billion hearing-aid industry in the United States with lower-cost, innovative products that Gorder and others were able to convince Congress will spur competition and quality.

IntriCon this quarter is completing its two-year acquisition of Illinois-based Hearing Help Express (HHE), a direct-to-consumer mail order hearing-aid provider. Moreover, this year IntriCon has acquired a 49 percent of Soundperience of Germany, which has designed the first “psycho-accoustic” way of analyzing peripheral hearing and central hearing processing through its Sentibo software.

Gorder said IntriCon becomes the U.S. gateway for a groundbreaking software it is integrating into its lower-cost, innovative hearing packages.

“We believe Soundperience’s technology has the potential to drastically reduce the price of hearing aids, drive greater access and increase customers’ satisfaction,” Gorder said last week. “We anticipate piloting the cloud-based system, with our wireless hearing aids in the U.S. market via HHE.”

IntriCon, which hopes to pilot its integrated system in the U.S. within a year, projects a roughly 15 percent revenue increase next year to up to $104 million.

The potential buyers of IntriCon range from medical products companies with deep pockets that are looking to diversify, possibly a larger hearing company, or a private equity company that would hold-and-grow it for another seller, or public offering of stock.

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.