Demant: The Sound of Innovation — From a Love Story to Global Hearing Healthcare Dominance

I. Introduction & Episode Roadmap

In 1904, in the Danish city of Odense—the birthplace of Hans Christian Andersen—a different kind of fairy tale was beginning. A local mechanic named Hans Demant watched his wife Camilla struggle to hear the world around her. In an era when hearing impairment often meant social isolation, Hans refused to accept that fate. He traveled, researched, and eventually secured a contract with an American manufacturer called General Acousticon Company. Hans Demant bought his first hearing aid for his hearing-impaired wife in 1904, won a contract with the American manufacturer General Acousticon Company that produces hearing aids called Acousticon, and sold his first hearing aids in Odense, Denmark.

What Hans Demant built from that single act of love has grown into something extraordinary. Demant A/S is a Danish multinational corporation specializing in hearing healthcare and audio technology, founded in 1904 by Hans Demant to address his wife Camilla's hearing loss. Headquartered in Smørum, Denmark, the company develops, manufactures, and distributes a wide range of products including hearing aids, diagnostic equipment, and professional audio solutions, operating under well-known brands such as Oticon, Philips Hearing, Interacoustics, and Maico.

Today, Demant stands as a titan of the hearing healthcare industry. The company is headquartered in Smørum (northwest of Copenhagen) and had a revenue of kr. 22,400,000,000 in 2024. Demant is the only company in the world that covers all areas of hearing healthcare, from hearing devices and hearing implants to diagnostic instruments and professional hearing care.

How did a Danish mechanic's love for his hearing-impaired wife turn into a global healthcare empire that survived two world wars, multiple technological disruptions, a $95 million cyberattack, and now controls a significant share of the world's hearing aid market? The story involves foundation-controlled capitalism, radical management innovation, vertical integration, and Denmark's remarkable hearing aid cluster—where competitors and collaborators have co-existed for over a century, creating one of the most specialized industrial ecosystems on Earth.

This is a company that embodies the long-term thinking of Danish foundation capitalism, the radical experimentation of the "spaghetti organization," and the disciplined empire-building of multi-brand strategy. Let's dive in.

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II. Founding Story & Early Years (1904-1950s)

The hearing aid that Hans Demant purchased for his wife Camilla in 1904 was nothing like the sleek, AI-powered devices that Demant produces today. These early "Acousticon" devices were bulky, battery-powered contraptions—primitive by modern standards but revolutionary for their time. What Hans recognized was an underserved market: millions of people with hearing impairment had few options and little hope.

Hans set up his first distribution business, selling these imported hearing aids in Denmark. But his journey was cut short. After Hans Demant's death in 1910, his widow Camilla and their son William Demant took over the responsibility of the company. William expands distribution to Finland and Russia. The business continued under family stewardship, with William proving to be an ambitious successor.

In 1915, William, and his wife Ida Emilie Høst, traveled to Russia to sell hearing aids. Picture the scene: a young Danish couple traversing war-torn Eastern Europe during World War I, carrying hearing devices in their luggage, driven by the conviction that their product could change lives. It was sales pioneering in its most literal form.

Then came World War II, which forced a critical pivot. During World War II, William was unable to import goods from USA, England and France. He therefore decided to produce components for the latest Acousticon devices in Denmark and start manufacturing the first Danish-made licensed hearing device—the Acousticus—a copy of the original Acousticon model. In 1943, Oticon became the official name of the company.

What began as wartime necessity became competitive advantage. The forced localization of production created manufacturing capabilities that would serve the company for decades. After World War II ended, the production of hearing aids in Denmark had become a big success, and Oticon established an export business. Together with American hearing aid producer Charles Lehman, they established the American-Danish Oticon Corporation, headquartered in Copenhagen.

The Foundation Decision: Permanent Family-Like Ownership

In 1957, William Demant made what would prove to be one of the most consequential decisions in the company's history. William and his wife Ida Emilie donated the family's shares in the company to "William Demant and wife Ida Emilie's Foundation," also called the Oticon Foundation, which is now called the William Demant Foundation. The Foundation's general aim is charity, with particular emphasis on helping people with a hearing impairment.

This decision aligned Demant with a distinctly Danish corporate tradition. Foundation ownership is particularly common in Denmark, whose largest companies—Novo Nordisk, A. P. Møller Maersk, Carlsberg, Danfoss, Grundfos, William Demant, Rambøll, COWI and many more—are owned in this way. In Denmark, where foundation-owned firms are particularly numerous, industrial foundations control a quarter of the country's 100 largest corporations and 60 percent of its stock market capitalization. These companies operate in a broad range of industries and include such internationally prominent companies as A. P. Møller-Maersk, Carlsberg, Novo Nordisk, and William Demant.

The William Demant Foundation holds the majority of shares in Demant A/S, which is listed on Nasdaq Copenhagen and among the 25 most traded stocks. William Demant Invest is a highly respected evergreen investment company, wholly owned by the charitable William Demant Foundation and the holding company for William Demant Foundation's activities.

Why does this matter? Foundation ownership creates what academics call "patient capital"—ownership that can think in decades rather than quarters. When your controlling shareholder is a charitable foundation with a perpetual mandate, short-term activist pressure becomes irrelevant. This structure enabled Demant to make long-term investments in R&D, to weather economic storms, and to resist the temptation of short-term profit maximization that so often derails technology companies. It's the corporate equivalent of a trust fund that actually works.

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III. The Rise to Market Leadership (1960s-1980s)

The 1960s and 1970s represented Oticon's golden age of international expansion. During the 1960s, Oticon expanded with subsidiaries in The Netherlands, USA, Norway, Switzerland, and Germany. Management also changed during this time, with Bent Simonsen, Henning Mønsted, Torben Nielsen, and Bengt Danielsen taking over Oticon, with Bent Simonsen as General Manager.

The company built an impressive global footprint. Oticon established a temporary factory in Skinnerup near Thisted in Denmark. An additional factory in Scotland was also established. Oticon also expanded with subsidiaries in France and New Zealand. Eriksholm, Oticon's research centre, was established outside of Elsinore in Denmark, in a newly renovated building.

The Eriksholm research center deserves particular attention. While competitors viewed hearing aids as simple amplification devices, Oticon was investing in fundamental audiology research—understanding not just how ears work, but how the brain processes sound. This early commitment to science-based innovation would pay dividends for decades.

By the end of the 1970s, the company had achieved market leadership. At the end of this decade, Oticon was the biggest supplier of hearing aids with a market share of almost 15 percent, and William Demant died.

Oticon Holding A/S was established in 1983.

The Seeds of Crisis

But markets never stand still. The 1980s brought massive disruption to the hearing aid industry as electronics giants sensed opportunity. Siemens, Philips, Sony, and 3M—companies with vast resources and consumer electronics expertise—entered the market. Back then, the company was up against big companies like Siemens, Philips, Sony, M3 and AT&T. It was impossible to compete against them on financial resources, technology or marketing. The only way to remain competitive was to create something that the big companies would never be able to replicate: an innovative fast-moving organisation.

For Oticon, the results were devastating. The company that had pioneered the industry found itself being outspent, outmarketed, and increasingly outmaneuvered. By 1987, market share had plummeted, and the company was bleeding money. The foundation's patient capital structure had bought time, but time alone wouldn't solve the fundamental problem: Oticon had become bureaucratic, slow, and technologically stagnant.

The company needed a miracle.

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IV. CRITICAL INFLECTION POINT #1: Lars Kolind and the "Spaghetti Organization" Revolution (1988-1998)

The Crisis & New Leadership

In 1988, with the company on the brink of irrelevance, the board brought in Lars Kolind as CEO. When in 1988 Lars Kolind took over as the CEO, the market share of the company had dropped dramatically. That situation called for a revolution in the company in order to remain competitive.

Kolind was an unusual choice. Kolind served as associate professor of economics and planning theory at Copenhagen University from 1977 to 1982. He had worked as an assistant director at Denmark's National Research Laboratory before moving to the private sector. A management consultant and academic by training, Kolind brought an outsider's perspective to an industry that desperately needed one.

His first move was conventional: cost-cutting. Once Lars Kolind was appointed CEO of Oticon, a period of rationalisation and cost-cutting started. During his first years as CEO, Kolind underwent a diagnosis of the company by meeting with clients and managers, analysing all the different parts of the company and understanding the market where they were competing.

But Kolind quickly realized that efficiency alone wouldn't save Oticon. The company didn't just need to cut costs—it needed to fundamentally reimagine how a hearing aid company should operate. The big electronics companies could always outspend a Danish specialist. Oticon had to find a different way to compete.

"Think the Unthinkable"

On New Year's Day 1990, Kolind produced his manifesto for change: it was to be nothing short of a revolution. In future, he believed a company's success would be increasingly reliant upon creating the right working environment—one where employees behaved as individuals rather than part of a large organisation. Formal organisational strictures and hierarchies, he felt, stifled innovation and initiative. They had to go.

The manifesto was presented under a provocative heading: "Think the Unthinkable." What followed would become one of the most studied management innovations in corporate history.

In 1990 he announced a broad package of innovative and radical measures in the job design, the organisational structure, the physical layout of the company and the way of sharing information. These changes led to a new organisation known as the Spaghetti organisation due to its lack of structure (e.g., there was neither managers nor subordinates; everything was "entangled"). Some of those changes included going from a hierarchical organisation to a project-oriented one.

How the Spaghetti Organization Worked

The concept was radical even by today's startup standards—and this was 1991, years before Google, Zappos, or any of the companies that would later experiment with similar ideas.

The Oticon spaghetti organisation was characterised by a project-focus, lack of vertical hierarchies and physical barriers, a networked information system, and a paperless office environment where information was freely accessible to all.

In the new-style Oticon, teams are encouraged to take up projects from start to finish all by themselves. It is an employee's job to either find something useful to do by joining an existing project or to start a complete new one by themselves. They enjoy lots of freedom in the process and don't have to worry much about resource planning. As long as the deadlines are respected, that is all that counts at new-style Oticon.

The physical manifestation was equally dramatic. The shredder is connected to a transparent chute which passes through the company cafeteria directly below, allowing workers on breaks to watch a satisfying stream of falling paper on its way to the recycling bins. Kolind estimates that the new way of working reduced circulating paperwork by 80 per cent.

A secretary can run a product development team if she can gain support from enough people to form the team and convince the management of the value of the project. Professional development at Oticon is not rewarded with promotion but with salary and ability to join or form project teams that have the biggest impact on the future of Oticon.

Kolind drew inspiration from an unusual source. Kolind said: "I see most companies as a waste of resources. In contrast, when I take a look at the scouting movement I see a strong volunteer aspect. When scouts come together they cooperate effectively without hierarchy, like a family brought together through common goals. That's why the scouting movement is accomplishing loads of remarkable things with limited resources."

Kolind described the result as "total chaos"—precisely what he was looking for. As he said: "To keep a company alive, one of the jobs of top management is to keep it disorganised."

The Results

The transformation worked spectacularly. In 1995, Oticon published figures showing revenues of $160 million and operating profits of $20 million—an increase of 100 per cent on revenue and a ten-fold increase in profits on the figures for 1990. In 1998, after serving for 10 years as CEO, Lars Kolind decided to step down and move on.

The management innovation garnered international attention. Kolind carried through a financial turnaround of Oticon 1988–90, and in 1991 Kolind changed the company by designing and implementing the so-called "Spaghetti Organization," which has been featured as one of the first knowledge-based, almost paperless organisations in the world. Kolind's work in Oticon has been featured in articles and books including Tom Peters' Liberation Management.

The model attracted academic study and became a case study taught at business schools worldwide. Kolind's transformation of Oticon has been subject of management cases from IMD. His "Spaghetti Organization" has been featured as one of the first knowledge-based, almost paperless organisations in the world.

The Evolution and Legacy

The pure spaghetti organization didn't survive intact. The case then goes on to discuss the reasons that led to a partial abandonment of the spaghetti structure around 1996, while the company continued to be a dominant player in the hearing aid industry with a continuous stream of product innovations.

Interestingly, too, some observers note that the company and Kolind never fully achieved the radical implementation of the spaghetti organisation, pulling back from the total chaos he advocated.

But the DNA of innovation and employee empowerment became embedded in the company culture. But the introduction of the innovative management style has proven its success in the long-term as well. Although the 'spaghetti organization' has evolved over time, Oticon is reported to be still an unusually relaxed and empowered organization. Nowadays, Oticon is the world's second largest hearing aid manufacturer.

In 1993 he received the national IT-Prize (IT-prisen) and in 1996 the National Management Prize. The same year Kolind was awarded the title "Man of the Year" and in 1998 "Social Entrepreneur of the Year."

When Kolind departed, he left a fundamentally different company—one that had proved that a small Danish specialist could outinnovate the global giants. That competitive spirit would define Demant for decades to come.

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V. IPO and the Multi-Brand Empire Building (1995-2010s)

Going Public and the Leadership Transition

In 1995, the company was listed on the Copenhagen Stock Exchange. The IPO represented a new chapter: access to public capital markets while maintaining foundation control.

In 1997, it was decided to change the name of the company from Oticon Holding A/S to William Demant Holding A/S, because it was considered disadvantageous to use the same name for both the corporate group and for one of its businesses.

In 1998, Niels Jacobsen was appointed President & CEO of William Demant Holding A/S. This marked the beginning of a 25-year tenure that would fundamentally transform the company from a single-brand hearing aid manufacturer into a diversified hearing healthcare empire.

Building the Diagnostics Empire

Under Jacobsen's leadership, the company began a systematic acquisition strategy to capture more of the hearing healthcare value chain.

The Group acquired Bernafon, a hearing aid manufacturer based in Switzerland. The acquisition also included the manufacturer of diagnostics equipment, Maico, thus laying the foundation for the Group's diagnostic business activity.

William Demant Holding A/S acquired the Danish manufacturer Interacoustics, that specializes in diagnostic instruments and audiometers.

The Group further expanded its portfolio with diagnostics instruments with the acquisition of Amplivox in 2008 and Grason-Stadler in 2009. At this point, Demant's Diagnostics Instruments solidified its position as the world's largest supplier of diagnostic equipment.

Adding Hearing Aid Brands

The multi-brand hearing aid strategy accelerated. In 2010, Otix Global was acquired, giving the Group a third hearing aid brand, Sonic.

Each brand served different market segments and channels. Oticon remained the flagship premium brand, sold through audiologists. Bernafon offered a differentiated positioning. Sonic targeted different geographic and demographic segments. This portfolio approach allowed the company to capture market share across multiple price points without diluting any single brand's positioning.

The Sennheiser Partnership

In 2003, German company Sennheiser electronic and William Demant Holding A/S established a joint venture to produce and sell headsets for office and gaming, which would later be operated by Demant alone under the brand name EPOS.

The Sennheiser partnership represented an attempt to leverage audio technology expertise beyond hearing aids. While the venture would eventually be wound down, it reflected the company's expansive vision and willingness to experiment with adjacent markets.

By the end of this era, William Demant Holding had transformed from a single-brand hearing aid company into a comprehensive hearing healthcare group—manufacturing devices, producing diagnostic equipment, and building distribution capabilities across the globe.

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VI. CRITICAL INFLECTION POINT #2: The Philips Partnership & Brand Strategy (2018)

The Sennheiser Exit and Philips Entry

2018 marked a strategic pivot. In 2018, William Demant Holding A/S and Sennheiser announced an end to their joint venture in headsets. Going forward, Enterprise Solutions and Gaming became independent divisions under the EPOS brand, which is fully owned by William Demant Holding A/S. William Demant Holding A/S and Philips announced a partnership where William Demant Holding A/S brings Philips branded hearing solutions to market, thus adding a fourth hearing aid brand to the Group.

The Philips partnership was strategically brilliant. The parent company of the Oticon, Sonic, and Bernafon brand of hearing aids, William Demant, announced that it has entered into a licensing agreement with Philips. The agreement will "bring Philips-branded solutions to hearing healthcare." According to the press release, the new partnership will leverage William Demant's leading role in hearing aid technology and Philips' global brand presence in healthcare.

The agreement highlights the multi-brand strategies being used by today's global hearing aid manufacturers, and how companies are trying "to widen the definition of hearing healthcare to the benefit of the end-user and hearing care professionals."

The Costco Channel

The real strategic significance became clear when Philips hearing aids began appearing at Costco. Demant's recently forged partnership with Philips, to manufacture Philips-branded HearLink hearing aids, kicked into high gear—with distribution secured at Costco hearing centers across America.

After the U.S. Veterans Affairs hospital system, Costco is the largest distributor of hearing aids in North America. The big box retailer sells hearing aids from the world's biggest hearing aid manufacturers including Sonova, Demant, GN Hearing, and WS Audiology.

The collaboration between Philips and Demant, one of the 5 major global hearing aid manufacturers, began in 2018, reinforcing the product's credibility. The Philips branded devices entered Costco in 2019, replacing Demant's Bernafon line.

Why replace Bernafon with Philips? We would imagine that Costco decided to drop the Bernafon range based on decisions around brand recognition. While Bernafon offers pretty great hearing aids, outside of the hearing aid world, no-one has ever heard of them, but I would imagine everyone has heard of Philips.

Demant's top hearing aid brands include Oticon and Philips. Oticon Intent is Demant's most popular product. If you compare the feature sets of the most recent Philips hearing aid and the Oticon Intent, you'll see they're sharing a lot of the same features. These are virtually identical products—they're just sold through different channels under different names.

This is the essence of the multi-brand strategy: the same underlying technology platform, differentiated by brand, channel, and positioning. Oticon maintains its premium positioning through audiologists. Philips captures retail channel volume through mass merchants. Different customers, same technological excellence, maximized market coverage.

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VII. CRITICAL INFLECTION POINT #3: The 2019 Ransomware Attack — A $95 Million Wake-Up Call

The Attack

September 2019 brought a crisis that no amount of strategic planning could have anticipated. Danish hearing health care company Demant estimated it would lose between $80 and $95 million due to a recent "cyber-crime" attack.

Demant, one of the world's largest manufacturers of hearing aids, was hit by a ransomware attack earlier this month and was expected to suffer losses of up to $95 million. The issue began on 3rd September where Demant made a statement on its website stating that it was shutting down its entire internal IT infrastructure due to a critical incident.

The scope of the attack was staggering. All the company's infrastructure was impacted very badly, including the company's ERP system, production and distribution facilities in Poland, production and service sites in Mexico, cochlear implants production sites in France, amplifier production site in Denmark, and its entire Asia-Pacific network. When companies normally recover from a breach within days, Demant took weeks and was still recovering assets, and might take even more weeks to recover in full.

The firm claims that their immediate response was to shut down all IT systems across all sites and business units to contain and limit the issue, but key business processes were heavily impacted by this incident, including research and development, production, and distribution.

The Financial Toll

As is typical, the cost of recovering its IT systems accounted for a small proportion of the total cost—around $7.3 million. The bulk of the losses were due to lost sales and the inability to process orders, which the company says make up around half of the estimated losses. In a press release, the firm said in addition to the lost sales, "the incident has prevented us from executing our ambitious growth activities in some of the most important months of the year—particularly in the US, which is our biggest market."

In a message to its investors, Demant said it expects to lose somewhere between $80 million and $95 million. The sum would have been higher, but the company expects to cash in a $14.6 million cyber insurance policy.

A September 2019 attack on Danish hearing aid business Demant cost $95 million. Demant, one of the world's largest manufacturers of hearing aids, expected to incur losses of up to $95 million following what appeared to be a ransomware infection that hit the company at the start of the month. This marked one of the most significant losses caused by a cyber-security incident outside of the NotPetya ransomware outbreak.

Interestingly, Demant wasn't financially impacted because of lost data. Their losses came from their inability to access systems. With no way to receive and fulfill orders, their bottom line took a massive hit.

Lessons and Recovery

The attack became a sobering case study for manufacturing companies everywhere. The hearing aid industry requires complex coordination between R&D, manufacturing, and distribution across multiple continents. A single cybersecurity breach can paralyze an entire supply chain.

For Demant, the recovery process prompted significant investments in IT security infrastructure. The company emerged with stronger defenses but also with a visceral understanding of operational risk in the digital age. The $95 million loss—equivalent to nearly two percent of annual revenue—was an expensive education.

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VIII. CRITICAL INFLECTION POINT #4: Rebranding to Demant & Vertical Integration (2019-2025)

The Rebrand and Leadership Transition

In 2019, William Demant Holding A/S changed its name to Demant A/S and launched a new brand strategy to support collaboration across the Group. At the same time, the Oticon Foundation was renamed William Demant Foundation.

The rebranding reflected a fundamental shift in strategy. The company was no longer just a hearing aid manufacturer with various subsidiaries—it was an integrated hearing healthcare group with a unified identity.

In February 2017, it was announced that then-President and CEO Niels Jacobsen would step down after 25 years in charge of the company. Instead, he would become CEO of William Demant Invest A/S. As of 1 April 2017, the company has been led by President & CEO Søren Nielsen and by board chairman Niels B. Christiansen.

Søren Nielsen joined the company in 1995 and has since then worked within multiple areas of the Group. In his first years, he worked with the Group's then newly acquired hearing aid manufacturer, Bernafon, in Switzerland where he was instrumental in integrating Bernafon into the Demant multi-brand structure. Since 2008, Søren Nielsen has been overall responsible for all the Group's hearing aid activities, consisting of four hearing aid brands, and been President of Oticon.

The newly appointed President & CEO is 46 years old and has been with the Company for almost half his life. Already when Søren Nielsen studied to become a Master of Science in Engineering at the Technical University of Denmark, he used Oticon as a case in his thesis work, and right after his graduation, he was employed with the Company. That was back in 1995.

The Retail Clinic Strategy

Under Nielsen's leadership, Demant accelerated its vertical integration into retail hearing care clinics. The logic is compelling: own the customer relationship, capture both the device sale and the ongoing service revenue, and create barriers to competitive substitution.

In June 2022, Demant acquired ShengWang and their network of 500 hearing aid clinics in China at a cost of CN¥ 1,750,000,000.

The company continued expanding its clinic footprint across Europe. Acquisitions of Dansk HøreCenter in 2024 doubled its network in Denmark. The February 2025 acquisition of Ohwerk Group integrated 77 clinics across Germany.

The KIND Acquisition — Largest Ever

The culmination of this strategy came in June 2025 with the announcement of the largest acquisition in company history. Today, Demant has signed an agreement to acquire KIND Group (KIND), one of the world's leading retailers of hearing aids with around 650 hearing care clinics, for a total consideration of EUR 700 million (around DKK 5.2 billion) on a cash- and debt-free basis. The transaction will be Demant's largest-ever acquisition and will expand the Group's global Hearing Care business to comprise more than 4,500 clinics worldwide.

Since its foundation in 1952 by the Kind family, KIND has become a leading provider of hearing care in Germany, with activities in several other countries, based on an ambition to offer high-quality expert service and improve the quality of life of hearing-impaired people. Demant shares this ambition of improving the lives of people living with hearing loss with its purpose to create life-changing differences through hearing health.

While KIND's core operations are in Germany—home to around 600 of its clinics—the acquisition also includes about 30 locations in Switzerland and a smaller number of clinics in Austria, Luxembourg, and Singapore. The company says the deal boosts its total presence in Germany to more than 900 clinics—positioning it as a market leader in one of the world's largest and most competitive hearing aid markets.

Demant announced that it obtained all required regulatory approvals for its acquisition of KIND Group, clearing a key milestone toward finalizing the company's largest retail acquisition to date. The agreement, first announced in June 2025, has now been approved by both the Austrian and German competition authorities.

The transaction is expected to close at the beginning of December 2025, at which time the company will outline the financial effects of bringing KIND into the Demant Group.

Portfolio Optimization

The vertical integration into clinics has been accompanied by a streamlining of the business portfolio. In April 2022, Demant announced it had agreed to sell Oticon Medical to Australian company Cochlear Limited for kr. 850,000,000 and would exit the hearing implant business.

In 2024, the Group announced its intention to find a more suitable owner for EPOS. The EPOS business—the legacy of the Sennheiser joint venture—has struggled in the post-pandemic market for enterprise audio equipment.

The strategic direction is clear: Demant is becoming a more focused hearing healthcare company, divesting peripheral businesses while doubling down on the vertically integrated model of manufacturing hearing aids, producing diagnostic equipment, and operating retail clinics.

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IX. The Business Today: Segments, Brands & Global Footprint

Financial Performance 2024

The Group generated revenue of DKK 22,419 million. EBIT before special items of DKK 4,404 million, resulting in an EBIT margin before special items of 19.6%. Very strong cash flow with CFFO of DKK 4,080 million and FCF of DKK 3,486 million. "In 2024, we took important steps to become a more focused hearing healthcare company and concentrate our efforts on our core business. We delivered on our ambition to help as many people as possible by improving the lives of 11 million people based on our life-changing hearing solutions and personalised care."

Financial highlights in 2024: Revenue (DKK million) with 2% organic revenue growth, 5% in local currencies, and 4% reported. Revenue breakdown: Hearing Aids (Ext.) 45%, Hearing Care 44%, Diagnostics 11%.

The Group achieved a solid operating profit before special items of DKK 4.4 billion and a very strong cash flow for the year, which allows us to continue to invest in growth and innovation. All our hearing aid brands launched new products in 2024, and our flagship product, Oticon Intent, was a strong sales driver, particularly for our Hearing Care business area, which generated solid growth in 2024.

Revenue Breakdown by Segment

The company operates across three primary business areas:

• Hearing Aids (~45% of revenue): Wholesale of hearing devices through the Oticon, Bernafon, Philips, and Sonic brands
• Hearing Care (~44% of revenue): Retail clinics under brands including Audika, HearingLife, Hidden Hearing, and Acústica Médica
• Diagnostics (~11% of revenue): Audiometers and diagnostic equipment under brands including Maico, Interacoustics, Amplivox, GSI, MedRx, and Audioscan

Demant is the only company globally that covers all areas of hearing healthcare. Not just hearing devices—they make hearing implants, diagnostic equipment, and run professional hearing care services. They also own the popular hearing health site HealthyHearing.com.

Global Footprint

With a presence in over 130 countries and more than 22,000 employees, Demant serves millions of people with hearing impairments worldwide, emphasizing innovation in personalized hearing care and communication technologies.

Geographic revenue distribution: Europe (~40%), United States (~34%), Other North America (~7%), Asia (~10%), Pacific (~5%), Other (~3%).

2025 Outlook

Also in 2025, Demant will continue to invest in hearing solutions based on artificial intelligence, and the possibilities to help users seem limitless, which includes the launch of new AI-powered in-the-ear devices in our smallest form factors already in the first quarter, so we have entered the year with optimism, energy and commitment to drive sustainable growth and to help even more people hear better through innovation.

The company guided for organic growth of 3-7% and EBIT of DKK 4,500-4,900 million for 2025.

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X. Competitive Landscape: The "Big 5" Oligopoly

Market Structure

The global hearing aid market is dominated by five major manufacturers. Sonova, WS Audiology, Demant A/S, GN Store A/S, and Starkey Corp are some leading players currently dominating the global hearing aids market.

WS Audiology, leading the hearing aids market with a 26.9% share in 2024, was formed through the merger of Widex and Sivantos. The company leverages a broad product portfolio spanning premium and mid-tier segments, supported by a strong global distribution network. Its focus on innovative digital solutions and personalized hearing experiences further reinforces its market leadership.

The Danish Cluster

What's remarkable about the hearing aid industry is the concentration of world-leading companies in Denmark. GN spokespersons explain: "Denmark has a long-standing tradition of excellence in engineering and technology, fostered by a strong emphasis on research and development. Danish companies were early adopters of digital technologies and have focused on understanding the needs of hearing aid users, leading to innovations that improved user experience. In the 1990s, hearing aid manufacturers in Denmark introduced some of the first fully digital hearing aids."

Hearing aid manufacturers have established partnerships with universities and research institutes to leverage academic research for product development. Denmark has developed innovation hubs and research clusters that facilitate collaboration between scientists, engineers, and industry professionals. These hubs have been instrumental in translating academic research into practical and innovative hearing aid technologies.

"The long tradition of public/private partnerships will continue and that can maybe even strengthen our position. Innovation is of course important in order to live up to being dominant, but with a strong Danish foundation within hearing healthcare, I believe we will still see strong Danish players in the market until then."

Demant's Differentiation

Demant stands out for its vertically integrated business model, combining hearing aid manufacturing, diagnostic equipment, and retail operations.

This vertical integration creates several competitive advantages: - Customer relationship ownership: By operating clinics, Demant captures both the initial device sale and ongoing service revenue - Data and feedback loops: Clinic operations provide direct insight into customer needs and product performance - Channel control: Reduces dependence on independent audiologists who may recommend competing products - Cross-selling: Diagnostic equipment sales benefit from relationships with clinic operators

Market Dynamics

The global hearing aids market size was valued at USD 8.3 billion in 2024. The market is expected to reach from USD 8.8 billion in 2025 to USD 15.5 billion in 2034, growing at a CAGR of 6.5% during the forecast period.

The high market growth is attributed to the increasing prevalence of hearing loss, rising aging population and geriatric care needs, technological advancements in hearing devices, and growing awareness and early diagnosis, among other contributing factors.

The OTC Disruption

To increase the use of—and access to—hearing aids, in October 2022, the FDA established a new category of over-the-counter (OTC) hearing aids for adults 18+ with mild to moderate hearing loss.

Hearing aid sales have been improving since the FDA ruling but, interestingly, OTC sales don't seem to be negatively impacting "traditional" hearing aid sales at hearing clinics. During the first quarter of 2023, hearing aid sales increased 9.1% over the same period last year, according to the Hearing Industries Association (HIA). The HIA found that OTC sales in Q1 2023 only accounted for 1% of the total hearing aids distributed by HIA members.

In our analysis of the FDA Establishment Registration & Device Listing database, we found that the current OTC hearing aid market is still dominated by traditional hearing aid manufacturers, with limited disruption from major consumer electronics and startup companies.

The established manufacturers have been able to participate in the OTC category through their retail partnerships while maintaining premium positioning through professional channels—exactly the multi-brand, multi-channel strategy that Demant has pioneered.

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XI. Investment Analysis: Bull Case, Bear Case, and Key Metrics

Bull Case: The Aging World Thesis

The demographic tailwind for hearing healthcare is powerful and durable. According to the World Health Organization (WHO), in 2024, over 1.5 billion people around the globe are living with some degree of hearing loss, with approximately 430 million individuals experiencing disabling impairment that significantly impacts their daily lives. This figure is forecasted to escalate to more than 700 million by the year 2050.

The adoption rate of prescription hearing aids has remained relatively low, varying from 1 to 2% in low-income countries to 38% in the USA. This underpenetration suggests significant addressable market expansion as awareness grows and stigma diminishes.

Demant's vertical integration strategy positions it to capture value across the entire hearing healthcare journey—from diagnosis through device sale through ongoing care. The KIND acquisition extends this model into Germany, one of the world's largest hearing aid markets.

The foundation ownership structure enables patient capital allocation. While competitors must satisfy quarterly earnings expectations, Demant can invest for long-term market position.

Bear Case: Disruption Risks

Consumer electronics giants represent existential risk. Apple seems to have discovered a desirable price point for the AirPods, pricing them between $129 and $249. This price contributed to Apple's sales of over 80 million AirPods, or $15 billion in revenue in 2022, which was more than the combined revenue of $12 billion from all hearing aid and cochlear implant companies worldwide.

Apple's AirPods Pro now include FDA-cleared hearing aid functionality. If Apple, Google, or other technology giants aggressively pursue the hearing health market, they could disrupt pricing, distribution, and customer expectations.

Regulatory and reimbursement changes pose ongoing uncertainty. Healthcare policy shifts in major markets (particularly the U.S. and Germany) could alter market dynamics.

The KIND acquisition temporarily elevates leverage, with gearing expected around 3.5x at closing, above the target range of 2.0-2.5x. The company expects to deleverage within 18-24 months, but integration risks exist with any acquisition of this scale.

Porter's Five Forces Analysis

• Threat of New Entrants: HIGH. Consumer electronics companies have the capital, technology, and distribution to enter. However, deep audiological expertise and relationships with hearing care professionals create barriers.

• Bargaining Power of Suppliers: LOW to MODERATE. Hearing aid manufacturers control chip development and key technologies. Supply chain concentration (particularly for semiconductors) creates some dependency.

• Bargaining Power of Buyers: MODERATE. Individual consumers have limited negotiating power. Large retail channels (Costco, VA) command meaningful leverage. Vertical integration into clinics shifts buyer power toward Demant.

• Threat of Substitutes: MODERATE and RISING. OTC devices, smartphone applications, and consumer hearables represent emerging substitutes for mild hearing loss cases.

• Competitive Rivalry: HIGH. Five major players compete intensely on technology, distribution, and pricing. Patent litigation (as seen between Oticon and GN ReSound) reflects the stakes involved.

Hamilton Helmer's 7 Powers Analysis

Demant possesses several durable sources of competitive advantage:

• Scale Economies: Global manufacturing and R&D scale enables investment levels that smaller competitors cannot match.

• Network Economies: Limited direct network effects, though the clinic network creates some local market power.

• Counter-Positioning: Vertical integration into retail may represent counter-positioning against pure-play manufacturers. Competitors face difficult choices in whether to compete or cooperate with their retail clinic customers.

• Switching Costs: Professional audiologists develop familiarity with specific fitting software and manufacturer support. Consumers experience adjustment periods when changing hearing aid brands.

• Branding: Oticon represents a century of brand equity in professional audiology. Philips leverages consumer brand recognition.

• Cornered Resource: Eriksholm research center and accumulated audiological expertise represent valuable intellectual property.

• Process Power: The legacy of the spaghetti organization—a culture of innovation and employee empowerment—represents process advantage that competitors cannot easily replicate.

Key Performance Indicators to Monitor

For long-term fundamental investors, three KPIs matter most:

1. Organic Revenue Growth: The clearest indicator of competitive positioning. Demant guided 3-7% organic growth for 2025; sustained performance above market growth rates (typically 4-6% structurally) indicates market share gains.

2. Hearing Care Same-Clinic Sales Growth: As the company becomes increasingly vertically integrated, same-clinic sales growth in the Hearing Care segment measures the performance of existing retail assets—the equivalent of same-store sales in retail analysis.

3. EBIT Margin Before Special Items: At 19.6% in 2024, this metric captures operational efficiency and pricing power. Margin expansion would indicate scale benefits and/or pricing strength; compression would suggest competitive pressure or integration challenges.

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XII. Conclusion: The Sound of Long-Term Thinking

In 1904, Hans Demant purchased a hearing aid for his wife Camilla. That simple act of love launched a journey spanning 121 years, two world wars, digital revolution, and countless technological disruptions. The company that emerged from that moment now employs over 22,000 people, operates in 130 countries, and touches over 10 million lives annually through its hearing solutions.

What lessons does Demant's story offer?

Foundation capitalism enables patient strategy. The William Demant Foundation's controlling ownership has allowed the company to invest for the long term, weather crises, and avoid the short-termism that afflicts many public companies. When a ransomware attack caused $95 million in losses, there was no activist investor demanding management's heads. When vertical integration required sustained investment in retail clinics, the capital was available.

Management innovation can create durable advantage. Lars Kolind's spaghetti organization may have been partially walked back, but its DNA persists. The company's culture of innovation and employee empowerment has produced a stream of technological advances—from the first digital hearing aids to AI-powered devices today.

Multi-brand strategies enable market coverage. By operating Oticon, Bernafon, Philips, and Sonic across different channels and price points, Demant maximizes market capture without cannibalizing premium positioning. The same technology platform serves audiologist clinics and Costco warehouses under different brands.

Vertical integration captures value. The aggressive expansion into retail clinics—culminating in the €700 million KIND acquisition—represents a bet that owning the customer relationship is worth the capital and complexity involved.

Geographic clusters matter. Denmark's hearing aid cluster—housing Demant, GN Store Nord, and the legacy of Widex—represents over a century of accumulated expertise, educational infrastructure, and collaborative competition. This cluster advantage has proven durable even as the industry globalized.

For long-term investors, Demant represents a distinctive asset: a foundation-controlled company with durable competitive advantages in a market with powerful demographic tailwinds. The risks—technology disruption from consumer electronics giants, regulatory uncertainty, integration challenges—are real but manageable.

More than anything, Demant's story illustrates what can be built when patient capital meets purposeful mission. From a mechanic's shop in Odense to global hearing healthcare dominance, the company embodies its own founding principle: making people smile through better hearing.

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Material Risks and Regulatory Considerations

Regulatory Environment: The hearing aid industry is subject to healthcare regulations in multiple jurisdictions. Changes in reimbursement policies, particularly in major markets like Germany and the U.S., could materially impact demand. The FDA's OTC hearing aid rules have introduced new competitive dynamics that continue to evolve.

Cybersecurity: The 2019 ransomware attack demonstrated the company's vulnerability to cyber threats. While investments in IT security have been made, manufacturing companies remain attractive targets.

Acquisition Integration: The KIND acquisition represents significant integration risk. The transaction temporarily elevates leverage above target levels.

Competition: Entry by major consumer electronics companies into hearing healthcare could disrupt established market dynamics, pricing, and distribution.

Currency: With significant revenue outside Denmark, foreign exchange fluctuations impact reported results.