Eargo (EAR) Stock: Why It Surged 54.95% Today
The stock price of Eargo (EAR) increased by 54.95% today. Investors responded positively to the company announcing its support of the new regulatory category of over-the-counter (OTC) hearing aids, as finalized by the Food and Drug Administration (FDA) Wednesday, August 17, 2022.
The new ruling – which is expected to go into effect in October 2022 – stands to increase product access for the estimated 45 million American adults who experience some degree of hearing loss. And only 1 in 4 individuals who would benefit from wearing a hearing device has worn one. The regulatory category of OTC hearing aids aims to make hearing care devices more affordable and attractive to consumers while upholding reasonable standards of safety and efficacy.
The final rule will become effective 60 days after its publication in the Federal Register. And based on the current regulatory classification of Eargo hearing aids as Class I or Class II exempt air conduction hearing aids, we believe Eargo will have 240 days after the date of publication in the Federal Register to achieve compliance with new or revised requirements, including labeling requirements. But If any of the company’s current devices require 510(k) clearance in order to come into compliance with the final rule, then the company would need to obtain clearance for such devices by the effective date of the final rule.
“This ruling directly aligns with Eargo’s mission. By making hearing aids more accessible and affordable while maintaining safety standards, the industry will now finally be driven by consumer demand for superior products.”
“Based on our initial review of the final rule, we believe Eargos can continue to be sold under existing regulations as well as classified as OTC hearing aids, subject to compliance with labelling and other requirements of the final rule. For example, we believe Eargo hearing aids currently on the market are within the FDA’s output and insertion depth limit requirements. We also believe the FDA’s removal of certain selling restrictions for OTC hearing aids will allow Eargo to expand the way we serve customers by making the addition of full retail and physical locations in a simplified and scalable way, which will allow Eargo to more broadly meet customers’ hearing health needs. We plan on adding partnered physical locations to our online experience in 2022 and 2023. With that said, we will need to expend time and resources evaluating the final rule and ensuring that our devices and processes come into compliance with the new requirements.”
“This industry milestone will drive greater innovation and provide the types of consumer-friendly hearing care experiences the industry needs. The hearing aid industry has traditionally been stagnant and slow to adapt to consumers’ evolving needs. Stigma is the biggest hindrance to people’s decision to wear hearing devices—Eargo launched its first product six years ago to overcome stigma with its virtually invisible hearing aids. Our differentiated product and consumer-first approach, which includes lifetime remote customer care, empower people to take control of their own hearing wellness. Eargo wholeheartedly supports the FDA’s decision to take this monumental step forward to promote accessibility, and we look forward to the positive changes this will have on the future of hearing health.”
— Christian Gormsen, President and Chief Executive Officer