The global landscape of hearing healthcare is undergoing a significant transformation, and at the forefront of this shift is a newly formed entity: LXE Hearing. This venture is the result of a notable merger between hearX Group, an innovative e-health startup hailing from South Africa, and Eargo, a U.S.-based pioneer in direct-to-consumer hearing aids. Bolstered by a substantial $100 million investment from the healthcare-focused private equity firm Patient Square Capital, the creation of LXE Hearing marks the first major consolidation in the over-the-counter (OTC) hearing aid market since the Food and Drug Administration (FDA) paved the way for their sale in 2022.
For the estimated 44 million American adults grappling with hearing loss, traditional pathways to obtaining hearing aids have often been fraught with obstacles — high costs, social stigma, and limited accessibility. Both Eargo and hearX, through its Lexie Hearing brand, have independently sought to dismantle these barriers. Eargo, established in 2010, gained recognition for its sleek, virtually invisible, and rechargeable in-canal hearing aids, directly appealing to consumers seeking discreet solutions. Meanwhile, hearX, founded in 2015 with roots at the University of Pretoria, initially focused on digital hearing diagnostics before launching Lexie Hearing in 2020. Leveraging mobile technology and a direct-to-consumer model, Lexie quickly rose to prominence, even earning a spot on TIME’s list of 100 Most Influential Companies in 2023 for its innovative approach.
The newly minted LXE Hearing will operate with both the Eargo and Lexie Hearing brands continuing to serve their respective customer bases. This strategic decision allows the company to cater to a broader spectrum of consumer preferences and needs within the OTC market. Leading the combined entity is Nic Klopper, CEO and co-founder of hearX, who will assume the role of CEO for LXE Hearing. Bill Brownie, Eargo’s COO and interim CEO, will take on the COO position. This leadership structure suggests a blend of the innovative spirit of the South African startup with the established operational experience of its U.S. counterpart.
The driving force behind this transatlantic alliance appears to be a shared vision of democratizing hearing healthcare. “The merger between Lexie and Eargo is founded on our shared mission to create hearing health solutions for everyone, everywhere,” stated Klopper. He further emphasized the complementary nature of the two companies, noting how Eargo’s design and focus on clinical quality align with hearX’s technology, including its Bose-powered product line and mobile application. Brownie echoed this sentiment, highlighting that the combination of their experience, talent, and technology will make hearing solutions more accessible and affordable.
The $100 million infusion from Patient Square Capital signals strong investor confidence in the potential of the direct-to-consumer hearing aid market. Justin Sabet-Peyman, a Partner at the investment firm, believes that LXE Hearing’s innovative technology and go-to-market strategy, amplified by the synergies of the merger, will provide crucial solutions for individuals in need of hearing care. This substantial financial backing will likely fuel further research and development, expand marketing efforts, and potentially facilitate entry into new market segments.
From a South African perspective, this merger represents a significant milestone in the country’s tech landscape. hearX ’s journey from a university spin-off to a key player in the global hearing health market culminating in this major merger with a U.S. company is a testament to the innovation and entrepreneurial spirit emerging from the African continent. The fact that key leadership and many skilled employees will remain based in South Africa is a positive indicator for the local tech ecosystem. HAVAÍC, a South African venture capital firm that has supported hearX since 2019, lauded the merger as one of the largest tech mergers in South African history, highlighting the company’s remarkable global growth journey.
The creation of LXE Hearing arrives at a pivotal moment for the U.S. hearing aid market. The FDA’s 2022 decision to allow the sale of OTC hearing aids was intended to increase competition and lower costs, making hearing assistance more readily available. LXE Hearing, with its combined expertise, technological resources, and significant funding, is poised to be a major player in this evolving landscape. By integrating product technology platforms and customer relationship management systems, the company aims to create a more seamless experience for both consumers and business partners.
While the long-term impact of this merger remains to be seen, the formation of LXE Hearing signifies a bold step towards reshaping how Americans access and afford hearing healthcare. By bringing together the strengths of a South African innovator and a U.S. market leader, backed by substantial investment, LXE Hearing has the potential to significantly impact the lives of millions living with hearing loss, offering a new standard in accessibility, affordability, and convenience.