Earbuds maker Nuheara (ASX:NUH) surprised and dismayed the market this morning telling investors it received a takeover offer in April and is scrapping a new product unveiled in January last year.

Nuheara did not identify the “large multinational” which was kicking its tyres, and the offer didn’t go further than a very loose indicative non-binding letter of intent.

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It’s unclear who ended the discussions.

Nuheara stock plunged 18 per cent on the news to 5.9c.

What the approach did do is delay a shift to selling Nuheara earbuds via original equipment manufacturers (OEMs) as a white labelled product.

“[The bid] placed a number of OEM and other partnership discussions on hold pending the outcome of these discussions,” Nuheara said.

LiveIQ is dead

It also scrapped a line of earbuds dubbed LiveIQ, which were announced during major electronics trade fair CES in 2018 but whose fate was dependent on finding an OEM keen to make and sell it.

Nuheara’s other products are the $240 IQbuds for everyday use, the IQbuds Boost which it’s selling as a precursor to a full hearing aid, and a TV box which allows multiple users to listen to a television at different volumes.

Stockhead is seeking comment from Nuheara.

A rocky road

Nuheara entered the ASX as a wireless earbud market in 2016, the year Apple launched its Airpods.

Since then the market for wireless earbuds has exploded and Nuheara pivoted away from a purely retail product and into the proto-hearing aid market mid-last year.

That repositioning took a body blow in March when the Scottish NHS, a customer of Nuheara’s UK distributor, recategorised the IQbuds Boost as a ‘hearable’ rather than a hearing aid.

The company fought back weeks later with a new platform allowing people to self-assess their hearing online, rather than having to start the process with a doctor appointment.

Yet Nuheara has struggled to maintain consistent sales figures following its repositioning and refocus on the higher value IQbud Boost.

Peak cash receipts hit $1.3m in the July quarter last year just as the IQbud Boost was launched for sale, and have fallen to $641,000 in the March quarter this year.

In the half year report in February, auditors emphasised a “material uncertainty” of the company remaining a going concern, based on its $4m loss and falling revenue.

Company directors noted the concerns but said there are “reasonable grounds to believe that the Group will be able to continue as a going concern” due to ongoing sales growth, purported new products and new customers and the appointment of a chief sales officer.

In other health news:

Bioscaffold maker Admedus (ASX:AHZ) has some good news from a five-year study of its heart product CardioCel, an implant that acts as scaffolding inside the organ. The independent study found that when used for congenital heart defects in newborns through to one year olds, 96 per cent of the children hadn’t needed any more surgery by the time they reached three to five years old.

There was also no evidence of calcification, a problem with heart implants that narrows the valves in the heart and reduces the blood flow through the organ.
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