European hearing aids market and U.S. Veterans Affairs channel: Demant's Zeal extends VA share gains, while Sonova remains dominant but loses ground in August

Overview

Bernstein reviews August U.S. Veterans Affairs hearing-aid purchasing and market-share data. The report finds that Demant's new Oticon Zeal product continued to take share, while Sonova remained the category leader but ceded share and GN weakened further in the channel.

Core views

VA hearing-aid unit sales increased 3% year on year in August, following a 6% rise in July, with Bernstein noting that month-to-month volatility is normal in this channel. The VA is important because it provides the only granular monthly market-share data and is treated as an early read on how the broader hearing-aid market may receive differentiated new products. In 2025, the VA represented 15% of U.S. hearing-aid units despite veterans comprising about 6% of the adult population. The channel has grown at a 7% CAGR since 2000 versus 4% for the private market, but its five-year CAGR has slowed to 3%, partly due to a slower post-COVID reopening and audiologist shortages. Demant was the principal August winner. Following the May launch of Oticon Zeal, its overall VA share increased 80 basis points month on month to 23.9%, after gains of 30 basis points in July and 50 basis points in June. In the combined rechargeable and multi-processor ITE categories, Zeal helped Demant reach 27% share in August, up from 24% in July and 22% in June, overtaking Starkey for second place. Zeal carries a $695 ASP, a 42% premium to Demant's rechargeable RIC product. Bernstein considers the continued gains encouraging because market share often falls back in the months following a launch; the data therefore indicate sustained product acceptance rather than only an initial launch effect. Sonova lost about 50 basis points of overall VA share in August, after gaining 45 basis points in July. Its share in the combined ITE rechargeable and multi-processor categories fell from 44% to 42%, though it remained the leader. Bernstein attributes part of the pressure to Zeal's gains, while noting that Sonova has broadly retained significant share gains following the November 2025 Virto R launch. Sphere represented approximately 52% of Sonova's rechargeable RIC units in August, unchanged from July. Since Sphere is priced about 10% above standard Infinio in the VA channel, a higher Sphere mix could provide an ASP tailwind. Earlier durability issues have been resolved, but Bernstein suggests Sphere's larger size may have limited uptake among the VA's relatively young, predominantly male population. GN's VA share declined 20 basis points in August, following a 30-basis-point fall in July, as product demand shifted toward ITE devices after the Virto R and Zeal launches. GN had gained share when its high-powered ReSound Enzo IA entered the VA channel in November 2025 and when ReSound Vivia launched in May 2025, but it has remained a long-term share donor. Bernstein notes GN's share fell from 21% in 2017 to 10% in 2024, reflecting difficulties associated with the ReSound One M&RIE form factor and restricted sales access to VA audiologists during the COVID-19 period. The VA's scale and centralized procurement shape the economics of the channel. The VA has contracts with GN, Sonova, Starkey, Demant and WS Audiology, typically structured as a one-year base term with four annual renewal options. Bernstein estimates a VA average hearing-aid selling price of roughly $480, below private-market wholesale prices of $600-1,100. Lower ASPs reduce gross margins, although lower sales and marketing costs make the EBITA-margin impact less severe. Sonova has the greatest VA wholesale-sales exposure at 13%, versus 5% for Demant and 4% for GN, making channel share trends especially relevant to Sonova while also providing an important competitive signal for all manufacturers. Bernstein rates Sonova Outperform with a CHF275 target, Demant Market-Perform with a DKK276 target, and GN Underperform with a DKK79.15 target. Its stated valuation work uses blended P/E and DCF approaches for Sonova and Demant, while GN is valued on a sum-of-the-parts basis.

Analysis framework

Bernstein combines monthly VA purchasing and market-share data with product-launch timelines, company channel-exposure estimates, historical share trends and channel economics. It uses these inputs to assess whether new products are gaining traction and to relate VA trends to the manufacturers' broader competitive positions and valuations.

Methodology notes

• Industry AnalysisVolume-price decomposition

  VA unit-volume, market-share and ASP analysis

  The report separates unit growth, manufacturer share movements and product pricing to assess competitive performance and potential revenue or mix effects.

• Valuation methodsP/E and PEG Valuation

  P/E-based target-price analysis for Demant and Sonova

  Bernstein assigns 70% weight to P/E-derived values, using 18.0x 2026E EPS for Demant and 21x 2026/27E EPS for Sonova.

• Valuation methodsDCF (Discounted Cash Flow)

  DCF target-price analysis for Demant and Sonova

  The remaining 30% of each target value is based on a DCF using an 8% WACC and 3% terminal growth rate.

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  Sum-of-the-parts valuation for GN

  GN's target is based on the sale-price cash and share components of Hearing plus continuing operations valued at 10x 2026 adjusted EBIT.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Demant A/S (DEMANT.DC)

  Zeal's launch is driving VA share gains and stronger ITE-category positioning.

  Strengths

  Overall VA share reached 23.9%, while Zeal reached 27% in the combined ITE categories.

  Weaknesses

  VA exposure is smaller than Sonova's at 5% of wholesale hearing-aid sales.

  Comparison

  Overtook Starkey for second place in the combined ITE categories; gained share while Sonova, GN and WS Audiology declined.

  Risks

  Economic weakness, reimbursement-policy changes, a stronger competitor launch and U.S. OTC-market expansion are cited downside risks.

• Sonova Holding AG (SOON.SW)

  Remains the VA market leader but ceded August share as Demant's Zeal gained traction.

  Strengths

  Leads the combined ITE categories with 42% share and maintained a 52% Sphere mix in rechargeable RIC units.

  Weaknesses

  Overall VA share fell about 50 basis points month on month; Sphere adoption has been constrained by prior durability issues and potential size concerns.

  Comparison

  Has the highest estimated VA exposure at 13% of wholesale hearing-aid sales, versus 5% for Demant and 4% for GN.

  Risks

  A competitor product launch, macroeconomic weakness affecting hearing-aid demand and Swiss-franc appreciation are cited downside risks.

• GN Store Nord A/S (GN.DC)

  Lost VA share as the market shifted toward ITE products where newer rival launches gained traction.

  Strengths

  ReSound Enzo IA previously supported rechargeable BTE share gains after its November 2025 launch.

  Weaknesses

  VA share declined 20 basis points in August after a 30-basis-point July decline; the company has been a long-term share donor.

  Comparison

  GN's VA exposure is estimated at 4% of wholesale hearing-aid sales, below Demant and Sonova.

  Risks

  An unexpected product launch, stronger macro and consumer conditions, and Danish-krone weakness are cited as upside risks to the target price.

Key data

• VA hearing-aid unit growth+3% YoY in AugustFollowed +6% year-on-year growth in July.
• Demant VA market share23.9%Up 80 basis points month on month in August.
• Demant ITE-category share27%Up from 24% in July and 22% in June; surpassed Starkey for second place.
• Sonova combined ITE-category share42%Down from 44% in July but still category-leading.
• Sphere rechargeable RIC mix52%Unchanged month on month; Sphere carries about a 10% VA price premium to standard Infinio.
• VA share of U.S. hearing-aid units15% in 2025Veterans account for about 6% of the U.S. adult population.
• VA sales exposureSonova 13%, Demant 5%, GN 4%Share of each company's hearing-aid wholesale sales, based on Bernstein estimates.
• VA average selling priceapproximately $480Compared with private-market wholesale prices of $600-1,100.

Impact & implications

The report treats Demant's persistent Zeal share gains as a positive product-acceptance signal and identifies the VA as an important early competitive indicator. Sonova's large channel exposure makes its share and premium Sphere mix relevant, while GN's continuing share losses underscore its weaker VA competitive position.

Risks

• For Demant, Bernstein cites weaker global hearing-aid demand, adverse reimbursement-policy changes, stronger competitor launches and a larger U.S. OTC market as downside target-price risks.
• For Sonova, Bernstein cites competitor product launches, macroeconomic weakness that softens hearing-aid growth and Swiss-franc appreciation as downside target-price risks.

What to watch

• November VA data, released in December, as an early indicator of how competitive the new RIC products are.
• Whether Demant's Zeal can sustain post-launch share gains in the VA channel.
• Whether Sonova can increase Sphere's share of rechargeable RIC sales and capture a higher ASP mix.
• Further VA share shifts among Sonova, Demant, GN, Starkey and WS Audiology.