Eargo's OTC-hearing-aid bet ends in a $2.55 take-private, then a merger

Eargo designs, manufactures and sells virtually invisible, rechargeable, completely-in-canal hearing aids directly to consumers, with remote support from its own hearing professionals.

That FDA rule-making would let adults buy invisible, rechargeable hearing aids direct, and that Eargo — built for the OTC world years early — would own that channel.

Around $164M raised privately before the October 2020 IPO plus about $141M from the offering (Global Venturing); Patient Square added $100M in the 2025 LXE Hearing merger (Hearing Review).

Eargo was founded in 2010 to attack the reasons adults skip hearing aids — stigma, cost and access — with a completely-in-canal device sold direct to consumer. It raised from NEA, Future Fund, Maveron, Longitude and Nan Fung, launched seven device generations from 2017, and went public in October 2020 on the strength of a DTC model it believed an OTC regulatory category would reward.

In late 2021 third-party payor claims audits pushed Eargo to stop accepting insurance benefits as payment from 2021-12-08 to 2022-09-15, collapsing revenue, and it took on $100M of notes in mid-2022. The FDA published its final OTC hearing-aid rule on 2022-08-17, effective 2022-10-17; Eargo said it would bring devices into OTC compliance and pursue retail partnerships, but its self-fitting 510(k) application still needed more data. Net loss for 2022 reached about $157.5M and the stock never recovered.

Patient Square Capital announced on 2023-10-30 and closed on 2024-02-16 a take-private at $2.55 per share — roughly 86% below Eargo's $18 IPO price. In April 2025 Eargo merged with hearX Group, maker of the Lexie OTC line, into LXE Hearing with a fresh $100M from Patient Square, the first major consolidation in the OTC category the FDA created.

Eargo's product was built for the OTC world years before the FDA rule: invisible design, self-fitting ethos and remote hearing care addressed exactly the barriers the rule was meant to lower.

The rule opened the category to every consumer-electronics and mass-market player with better distribution and lower cost, turning regulatory validation into head-on competition.

Dependence on insurance reimbursement made revenue hostage to payers; audits paused that channel for nine months right before the rule took effect.

A direct-to-consumer model with heavy brand marketing could not reach the scale economics of incumbents and consumer giants in a newly commoditized category.

A rule that creates your category can erase your moat: if regulation was what kept giants out, its arrival means winning on distribution and cost — not on being first.

As of 2025-04-09 Eargo operates inside LXE Hearing, the company formed by its merger with hearX Group; hearX CEO Nic Klopper leads it, Eargo's Bill Brownie serves as COO, and the Eargo and Lexie brands continue under one platform. Patient Square's additional $100M backs the combination, which Hearing Review called the first notable OTC hearing-aid merger since the FDA created the category in 2022.