Company Financials: Orthopaedics and Spine

ORTHOWORLD’s estimates place overall 2Q12 market growth at 5% over 2Q11, as shown in Exhibit 1. Performance highlights follow and pertain to 2Q12, unless noted otherwise.

Exhibit 1: Increases by Product Segment: 2Q12 vs. 2Q11

Financial Table_-_Sized 

 

NOTES TO EXHIBIT 1

1 Orthopaedic products; constant currency, pro forma growth
2 Includes biologics
3 For the quarter ended 5/31/12; includes Dental. Spine includes Bone Stim and Biologics; Bone Stim reflects all Bone Healing sales.
4 For the quarter ended 7/27/12
5 Spine
6 For the quarter ended 6/30/12
7 Extremities: extremities + fixation combined; Endoscopy: endoscopic + communications, most of which is orthopaedic; Spine: neuro + spine. Total growth excludes Patient Handling.
8 ORTHOWORLD estimates



AAP IMPLANTATE
€9.0MM (~US $11.1MM), +18% (Bone Cement/Cementing Technologies +20%; Trauma +44%; Biomaterials -17%)

  - Launching extensions to LOQTEQ locking/compression family by year-end
  - Supplying stainless headed compression screw to Integra LifeSciences for U.S. market

ALPHATEC SPINE
$48.2MM, -4% (U.S. $32.8MM, -5%; ex-U.S. $15.3MM, -1%)
  - Acquired exclusive U.S. distribution rights to sell FDA-cleared synthetic biologic for posterolateral spine fusion under the company’s own label
  - Signed letter of intent to acquire small spinal implant company
  - Received FDA conditional approval to start pivotal IDE trial of OsseoFix: 400 patients, 25 sites
  - Completed design changes for Solus, expects to file for new 510(k) by year-end

ARTHROCARE
$60.5MM, +2%
• Sports Medicine $57.7MM, +3% (Americas +5%, International -5%)
• Other (primarily spine) $2.8MM, +22% (Americas -52%, International +64%)
  - Speedlock knotless anchor contributed to overall increase in average revenue per customer in U.S.
  - Launched Ambient MegaVac 90 Coblation Wand, MultifIX P Knotless Fixation Device for rotator cuff repair

BIOMET (Fiscal 4Q12, ended 5/31/12)
$739.5MM, +5% (U.S. $439.5MM, +7%; Europe $182.4MM, -2%; International $117.6MM, +14%)
Reconstructive $439.6MM, +6% (U.S. +7%)
• Hips +6% (U.S. +8%)
• Knees +6% (U.S. +6%)
• Bone Cement/Other +4% (U.S. +13%)
S.E.T. $96.2MM, +16% (U.S. +18%)
• SportsMed +21% (+16%)
• Extremities +22% (+29%)
• Trauma -4% (U.S. -5%)
Spine/Bone Healing $83.9MM, +5% (U.S. +3%)
• Spine +9% (U.S. +7%)
• Bone Healing -5% (U.S. -5%)
Other $50.6MM, +1% (U.S. -3%)
(Overall growth includes dental.)

Recon
  - Very strong demand for Taperloc Complete Hip in U.S. and Europe
  - Highly-advanced bearings ~70% of domestic acetabular units
  - Received clearance for Signature Personalized Patient Care System for acetabular cup placement, will start clinical evaluations in FY1H13
  - Oxford partial knees declined very slightly, but at improved rate vs. previous quarters
  - Referenced “pretty significant knee development,” targeting “clinical evaluation in the back half of this year”

S.E.T.
  - Rolling out comprehensive reverse shoulder in Europe in FY1Q13

Spine/Bone Healing
  - Received clearance for Lineum Posterior Occipital Cervical Thoracic System with proprietary translating screw design

CHINA KANGHUI
RMB 101.1MM (~US $15.9MM), +24% (China ~$12.2MM, +35%; ex-China ~$2.3MM, -9%)
• Trauma ~$9.4MM, +25%
• Spine ~$5.1MM, +24%
• OEM ~$1.4MM, +11%
• Joint Reconstruction ~$0.16MM

  - Launched TGM hip implant internationally through Consensus Orthopedics, focusing on mid- to top-tier hospitals
  - Launched Wei Rui Li knee system in 3Q, focusing on low- to mid-tier hospitals
  - Launched Anterior L5/S1 Spine Plate in China to good initial market acceptance



CONMED

$118.2MM, +9%
• Arthroscopy $81.0MM, +15% (Single-use products +18%; Y-KNOT ~$0.5MM)
• Powered Instruments $37.2MM, -3% (Burs/blades +6%)
  - In 3Q, announced partnership with Exactech on surgeon education in North America, from early arthroscopic intervention to total joint  replacement

CORIN(1H12 sales only; 2Q12 not available)
£25MM (~US $39.5MM), +13%

• Hips ~$25.1MM, +37%
• Knees ~$5.5MM, -5%
• Other Products ~$8.8MM, -17% 

By geographic region:
• U.K. ~$6.6MM, +10%
• Germany/Austria ~$5.1MM, +24%
• Australia, ~$8.9MM, -12%
• Japan ~$6.3MM, +8%
• U.S. ~$7.4MM, +101%
• Distributor markets ~$5.2MM, flat
Highlights pertain to 1H12.

Hips
  - Growth led by new cementless systems, Trinity cup, Metafix and MiniHip stems, line extensions
  - Volume of metal-on-metal (Cormet and Optimom) sales declined, while value of sales increased slightly
  - Rolling out upgraded MiniHip instruments in 2H12; expects to launch new TriFit TS cementless stem in 1H13

Knees
  - Improved performance from Uniglide partial knee due to new accounts in Germany, better market in U.K.
  - Unity knee 1st evaluation surgeries complete

Other
  - LARS distribution agreement extended to end of 2016, with increased exclusive distribution rights (notably in the U.S.), closer collaboration between companies

DJO
$285.9MM, +5%
• Bracing/Vascular $112.5MM, +9%
• Recovery Sciences $84.8MM, -2%
• International $70.4MM, +5%
• Surgical Implant $18.0MM, +10%
(Bracing and Vascular includes products serving the diabetes market.)

EXACTECH
$55.2MM, +7% (U.S. $35.2MM, +8%;
ex-U.S. $19.9MM, +5%)
• Hips $10.3MM, +22%
• Knees $21.0MM, +1%
• Biologics and Spine $5.9MM, -1%
• Extremities $12.0MM, +24%
• Other $6.0MM, -14%
  - Seeing small signs of recovery in U.S. market
  - Fully launched posterior augmented glenoid and augmented reverse base plates
  - Planning 4Q full launch of InteGrip cup with acetabular augment
  - On track with IDE study for cartilage project in Taiwan

GLOBUS MEDICAL
$96.0MM, +19% (U.S. $88.5MM, +17%; ex-U.S. $7.3MM, +38%)
• Fusion $61.2MM, +10%
• Disruptive Technology $34.7MM, +38%

  - Sales growth led by CALIBER expandable lumbar fusion and lateral lumbar fusion devices, SP-FIX spinous process fixation and INTERCONTINENTAL minimally invasive lateral fixation devices



GREATBATCH MEDICAL
$32.8MM, -5%
  - Continued to experience operational issues with Swiss orthopaedic facilities
  - Opening manufacturing facility in Ft. Wayne, Indiana to consolidate orthopaedic operations

INTEGRA LIFESCIENCES
$95.6MM, +17% (U.S. $80.7MM, +22%, ex-U.S. $14.9MM, -2%)
  - U.S. Extremities $32.0MM, +38%
  - U.S. Spine/Other $48.8MM, +13%
  - Orthobiologics +>20%
  - New spine launches doing quite well
  - Continued high demand for Evo3 and Mosaic biologics through existing and new distributors

INTERNAL FIXATION SYSTEMS
$136,800, +124%

  - Growth attributed to release of additional sets of redesigned cannulated screws, limited initial release of modular locking small fragment system and hiring of new distributors

JOHNSON & JOHNSON
$1,628MM, +14% (U.S. $873MM, +13%, ex-U.S. $755MM, +15%; excluding Synthes, growth +0.9%, U.S. -0.6%, ex-U.S. +3%)
• Hips +4% (U.S. +5%, ex-U.S. +3%)
• Knees +3% (U.S. +3%, ex-U.S. +3%)
• Spine -3% (U.S. -5%, ex-U.S. +1%)
  - Synthes contributed ~$200MM, ~13% of sales growth

MAKO SURGICAL
$23.7MM, +27%
• Procedures $13.0MM, +70%
• RIO Systems $8.2MM, -14%
• Service/Other $2.5MM, +73%
  - 2,590 MAKOplasty bone-resurfacing procedures performed, +66% (2,494 domestic; of those, 280 hip)
  - Rolling out RIO 2.5 and Hip 2.0 software systems by end of 3Q
  - Presented results of randomized, controlled clinical trial comparing uni knee implant alignment error between group receiving RESTORIS MCK delivered by RIO and those receiving the Oxford Partial Knee mobile bearing uni using non-robotic instrumentation; results deemed statistically significant and indicate more accurate alignment using RIO
  - Underestimated time and effort necessary to close system sales—future sales require more hospital approvals, additional surgeon support/training

MAZOR ROBOTICS

NIS 11.2MM (~US $2.9MM), +470% (U.S. ~$2.5MM)

  - Launched C-OnSite, add-on to Renaissance system for planning, execution and verification of implant placement

MEDICREA
€5.9MM (~US $7.3MM) +3%
  - Performed 30 complex spine procedures with LigaPASS
  - Planning 2H12 launch of PASS OCT for treatment of occipital, cervical and thoracic spinal conditions, primarily targeting U.S., and LaminoJAWS nonfusion implant for reconstruction of the posterior cervical arch under cervical laminoplasty




MEDTRONIC(fiscal 1Q13, ended 7/27/12)
$786MM, -3% (U.S. $558MM, -5%; ex-U.S. $228MM, -3%)
• Core Spinal $645MM, +1% (U.S. $430MM, flat; ex-U.S. $215MM, -2%)
• Biologics $141MM, -19% (U.S. $128MM, -20%; ex-U.S. $14MM, -7%)
FY12 Other Biologics revenue, previously classified within Biologics, has been reclassified to Core Spine.

  - Navigated spinal procedures and enabling technologies (such as POWEREASE) attracting more interest
  - >300 surgeons using MAST MidLIF procedure (>1,000 procedures performed)
  - Commenced full launch of Solera 5.5/6.0, nearly doubled SOLERA minimally invasive sets in field
  - Increased ATLANTIS Vision Elite cervical plate sets by 20%
  - Launching AMT interbody implants at NASS meeting

NUVASIVE
$154.4MM, +16% (Ex-U.S. $14MM, +40%; Monitoring services revenue $10.2MM; Lumbar U.S. +5%, Biologics U.S, +5%, worldwide >$26MM, +9%; Cervical U.S. +17%)
  - Impulse Monitoring case volumes growing as planned, seeing tightening of monitoring reimbursement by some payers

ORTHOFIX
$119.5MM, +5%
• Spine $81.8MM, +7% (Stimulation $43.3MM, +9%, Repair Implants/Regenerative Biologics $38.5MM, +4%)
• Orthopaedics $37.7MM, +2%
  - Planning 3Q launch of Forza next-generation interbody spacer
  - New cervical implant products slated for launch in 4Q and 2013

RTI BIOLOGICS
$30.1MM, +3%
• Spinal $9.7MM, -11%
• Bone Graft Substitutes/General Orthopaedic $7.0MM, +12%
• Sports Medicine $13.3MM, +10%
  - Starting to see more indicators of economic stability in certain markets, though larger segments typically record slowdown during summer—will expect rebound once football and soccer season resumes
  - SportsMed growth buoyed by strong export business
  - Launched/released for distribution 2 implants or enhancements
  - Multipotent Adult Progenitor Cell (MAPC) technology-based implants on track for human implantation within 2012; small and large animal studies processing with encouraging results
  - Initiated large primate study for Xenograft Tendon in ligament reconstruction

SEIKAGAKU(fiscal 1Q12 ended 6/30/12)

¥6,727MM (~US $86MM), -3%
  - Decrease attributed to National Health Insurance drug price reductions and discontinuation of research reagent business, despite higher sales volume for ARTZ in Japan and increased export sales of SUPARTZ in U.S.
  - Focusing on differentiation from competitors in U.S.



SMITH & NEPHEW

Advanced Surgical Devices (ASD) $774MM, +2% (U.S. +2%, Established Markets flat; Emerging/International Markets +10%)
• Hips $165MM, -5% (U.S. -6%, ex-U.S. -4%)
• Knees $219MM, +3% (U.S. +3%, ex-U.S. +3%)
• Sports Medicine Joint Repair $127MM, +10%
• Arthroscopic Enabling Technologies $98MM, -4%
• Trauma $116MM, +3%
• Other ASD, including Clinical Therapies $49MM, +11%

Recon
  - Continued effects of negative commentary on metal-on-metal hips; Birmingham sales continue to decline, -3% globally, represents <8% of hip sales, little over 1% of total sales
  - Good growth from traditional hips: OXINIUM, VERILAST bearing technology, SMF Short Modular Femoral stem, R3 Acetabular system, POLARCUP Dual Mobility
  - Commenced limited launch of REDAPT Revision Femoral system, will add U.S. later in 2012
  - Launched LEGION HK (Hinge Knee) with a kinematic design
  - Commenced limited release of JOURNEY II TKA in U.S. to positive early feedback from surgeons, patients; full global release to follow in 2014

Other
  - Introduced VLP FOOT Percutaneous Calcaneus Plate and PERI-LOC Ankle Fusion Plate
  - 3Q launches include ENDOBUTTON CL Ultra 10mm fixation, Gluteal Tendon Repair kit

STRYKER
$2,106MM, +3%* (U.S. $1,384MM, +8%, ex-U.S. $722MM, +0.3%)
Reconstructive $927MM, +2%* (U.S. 10%, ex-U.S. -4%)
• Hips $308MM, +0.8% (U.S. +6%, ex-U.S. -4%)
• Knees $329MM, +2% (U.S. +5%, ex-U.S. -3%)
• Trauma/Extremities $233MM, +11%* (U.S. +22%, ex-U.S. -1%)
MedSurg Equipment $786MM, +3%* (U.S. +3%, ex-U.S. +5%)
Neurotechnology/Spine $393MM, +5%* (U.S. +17%, ex-U.S. +6%)
• Neurotechnology $212MM, +16% (U.S. +23%, ex-U.S. +8%)
• Spine $181.0MM, +9% (U.S. +11%, ex-U.S. +3%)
(MedSurg includes patient handling and emergency medical equipment.)
*Excludes acquisitions.

  - Recon growth continues to benefit from launches of ADM, MDM and rollout of next-gen Accolade primary hip stem

Voluntary recall of Rejuvenate ABG II modular hip stem in early 3Q
  - Due to potential for fretting and corrosion at modular neck junction
  - As of 6/12, reported rate of ALTR less than 0.5% of patients (~150 patients)
  - 30,000 units implanted since global 2007 launch (20,000 in U.S.), revenue impact not material

SYMMETRY MEDICAL
$102.3MM, +8% 
• Instruments $28.5MM, -8%
• Implants $25.1MM, -5%
• Cases $14.5MM, -36%
• Other $6.9MM, +23%
• Surgical $27.3MM, +210%
  - OEM Solutions revenue decline primarily driven by customers’ reduced capital spending on instruments/cases, low-single-digit hip and knee procedural growth offset by customer inventory management
  - Noted slight uptick in instrument sales, stable results for implants, seeing order activity above year-on-year levels
  - Seeking more consistent inventory practices from customers to lend a more stable implant revenue growth; “encouraged by what we’re seeing on those fronts”
  - Notes that 2013 AAOS meeting is later than usual, might affect timing of customer product rollouts

TORNIER
$66.0MM, +6% (U.S. $36.5MM, +6%; ex-U.S. $29.4MM, +6%)
• Total Extremities $53.2MM, +8% (Upper $42.9MM, +9%, Lower $6.4MM, +3%, Sports Med/Biologics $3.7MM, +8%)
• Large Joints/Other $12.7MM, flat
  - Launched Ascend PTC, porous-coated version of original stem
  - Will launch ArthroTunneler Tunnel Pro system in 3Q
  - 4Q12 launch expected for Ascend Flex, convertible shoulder that can be used as a primary reverse, will be offered as porous- and non-porous-coated



TRANS1

$3.5MM, -35% (U.S. $3.2MM, -35%; ex-U.S. $0.2MM, -29%)

  - U.S. AxiaLIF revenue $2.6MM: 65% 1-level, 35% 2-level
  - Non-AxiaLIF revenue $600,000, including ~$0.5MM from VEO direct lateral cases
  - Completed 262 AxiaLIF procedures; 193 in U.S.
  - Average revenue per case near all-time highs, driven by higher mix of AxiaLIF 1L+ and higher ancillary product use; case count declined, number of active surgeons flat
  - VEO case revenue +46% sequentially
  - Enrolled 1st patient in RAMP trial, 200-patient study comparing AxiaLIF to TLIF

TRAUSON (1H12 sales only; 2Q12 not available)
RMB 205.8MM (~US $26.5MM), +28%
• Trauma ~$14.7MM, +17%
• Spine ~$5.5MM, +95%
• OEM Products ~$3.3MM, -8%
• Other ~$2.7MM, +89%
Highlights pertain to 1H12.

  - Launched 4 new products, including one for non-fusion spine market
  - Planning 2H12 launch of 1 trauma and 3 spine products

WRIGHT MEDICAL
$123.3MM, -5% (U.S. $69.2MM, -8%, ex-U.S. $54.0MM, -1%)
Recon $71.3MM, -9% (U.S. -17%, ex-U.S. -3%)
• Hips $40.0MM, -10% (U.S. -19%, ex-U.S. -4%)
• Knees $30.1MM, -8% (U.S. -15%, ex-U.S. flat)
• Other $1.0MM, -18% (U.S. -13%, ex-U.S. -19%)
Extremities $51.9MM, +1% (U.S. -1%, ex-U.S. +7%)
• Foot/Ankle $28.8MM, +13% (U.S. +11%, ex-U.S. +23%)
• Upper $6.3MM, -8% (U.S. -10%, ex-U.S. -1%)
• Biologics $15.4MM, -13% (U.S. -16%, ex-U.S. flat)
• Other $1.2MM, -14% (U.S. +25%, ex-U.S. -27%)
  - Early feedback positive on next-gen ORTHOLOC 3Di reconstruction plate for foot
  - Focused on expansion and completion of EVOLUTION knee platform, enhancements to hips such as superPATH Fast Recovery technique

ZIMMER
$1,125MM, +2% (Americas $614.3MM, +1%; Europe $305.2MM, +4%; Asia Pacific $205.5MM, +4%)
Reconstructive $843MM, +2% (Americas $449MM, flat; Europe $240MM, +3%; Asia Pacific $154MM, +3%)
• Hips $340MM, +2% (Americas $152MM, +1%; Europe $115MM, +4%; Asia Pacific $72MM, +1%)
• Knees $461MM, +1% (Americas $265MM, flat; Europe $117MM, flat; Asia Pacific $79MM, +6%)
• Extremities $42MM, +6%
Dental $62MM, -5%
Trauma $74MM, +9%
Spine $52MM, -4%
Orthopaedic Surgical Products/Other $94MM, +8%
  - Recon volume trends remained relatively stable, with some apparent improvement in U.S.
  - Received FDA clearance for VIVACIT-E, highly crosslinked polyethylene with vitamin E
  - Introduced Sidus stem-free shoulder in Europe
  - Received FDA clearance for Trabecular Metal Ardis Interbody spine system
  - Next-generation knee to fully launch in 4Q, will be the company’s largest launch ever


Sources: Company press releases, earnings calls, filings with the Securities and Exchange Commission

Julie A. Vetalice is Editor, Information Products for ORTHOWORLD Inc. She can be reached at 440.543.2101 or This email address is being protected from spambots. You need JavaScript enabled to view it.