Company Financials: Orthopaedics and Spine

ORTHOWORLD’s estimates place 3Q12 market growth at 3% over 3Q11, as shown in Exhibit 1 on the following page. Performance highlights follow and pertain to 3Q unless otherwise noted.

Exhibit 1: Orthopaedic Sales1 Increases by Product Segment: 3Q12 vs. 3Q11

For Financials_OK3Q12UpdateSE_JV-800 

Notes to Exhibit 1:

1. Orthopaedic products; constant currency, pro forma growth
2. Includes biologics
3. For the quarter ended 8/31/12; includes Dental. Spine includes Bone Stim and Biologics; Bone Stim reflects all Bone Healing sales. Excludes trauma acquisition.
4. Excludes Synthes acquisition.
5. Spine
6. For the quarter ended 9/30/12
7. Extremities: extremities + fixation combined; Endoscopy: endoscopic + communications, most of which is orthopaedic; Spine: neuro + spine. Total growth excludes Patient Handling.
8. ORTHOWORLD estimates

 

Alphatec

$47.8MM, flat (U.S. $31.0MM, -5%; ex-U.S. $16.8MM, +12%)

  • Launched BridgePoint spinous process fixation system, NEXoss biologic
  • Phygen asset acquisition brings access to >100 U.S. spine surgeons, Leucadia AutoLok Pedicle Screw

ArthroCare

$57.0MM, +5% (Americas $37.1MM, +9%; International $19.9MM, -3%)

Ÿ Sports Medicine $55.2MM, +8%; Other (includes spine) $1.8MM, -23%

  • Minimal sales arising from agreement to supply Wright Medical with Opus knotless suture technology
  • Launched phase 2 marketing strategy: medical education campaign to reinforce clinical facts concerning Coblation during knee arthroscopy; phase 3 to focus on ACL reconstruction; phase 4 is platform to deliver Coblation in versatile operating modes (expected late 2013)

Biomet (FY 1Q13 ended 8/31/12)

$707.4MM, +10% (U.S. $452.2MM, +9%; Europe $142.9MM, +9%; International $112.3MM, +14%)

Reconstructive $393.0MM, +2% (U.S. +1%)

  • Ÿ Hips +2%; Knees +2%; Bone Cement/Other +4%

Sports Med/Extremities/Trauma (S.E.T.) $127.3MM, +59% (U.S. +52%)

  • Ÿ Sports Med +12%; Extremities +15%; Trauma +199%

Spine & Bone Healing $77.9MM, +5% (U.S. +5)

  • Ÿ Spine +11%; Bone Healing -9%

S.E.T. includes acquisition. Excluding trauma acquisition +10% (U.S. +11%)
Trauma excluding acquisition, flat worldwide and U.S.

Hips/Knees

  • Commenced rollout of Taperloc Complete microplasty version to strong response
  • Further decline in Oxford Partial Knee sales
  • Initiated U.S. lifetime warranty for Oxford Partial implanted with Signature, as well as direct-to-consumer advertising
  • Launched Signature dynamic femoral positioning

S.E.T.

  • Launched Comprehensive Nano Stemless Shoulder in Europe; will launch Comprehensive SRS Shoulder there in FY3Q

Exactech

$51.3MM, +11% (U.S. $35.3MM, +12%; ex-U.S. $16.0MM, +7%)

  • Hips $9.2MM, +18%; Knees $18.2MM, +4%; Extremities $12.2MM, +26%; Biologics/Spine $5.9MM, +12%; Other $5.6MM, -6%
  • Knee sales offset by inventory reserve issue with distributor in Spain
  • Cruciate retaining element of Optetrak Logic system entering full launch 1H13
  • Cage glenoid in limited release; full launch to occur 1Q13, along with CTA humeral head and Silverbolt 2 MIS lumbar pedicle screw

Globus Medical

$94.8MM, +13% (U.S. $87.1MM, +11%; Ex-U.S. $7.6MM, +38%)

  • Ÿ Fusion $57.8MM, +4%; Disruptive Technologies $36.9MM, +30%
  • 3Q milestones: completed IPO, received Premarket Approval for Secure-C cervical disc in 1-level procedures
  • In 7/12, closed acquisition of Soteira for $6MM + potential revenue-sharing payments based on sales
  • Expects U.S. launch of Soteira’s Shield kyphoplasty system via Algea Therapies in 1H13

Greatbatch Medical

$27.1MM, -6%

  • Fewer customer product launches, development opportunities due to operational issues
  • Streamlining Swiss orthopaedic line: discontinuing non-core products
  • Implant business expanded nicely year to date
  • Ramp-up of delivery systems has somewhat mitigated effect of Swiss operating problems

Integra Orthopedics

$94.1MM, +9.9% (U.S. $82.0MM, +13%; ex-U.S. $12.1MM, -5%)

  • U.S. Extremities $32.9MM, +33%
  • U.S. Spine & Other $49.1MM, +2%
  • New biologics launches offset declines in spine hardware

Johnson & Johnson

$2,290MM, +69% (U.S. $1,242MM, +68.5%, ex-U.S. $1,048MM, +68.7%)*

Ÿ Hips +3%; Knees +3%; Trauma +4%; Spine -3%

*Includes Synthes. Excluding acquisition of Synthes, divestiture of neurosurgical instruments, overall growth +3% (U.S. and ex-U.S. +3%)

  • Hip and knee sales in Europe marked by lower-cost competitive pressure, soft market
  • U.S. joint recon volumes improved (around a mid-single-digit rate), too early to signal meaningful recovery

MAKO Surgical

$29.2MM, +46%

  • ŸImplants/disposables $12MM, +32%
  • RIO Systems/THA Applications $14.4MM, +55% (RIO $14MM, THA $0.4MM)
  • Service/Other $2.7MM, +71%
  • Launched RIO 2.5 software, designed to improve efficiency of partial knee application
  • Launched THA 2.0 software, enabling direct anterior approach
  • Released RESTORIS PST Cup/Tapered Stem

NuVasive

$148.4MM, +12% (International ~$14.8MM, +45%; Monitoring $9.6MM; U.S. Lumbar flat, U.S. Biologics flat, U.S. Cervical +12%)

  • Revenue shortfall attributed to account churn in certain U.S. regions, aggressive competition from small companies, encroaching PODs (estimates that PODs represent ~15% of U.S. market)
  • Received Premarket Approval of PCM in 4Q

Orthofix

$114.8MM, +1%

  • Spine $79.4MM, +4% (Stimulation $42.8MM, +8%, Implants/biologics $36.6MM, flat); Orthopaedics $35.4MM, -4%
  • Launching Trinity Elite next-generation biologic in 2013
  • Growth in orthopaedics challenged by weak Physio-Stim sales, challenges in Brazil (latter impacted by increased competition, product delays due to strike at regulatory agency)

RTI Biologics

$29.9MM, +6%

  •  Sports Medicine $11.8MM, +7%; Spine $10.1MM, -1%; Bone Growth Substitute/General Orthopaedic (BGS/GO) $7.9MM, +13%
  • Received FDA Warning Letter regarding environmental monitoring of incoming tissue in Alachua, Florida processing facility; does not restrict implant distribution or require any product withdrawal
  • Sports Med supported by strong exports

Smith & Nephew

Advanced Surgical Devices (ASD) $698MM, flat (U.S. $326MM, flat; Established Markets $290MM, -1%; Emerging/International Markets $82MM, +3%; China +20%)

  • Hips $149MM, flat excluding BHR (BHR -36%); Knees $193MM, -1%; Sports Med Joint Repair $126MM, +8%; Arthroscopic Enabling Technologies $94MM, -3%; Trauma $112MM, +2%; Other ASD, including Clinical Therapies $24MM, -5%
  • Birmingham Hip ~7% of overall hip sales
  • REDAPT revision hip in limited market release, on track for 4Q U.S. launch
  • Full global launch of late 2013/early 2014 expected for JOURNEY II knee
  • Double-digit growth in U.S. Sports Med
  • Launched 2 new anchors for hip arthroscopy

Stryker

$2,052MM, +3% (U.S. $1,360MM, +5%, ex-U.S. $692MM, -0.4%)

Reconstructive $891MM, +1% (U.S. +5%, ex-U.S. -4%)

  • Hips $288MM, -2%; Knees $315MM, +3%; Trauma/Extremities $235MM, +3%

Neurotechnology/Spine $380MM, +7% (+5% excluding acquisitions) (U.S. +11%, ex-U.S. -0.2%)

  • Ÿ Spine $175MM, +0.1%; Neurotechnology $205MM, +14%
  • Accolade II stem launched, gaining traction
  • GetAroundKnee direct to consumer campaign yielded good early uptake

Symmetry Medical

$100.9MM, +20%

  • Instruments $29.6MM, +19%; Implants $25.6MM, -4%; Cases $14.2MM, -11%; Other $6.7MM, +10%
  • OEM customers increased spending on instruments to support new product launches
  • Orthopaedic procedures stable, but not improving
  • Recent FDA action requiring contract manufacturers to register/list products in the FDA Unified Registration and Listing System could accelerate supplier rationalization by OEMs

Tornier

$58.0MM, +6% (U.S. $34.3MM, +5%; ex-U.S. $23.6MM, +6%)

  • Ÿ Total Extremities $48.7MM, +7% (Upper $39.4MM, +8%, Lower $5.8MM, +0.1%, Sports Med/Biologics $3.4MM, +8%); Large Joints/Other $9.2MM, -1%
  • Completed 1st clinical use of Ascend Flex convertible shoulder
  • Launching Latitude elbow ex-U.S. in 2013

Wright Medical

$110.4MM, -5% from 3Q11 (U.S. $65.7MM, -5%; ex-U.S. $44.6MM, -5%)

Recon $59.4MM, -10% (U.S. -12%, ex-U.S. -9%)

  • Ÿ Hips $33.0MM, -13%; Knees $25.6MM, -4%; Other Recon $0.7MM, -46%

Extrem $50.8MM, +2% (U.S. flat, ex-U.S. +7%)

  • Ÿ Foot/Ankle $29.0MM, +14%; Upper Extremities $6.2MM, -7%; Biologics $14.6MM, -12%; Other Extremities $1.0MM, -27%
  • Launched additional sizes of PRO-TOE Hammertoe in U.S.

Zimmer

$1,026MM, +3% (Americas $584MM, flat; Europe $246MM, +8%; AsiaPac $196MM, +2%)

Recon $756MM, +2%

  • Hips $309MM, +2%; Knees $407MM, +1%; Extremities $40MM, +12%

Dental $55MM, +3%
Trauma $74MM, +11%
Spine $50MM, -7%
Surgical/Other $91MM, +11%

  • Continued limited developer release of Persona Personalized Knee
  • Impressive global growth from Anatomical Combined Shoulder, Trabecular Metal Revers Shoulder
  • Sidus Stem-Free Shoulder providing opportunities for account conversion, ex-U.S.
  • Received FDA clearance to market Trabecular Metal Total Ankle, will launch broadly in 2013
  • Supply chain structured such that company will account for medical device excise tax as a cost of goods; thus, half of the $40MM-$50MM expected to owe gets deferred for half a year

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

Julie A. Vetalice is Content Coordinator 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..