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Exactech Divests Spine Assets

Exactech restructured its Spine & Biologics segment, divested spine product assets to ChoiceSpine and announced restructuring charges related to ex-U.S. operations. Terms were not disclosed.

The transaction allows Exactech to focus on joint reconstruction in hip, knee and extremities, including shoulder and ankle. The transaction does not include orthobiologics, a segment which leadership said has become a less-material contributor to overall revenue due to the commoditized nature of the products.

Exactech’s spinal products encompassed cervical, thoracolumbar and interbody implants and minimally invasive instrument systems. ChoiceSpine also gains distribution channels in Germany, Portugal and Spain, adding to its presence in Italy and Mexico.

For 2016, Exactech reported combined Spine & Biologics revenue of US $19.6 million, representing 7.6% of 2016 overall sales of $257.6 million. Of that, ORTHOWORLD estimates that 2016 Spine sales were $8.4 million, a 13.4% decrease vs. 2015. Orthobiologics sales were $11.2 million, a 14% decrease from 2015 to 2016.

In its 3Q16 call, company leadership noted headwinds to its spine revenue such as a small customer base, making that business somewhat volatile with respect to surgeons taking vacations and slower-than-intended adoption of products. Per Exactech, the restructuring initiative and losses on the impairment of spine and biologics assets, including goodwill and spine assets sold, incurred a pre-tax charge to 2016 earnings in the range of $15.0 million to $17.0 million. Exactech expects 2017 revenue in the range of $264.0 million to $272.0 million.

ChoiceSpine formed in 2006 after acquiring the assets of Orthotec. Today, it is a privately-held 45-employee company marketing cervical, thoracolumbar and interbody devices, with an annual revenue range of $30.0 million to $45.0 million. In 1Q15, ChoiceSpine picked up Baxano’s VEO Lateral Access/Interbody Fusion system.