Biomet Reports Increased Q2 Profit, Earnings Slip

Sales of orthopedic products help boost fourth quarter and year end for LifeCell.

Biomet Inc. reported a net sales increase for the second fiscal quarter of 2008, though profits were down slightly. Net sales for the quarter, ended Nov. 30, were $578.1 million. Second-quarter net income was $89 million, compared to $104.8 million in the same quarter in fiscal 2007. Warsaw, IN-based Biomet manufactures products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy.

“The company’s reconstructive sales category performed very well again this quarter with accelerated growth continuing across various product groups within this category, particularly for knees,” said President and CEO Jeffrey Binder. “In addition, sales of craniomaxillofacial fixation and arthroscopy products were also strong during the second quarter.”

Binder said the company would work to strengthen its trauma and spine businesses, adding that Biomet has built “a strong foundation for change” and predicted reaching positive revenue growth for Biomet Trauma and Biomet Spine during the first half of fiscal year 2009.

During the second quarter of fiscal year 2008, reconstructive device sales increased 15% worldwide to $423.8 million. Reconstructive sales in the United States increased 9%, and international sales increased 24%. Knee sales, including instruments, increased 17% overall, while sales in the United States increased 13% during the second quarter. The company said it continues to see its Oxford Partial Knee System and Vanguard Complete Knee System drive growth for the division. Hip sales increased 12% worldwide and 4% in the United States during the second quarter. According to the company, its M2a-Magnum Acetabular System and the Taperloc Hip Stem experienced “robust demand.” Extremity sales increased 11% worldwide during the second quarter and decreased 3% in the United States. Sales of bone cements and accessories increased 8% worldwide and 2% in the United States. Dental reconstructive device sales increased 19% worldwide and 9% domestically.

Fixation sales decreased 4% worldwide to $56.7 million, compared to $58.8 million in 2007. Fixation sales decreased 14% in the United States during the quarter. Craniomaxillofacial sales increased 22% worldwide and 7% in the United States. The strong growth in international craniomaxillofacial sales was attributed to the launch of LactoSorb resorbable plates and screws into the Japanese market, the company said. Internal fixation sales increased 4% worldwide during the second quarter and decreased 11% in the United States, while external fixation sales decreased 17% worldwide and 19% domestically. Electrical stimulation device sales decreased 20% worldwide and 21% in the United States.

Spinal product sales decreased 3% worldwide to $49.5 million, compared to $50.9 million in 2007. Spinal sales decreased 1% in the United States. Sales of spinal implants and orthobiologics for the spine increased 3% worldwide and 8% in the United States, while spinal stimulation sales decreased 11% both worldwide and in the United States.

Sales of the company’s “other products” increased 13% worldwide to $48.1 million during the second quarter of fiscal year 2008, compared to $42.6 million during the second quarter of fiscal year 2007. Sales in this category increased 5% in the United States. Arthroscopy sales increased 30% worldwide and 18% in the United States during the second quarter, while sales of soft goods and bracing products decreased 11% worldwide and in the United States.

In September, Biomet Inc. was purchased by a group of private equity investors including The Blackstone Group LP, Goldman Sachs & Co., Kohlberg Kravis Roberts & Co. LP and TPG Capital.

LifeCell Posts Double-Digit Orthopedic Growth

LifeCell Corp. in Branchburg, NJ recently reported preliminary revenue for the fourth quarter and year ended Dec. 31. LifeCell develops biologically based products in the field of regenerative medicine for use in reconstructive, orthopedic and urogynecologic surgical procedures.

Preliminary product revenue for the fourth quarter was $52.6 million, up 34% compared to $39.3 million for the same period in 2006. According to company officials, the growth in revenue primarily was due to a significant increase in demand for the AlloDerm reconstructive surgical product (used for plastic reconstructive, general surgical, burn and periodontal procedures), which had a 38% sales increase to $46.9 million.

“Our top priorities continue to be driving revenue growth, making strategic investments in research and product development and delivering solid operating results,” said Paul Thomas, president and CEO.

Orthopedic product revenues, which include GraftJacket regenerative tissue matrix for orthopedic applications and AlloCraft DBM for bone grafting procedures, increased 15% to $3.2 million in the quarter from $2.8 million in the fourth quarter of 2006. GraftJacket represented $2.7 million of orthopedic product revenue in the quarter, compared to $2.3 million in the prior year quarter, the company said.

Revenue for LifeCell’s Repliform tissue regeneration matrix for urogynecologic surgical procedures was $1.9 million in the fourth quarter of 2007, compared to $2.1 million in the same quarter of 2006.

Full-year revenue for 2007 was $190.5 million, up 35% compared to $140.6 million in 2006. AlloDerm product revenue increased 40% to $167.1 million. Orthopedic product revenue increased 27% from $9.7 million in 2006 to $12.3 million in 2007. GraftJacket represented $10.4 million of orthopedic product revenue in the year, compared to $8 million in the prior year. Repliform revenue was $7.8 million, compared to $8.1 million in 2006.

For 2008, LifeCell projects product revenue in the range of $233 million to $243 million, which represents expected annualized growth between 22% and 28%. The company expects its product revenue mix in 2008 to be approximately 90% reconstructive, 7% orthopedic and 3% urogynecology. The company also noted that 2008 operating income should be in the range of $57 million to $62 million, with diluted net income per share projected to be in the range of 98 cents to $1.06.

Exactech Gives Preliminary Figures for Q4 2007

Exactech, Inc., a Gainesville, FL-based developer of bone and joint restoration products for hip, knee, shoulder, spine and biologic materials, announced that it expects to report revenue for the fourth quarter of 2007 of $33.1 million, which would be an increase of 27% compared to $26.2 million for the fourth quarter of 2006 (final numbers were not available at press time). Net income for the fourth quarter is expected to range from $2.6 million to $2.9 million, or 22 cents to 24 cents diluted earnings per share, compared to net income of $2.3 million, or 19 cents diluted earnings per share, in the same quarter a year ago.

Exactech’s Chairman and CEO Bill Petty said, “This represents our sixth quarter in a row of increasing sequential revenue growth. US sales represented our strongest quarterly growth in four years with a gain of 24% to $26.1 million during the fourth quarter. Our worldwide market presence continues to expand. International sales remained strong, increasing 38% to $7 million for the quarter.”

As a result of “momentum” in its domestic sales, the company said 2008 diluted earnings per share are targeted at 88 cents to 94 cents, based on top-line revenue expectations of $148 million to $156 million. Initial expectations for the first quarter 2008 revenue are $36 million to $38 million and diluted earnings per share of 18 cents to 20 cents.