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Greatbatch Execs Report on the Firm's Evolution and Discuss Algostim Spinal Division

Greatbatch Inc. has been on a mission to reinvent itself over the past year or so. During a recent analyst meeting in New York, N.Y., the Frisco, Texas-based medtech firm’s top brass briefed institutional investors on its plans to morph from strictly a developer of components and sub-assemblies to developing complete medical devices for OEM customers. Last year, the company moved its headquarters to Texas from its eponymous hometown of Greatbatch, N.Y.

Speaking at the Millennium Broadway Hotel, senior officials from Greatbatch and Algostim LLC (the recently created spinal stimulation business of Greatbatch) discussed how the company’s core business is driving organic growth and financial performance; Algostim’s spinal cord stimulation (SCS) system, which is nearing completion; and 2013 financial guidance with long-term growth plans.

“Ninety-five percent of all active implantable medical devices contain one or more of our proprietary component products—a core business that’s driving top-line and bottom-line performance,” said Thomas Hook, president and CEO of Greatbatch. “In turn, this is propelling our evolution into a medical device company. Algostim, which we revealed in great detail today, illustrates the capability and capacity we’ve built to bring greater value to our customers and true innovation to their markets.”

Leveraging an intellectual property (IP) portfolio of more than 1,000 patents, Greatbatch officials predict high potential in the multi-billion dollar end-markets the company serves—specifically in cardiac and neuromodulation, portable medical, vascular and orthopedics. Eighty-eight percent of its revenues are currently derived from the medical device sector. Based on its IP combined with enhanced sales and marketing, Hook indicated that Greatbatch is poised for significant growth through market share capture.

“We have made a considerable investment to optimize our sales and marketing organization as we deepen our relationships with the world’s leading medical technology and commercial companies,” Hook said. “This has allowed Greatbatch to secure long-term agreements while also capitalizing on increasing product life cycles.”

Greatbatch also shared extensive details regarding progress on its first complete medical device system, Algostim, a spinal cord stimulation system to treat chronic pain of the trunk and limbs. The company partnered with physicians in the field of neuromodulation, Richard North, M.D., and Giancarlo Barolat, M.D., to develop the system. It is now evaluating commercialization partners as it plans to submit a U.S. Food and Drug Administration premarket approval application and CE mark approval in Europe during the second half of 2013

“Algostim is a highly differentiated, complete SCS system and platform with extensive offering of innovation, intellectual property, advanced safety features, and future generation capabilities to serve the fast growing $1.4 billion SCS market,” said Scott Dress, president and CEO of Algostim.

Michael Dinkins, Greatbatch’s Chief Financial Officer, reaffirmed the company’s guidance for 2013 of revenue in the $660 million-$680 million range and adjusted diluted earnings per share (EPS) of $1.90-$2.00. Total revenue from fiscal 2012 was $646 million (14 percent growth compared with 2011). The company posted a loss in 2012 just shy of $4.8 million. The company reported a 5 percent increase in adjusted diluted EPS to $1.77 per share for the year.

“We have a strong and extremely successful core business that is generating significant cash flows,” Dinkins said. “These cash flows are enabling our strategic evolution to a medical device company which in turn will translate to profitable growth for the benefit of our investors, our customers and our associates worldwide.”

The Greatbatch Medical unit of Greatbatch Inc. develops and manufactures critical medical devices for the cardiac, neuromodulation, vascular and orthopedic markets. The Electrochem unit designs and manufactures batteries for high-end niche applications in the portable medical, energy, military and other markets. The QiG Group division designs new medical devices in the company’s core product sectors.

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