DJO Global Releases Second Quarter Financial Results
Vista, Calif.-based DJO Global, which makes musculoskeletal, vascular and pain management medical devices, has released it financial results for the second quarter of this year ending June 29 2013.
The company achieved net sales for the second quarter of 2013 of $294.7 million, reflecting growth of 3.1 percent, with net sales of $286.0 million for the second quarter of 2012. Net sales for the second quarter of 2013 were favorably impacted by $0.5 million related to changes in foreign currency exchange rates compared to the rates in effect in the second quarter of 2012. Excluding the impact of changes in foreign currency exchange rates from rates in effect in the prior year period, net sales for the second quarter of 2013 increased 2.9 percent compared to net sales for the second quarter of 2012.
For the second quarter of 2013, DJO reported a net loss of $20.8 million, compared to a net loss of $20.2 million for the second quarter of 2012. The results for the current and prior year second quarter periods were impacted by significant non-cash items, non-recurring items and other adjustments.
“We were pleased to see all of our business segments deliver strong growth in the second quarter, except for recovery sciences, which has been impacted by unfavorable market conditions and reimbursement hurdles,” said Mike Mogul, DJO’s president and CEO. “Excluding recovery sciences, aggregate net sales from our other business segments for the second quarter of 2013 increased by 7.4 percent compared to net sales for the second quarter of 2012. I want to especially congratulate our surgical implant and international teams, for delivering strong constant currency growth in the second quarter of 2013 of 18.2 percent and 8.2 percent, respectively, compared to the prior year period. Our recovery sciences business continues to be impacted by Medicare’s 2012 non-coverage decision related to transcutaneous electrical nerve stimulation (TENS) for chronic low back pain (CLBP) and slower than expected market conditions for capital equipment purchasing, which is impacting our Chattanooga business.”
In June last year, Medicare issued a decision that TENS is not reasonable and necessary for the treatment of CLBP, and therefore would not cover it. The treatment works by issuing electrotherapy—small electrical shocks—to the skin with the aim of pain management. In part due to Medicare’s decision, recovery sciences was the only business at DJO that did not show increased revenue this quarter compare to the same quarter last year. For the second quarter of 2012, recovery sciences brought in net sales of $84 million, whereas for the same quarter this year net sales were $77.2 million.
“We are diligently focused on executing upcoming new product launches within our recovery sciences segment,” Mogul continued. “We believe that the impact of those product launches, combined with reaching the anniversary date of Medicare’s noncoverage decision for TENS for CLBP late in the third quarter of 2013, will improve the sales results for this segment. This improvement, combined with continued strong performance from our other segments should permit us to report stronger revenue results and higher growth rates for the second half of 2013, which in turn should improve our adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization] results.”
In the first quarter of 2013, DJO reassigned certain product lines between its bracing and vascular and recovery sciences segments and revised the way it allocates costs among its segments. Segment information for all periods presented has been restated to reflect these changes.
Net sales for DJO’s Bracing and Vascular segment were $119.4 million in the second quarter of 2013, reflecting growth of 5.3 percent, compared to the second quarter of 2012, driven by strong contribution from the sales of new products and improving sales execution.
Net sales for DJO’s Recovery Sciences segment were $77.2 million in the second quarter of 2013, reflecting a contraction of 8.1%, compared to the second quarter of 2012, primarily due to the effects of the Medicare CLBP decision on the EMPI business unit and slow market conditions for capital equipment sold by the Chattanooga business unit.
Second quarter net sales within the international segment were $76.8 million, reflecting an increase in constant currency of 8.2 percent from the prior year period. According to DJO, the strong international growth is being driven by increased penetration in certain geographies and the impact of sales of new products.
Net sales for the surgical implant segment were $21.4 million for the second quarter of 2013, reflecting an increase of 18.2 percent over net sales in the second quarter of 2012, driven by strong sales of each of the company’s shoulder, knee and hip product lines.
As of June 29 this year, DJO had cash balances of $36.7 million and available liquidity of $71.0 million under its $100 million revolving line of credit.