Exactech Releases First-Quarter Results

Gainesville, Fla.-based Exactech Inc. has released its first quarter financial results for fiscal year 2015. The maker of joint restoration products for hip, knee, shoulder, spine and biologic materials has pulled in a revenue of $61.4 million for the first quarter of 2015, a 3 percent decrease from $63.3 million in the first quarter of 2014. On a constant currency basis, revenue was flat. Net income was $4.1 million, or $0.29 per diluted share, compared to $4.2 million, or $0.30 per diluted share, in the same quarter a year ago.

According to the company, the first quarter of 2015 was significantly impacted by a weakened Euro and Japanese Yen relative to the U.S. dollar. The following are company revenue results, as well as adjusted revenue comparisons on a constant currency basis:

• Extremity implant revenue increased 7 percent to $21.1 million, a 9 percent constant currency increase;
• Knee implant revenue decreased 10 percent to $18.4 million, a 6 percent constant currency decrease;
• Hip implant revenue increased 1 percent to $11.0 million, a 7 percent constant currency increase;
• Biologic and Spine revenue decreased 12 percent to $5.1 million, an 8 percent constant currency decrease; and
• Other revenue decreased 10 percent to $5.8 million, an 8 percent constant currency decrease.

“Worldwide sales decreased 3 percent to $61.4 million. U.S. sales were down 1 percent to $41.2 million compared with $41.6 million in the first quarter a year ago. International sales decreased 7 percent to $20.1 million,” said Exactech CEO and President David Petty. “U.S. sales represented 67 percent of total sales and international sales were 33 percent of the total. On a constant currency basis, international sales increased 3 percent and worldwide sales were flat for the quarter. At current rates we are expecting foreign currency challenges in the second quarter. Sales were softer than planned in part resulting from sales organization transition and improvement activities that we expect will begin delivering positive results in the second half of this year. Major product development projects for revision hip, knee and shoulder systems remain on track and we plan to be doing surgeries with all three revision systems in the second half of this year as well.”

“Gross margins decreased to 70 percent from 71 percent for the first quarter a year ago due to the anticipated impact of pricing. Total operating expenses for the quarter decreased 4 percent to $36.7 million and as a percentage of sales were 60 percent, the same as the first quarter of 2014,” added Chief Financial Officer Jody Phillips. “General and administrative expenses increased 1 percent in the first quarter at $5.8 million and sales and marketing expenses decreased 8 percent to $21.9 million. Research and development expenses increased 8 percent to $4.5 million during the first quarter reflecting ongoing significant investment in our new product pipeline and the integration of the Blue Ortho acquisition. Our forward looking guidance has been adjusted for the first quarter’s results as well as the anticipated full year impact of current currency exchange rates.”