Sales Up, Income Down for Exactech in Q2

Exactech, Inc. of Gainesville, FL, a manufacturer of bone and joint restoration products, implants and biologic materials, posted a 19% increase in second-quarter revenue, reaching $31.6 million, compared to $26.6 million in the second quarter of 2006. Reported net income was short of last year’s level for the second quarter at $1.4 million compared to $2.1 million a year ago.

Net income was affected by an impairment charge of $1.5 million related to a license and distribution agreement entered into during 2003 with Dimicron Corporation to develop polycrystalline diamond compact hip bearings. Excluding the impact of this impairment charge, the adjusted net income was $2.4 million.

For the first six months of 2007, revenue was $61.2 million, an increase of 18% compared to $52 million last year. Also including the impairment charge taken in the second quarter, net income for the first six months was $3.3 million, compared to $3.7 million for the first half of 2006.

“Sales grew in all product lines during the quarter reflecting the acceptance of our new products and continuing success of our products across all segments,” said Chairman and CEO Bill Petty.

Petty reported that shoulder product sales jumped 86% from $1.3 million in the second quarter of 2006 to $2.3 million in the most recent quarter. Sales of knee products, the company’s largest business unit, increased 17% to $16.9 million from $14.4 million in the same quarter of 2006, and increased 15% from $28.3 million in the first six months of 2006 to $32.6 million for the same period this year. Revenue from biologics increased 33% to $3.9 million.

Exactech anticipates a healthy second half of 2007, noting that its flagship Optetrak knee system is benefiting from the rollout of the Ligament Balancing System and Low Profile Instrumentation, as well as the expansion of its Rotating Bearing Knee system outside the United States.

Modest Q2 Sales Growth for Symmetry

For the second quarter of 2007 (ended June 30), Symmetry Medical reported revenue of $69.6 million, an increase of 7.4%. The Warsaw, IN-based company’s revenue included $2.3 million from Everest Metal, which was acquired in August last year; $2.9 million from Clamonta Limited, which was acquired in January; and $1.4 million from TNCO Inc., acquired in April. Revenue was negatively impacted by approximately $2 million related to a temporary disruption of production at Symmetry’s Sheffield, UK facility in the last week of June due to extreme flooding.

Net income for the second quarter was $4.4 million, compared to a net income of $7.7 million for the same period last year.

“While the sequential revenue growth in the second quarter was only 3% and the non-recurring issues in the first half of the year will impact our full-year profitability, we are pleased with the positive momentum coming out of the quarter and into the second half of 2007,” said Brian Moore, president and CEO. “Our acquisitions continue to perform to our expectations. Our pipeline of potential acquisitions is robust and we continue to review new opportunities both in orthopedics as well as complementary medical areas.”

Zimmer Holdings’ Profit  Rises in Second Quarter

Zimmer Holdings saw its second-quarter profit rise 15% based on strong performance of its reconstructive, knee and hip products.

The company reported net income of $231.5 million, compared with a profit of $200.9 million during the same period in the previous year. Revenue rose 10% to $970.6 million from $881.6 million.

Despite the increases, the performance falls a little shy of analyst expectations for the Warsaw, IN-based orthopedic giant.

Sales of reconstructive products rose 11% to $814 million, with the bulk coming from the Americas. The largest growth, however, resulted from sales in Europe. Sales of knee implant products rose 11% to $407 million, while hip implant product sales rose 8% to $324 million.

During the quarter, Zimmer completed its buyout of Endius Inc., privately held company based in Plainville, MA, for an undisclosed amount. The purchase adds to the company’s portfolio of spine products.

“This was a solid quarter for Zimmer and we are pleased that we achieved double-digit sales growth in our Asia Pacific geographic segment, our Americas and Asia Pacific reconstructive categories, and our extremities and dental businesses,” said David Dvorak, president and CEO.

The company said it is continuing to roll out its Gender Solutions knee and that the product is being well received by surgeons and patients. Second-quarter sales significantly increased from the first quarter, even though distribution of the product so far largely has been focused on existing accounts in the United States, the company said. Zimmer said it would concentrate its efforts on increasing US market share while expanding availability in Europe and Asia Pacific. The Gender Solutions knee design is part of the NexGen Complete Knee Solution, the company’s flagship knee brand.

Smith & Nephew Second Quarter Profit Up 16%

Demand for hip-replacement procedures drove a rise in second-quarter revenue for United Kingdom-based Smith & Nephew. Profit for the quarter rose 16% after the company benefited from rising demand for hip replacements and keyhole surgery products, the company said.

Net income increased to $111 million from $96 million a year earlier. Revenue rose 19% to $813 million.

Smith & Nephew bought Plus Orthopedics Holding AG in May for $887 million and BlueSky Medical Group Inc. in the same month for roughly $95 million.

Sales for orthopedic reconstruction and orthopedic trauma divisions each grew 15%.

“The second quarter has seen strong revenue growth across the business,” said CEO David Illingworth. “Our focus on innovation in the attractive growth market segments in each business is delivering excellent results. This is particularly so in Orthopaedic Reconstruction, where the Birmingham Hip resurfacing system drove growth well above market rates. Margin improvement across the businesses shows that our earnings improvement program is working well.”

DJO’s Sales Growth Up Nearly 13% in Q2

DJO Inc. reported net revenues for the second quarter of $120.2 million, an increase of 12.8%, compared with net revenues of $106.5 million in the second quarter of 2006. Net income was $8.5 million, compared to $5 million for the same period last year.

For the first six months of the fiscal year, net revenues were $235.1 million, reflecting an increase of approximately 24.3%, compared with net revenues of $189.1 million for the first six months of 2006. Net income for the first six months of 2007 was $14.1 million, compared with $11.6 million in the same period last year.

“We are once again very pleased to report strong revenue results that exceeded our expectations for the second quarter. These results were driven by continuing above market growth within each of our Domestic Rehabilitation, Regeneration and International business segments,” said Les Cross, president and CEO of DJO.

DJO manufactures musculoskel-etal and vascular health devices, specializing in rehabilitation and regeneration products for the non-operative orthopedic, spine and vascular markets.

Sales Rise for Orthofix, Profits Dip

Orthofix International NV, with US headquarters in Huntersville, NC, said revenue for the second quarter, ended June 30, was $123.3 million, an increase of 46%. The quarter’s results included a record $30.1 million from Blackstone Medical, Inc., which was acquired in September 2006. Excluding Blackstone’s revenue, Orthofix’s second-quarter sales rose 10% over the prior year. However, second-quarter earnings totaled $7.2 million—a 43.5% drop.

“Orthofix’s core business sectors once again demonstrated strong revenue growth. The spine implant and biologic business acquired from Blackstone continued to grow far in excess of the market rate, and we also continued to see improved performance from our orthopedic and sports medicine units reflecting the success of new product introductions and broad-based restructuring initiatives we began last year,” said CEO Alan Milinazzo.

Notably, total second-quarter sales of the company’s spine sector grew 107% to $61.5 million. Implant and biologic revenues from Blackstone were $30.1 million, which was an increase of 36% compared with its second-quarter sales in 2006, prior to the acquisition by Orthofix. This growth primarily was a result of increased sales of implant products, including ICON minimally invasive pedicle screw systems, Unity Anterior Lumbar Plating Systems, Pillar, Construx and Construx Mini vertebral body replacement devices and Ascent cervical fixation systems, the company said.

Orthofix expects to generate $120 million to $125 million of total revenue for the upcoming third quarter. The company also reiterated its full-year revenue expectations of $487 million to $502 million.