Biomet Reports Modest Quarterly Sales Profit

Biomet Inc. certainly is starting off its 2012 fiscal year on the right foot. The Warsaw, Ind.-based orthopedic manufacturer posted a 4 percent rise in net sales and a 4.3 percent increase in operating income as demand for new hips and S.E.T. (sports, extremities, trauma) products grew worldwide.

Hip sales swelled 7 percent worldwide (2 percent at constant currency) and 3 percent domestically due to strong demand for the company’s Arcos Modular Femoral Revision System, Active Articulation E1 Mobility Hip System and the Taperloc Complete Hip Stem. The Active Articulation E1 system, cleared by the U.S. Food and Drug Administration in April, is the first hip implant in the United States to merge the concept of dual mobility with the benefits of E1 antioxidant infused technology and a proven cup design, according to the company. The dual mobility hip concept utilizes a small femoral head that articulates with polyethylene; when triggered, the large polyethylene acts as a large head bearing that articulates within a metal cup.

“We executed well with our new product launches in hips during the quarter and we’re pleased with the improved sales results,” Biomet President and CEO Jeffrey R. Binder said. “We expect to see similar improvements in our knee performance later this year and into next year as we launch several new products in the second half.”

S.E.T. products also were brisk sellers during the first quarter (ended Aug. 31), evidenced by the 11 percent sales increase to $80.1 million. Extremities proved to be most popular, with sales soaring 19 percent worldwide (16 percent constant at constant currency) and 21 percent in the United States, thanks to devices such as The Comprehensive Primary and Reverse Shoulder Systems. Executives attributed the 12 percent growth in worldwide sports medicine sales during the first quarter to strong demand for procedure-specific devices including the JuggerKnot Soft Anchor, the ZipTight Fixation System with ZipLoop technology for ankle syndesmosis and the TunneLoc Femoral Fixation device. Surprisingly, trauma devices failed to follow suit and posted the only loss in the category, falling 2 percent worldwide (6 percent at constant currency) and 6 percent domestically.

Trauma products were not the only deficit generators, though. Spine and bone healing sales were off 10 percent in the first quarter, dropping to $76.1 million, according to Biomet’s latest earnings report. The losses were nearly uniform throughout the division, with sales of spinal devices slipping 10 percent both worldwide and domestically and bone healing sales sinking 11 percent domestically and worldwide. Dental sales fell 1 percent on a constant currency basis to $59.3 million, though worldwide sales grew 5 percent (on a reported basis) and jumped 7 percent in the United States.

Adjusted operating income more than doubled in the first quarter, going from $69.7 million during the first quarter of fiscal 2011 to $182.3 million during the first quarter of fiscal 2012. Such a monstrous increase, however, was offset by a near 50 percent cut in net income—data from Biomet show that net income plummeted to $28.6 million from the $50.8 million the company posted in the first quarter of fiscal 2011.

Gross profit so far in 2012 isn’t much better. It barely moved, edging up only half a percent to $449.3 million.