Exactech Reports Rise in 2013 Revenue

For the fourth quarter of 2013 revenue was $61.6 million, an increase of 4 percent compared with $59.3 million for the comparable period last year. Net income for the fourth quarter of 2013 increased 18 percent to $4.6 million, or 33 cents per diluted share, compared to $3.9 million, or 29 cents per diluted share, for the fourth quarter of 2012.

Total revenue for the quarter increased 4 percent to $61.6 million. Knee implant revenue decreased 2 percent to $20.4 million. Extremity implant revenue increased 24 percent to $18.4 million. Hip implant revenue decreased 2 percent to $10.1 million. Biologic & spine revenues increased 3 percent to $6.6 million. Other revenues decreased 13 percent to $6 million.

“Overall, we are pleased with these results despite some international economic challenges,” said Exactech Chairman and CEO Bill Petty. “Our extremities segment drove the top line with a 26 percent gain to $65.5 million in 2013. Our domestic knee sales did well, and we were encouraged by improvements in our biologic and spine segment. Our 21 percent improvement in net income was particularly satisfying, as the people of Exactech worked effectively and efficiently to hold down costs and improve productivity. Looking ahead, our new product pipeline should provide fresh top line momentum in 2014. In addition, we expect our focus on increased productivity and lower costs will continue to contribute to net income growth.”

For the year 2013, U.S. sales increased 10 percent to $159.7 million, and international sales were down 2 percent to $77.4 million. During the fourth quarter, U.S. sales increased 9 percent to $41.8 million. International sales decreased 5 percent to $19.8 million.

“Our domestic knee product sales did well in the fourth quarter, providing us with good momentum going into 2014,” said President David Petty. “We have increased the number of active trials of our new ExactechGPS guided personalized surgery system, and that is already driving new knee sales to surgeons. Based on surgeon feedback, we are encouraged about the future impact of the system as a sales catalyst for our knee results. Our extremities business continues to be a growth leader both domestically and internationally. Our surgeon customers repeatedly report excellent patient outcomes, and that is playing an important role in propelling this segment.”

Petty said he was pleased with improvements in the biologics and spine segment, and noted that the company continues to see “strong growth” in its spine business.

“Operationally, we made significant improvements during 2013,” said Chief Financial Officer Jody Phillips. “Gross margins remained flat at 69 percent for 2013 and 2012 due to continued focus on maintaining cost reductions that offset the impact of the medical device excise tax. Total operating expenses for the year increased 4 percent to $140.1 million, and as a percentage of sales decreased to 59.1 percent from 59.8 percent for 2012. General and administrative expenses increased 5 percent for 2013 to $21.1 million from $20.1 million. Sales and marketing expenses increased 4 percent to $85 million, primarily due to variable selling expenses. Research and development expenses increased 6 percent to $17.8 million during 2013, as we continue to actively invest in our new product pipeline.”

Looking forward, Exactech released its initial 2014 revenue guidance of $246 million to $254 million and diluted earnings-per-share target of $1.18-$1.24. For the first quarter of 2014, the company anticipates revenues of $62 million to $64 million and diluted EPS of 28 to 30 cents.