Michael P. Mogul, President, CEO & Director
Toby Bost, President, DJO Global Consumer Business
Susan Crawford, Exec. VP & Chief Financial Officer
Steven Ingel, President, Global Bracing and Supports
Joe McClung, Sr. VP & General Manager, DJO Global Vascular
Gerry McDonnell, Exec. VP, Global Operations
Stephen J. Murphy, President, Sales and Marketing, International Commercial Business
Mike Peters, Exec. VP, Chief Information Officer
Brady R. Shirley, President, DJO Surgical
Sharon Wolfington, President, Global Recovery Sciences
NO. of EMPLOYEES: 5,200
HEADQUARTERS: Vista, Calif.
There are so many examples of how the medical device industry represents the best of American ingenuity. Who doesn’t love the proverbial story of the big idea that started in a garage and ended up a billion-dollar business? DJO Global is the result of just such a humble beginning. The company got its start in a garage in Carlsbad, Calif., in 1978—founded by the Philadelphia Eagles’ offensive line captain and a local attorney. Mark Nordquist and Ken Reed named their new company after their wives, Donna and Joy; DonJoy was born. The firm’s first products were simple sleeves made of neoprene that were sewn together and designed to be pulled over the knee, ankle and/or elbow for support. Thirty-seven years may have passed, the name may have changed a little, and a few different owners have come and gone, but the company’s innovative roots are still intact, selling products under more than 10 different brand names. Today, DJO’s medical devices include rigid and soft orthopedic bracing, hot and cold therapy, bone-growth stimulators, vascular therapy systems and compression garments, therapeutic shoes and inserts, electrical stimulators used for pain management, physical therapy products, and reconstructive joint implants for the hip, knee and shoulder.
A Primed Product Pipeline
In August last year, the company announced the first surgical use of its e-plus blended vitamin E polyethylene bearing in reverse shoulder arthroplasty. In 2013, DJO claimed it was the first-to-market with blended vitamin E polyethylene in a total anatomic shoulder offering. At the time of the announcement, with the combination of blended vitamin E polyethylene in both total anatomic and reverse shoulder product lines, DJO said it was the only company to offer blended vitamin E polyethylene throughout an entire shoulder product portfolio.
“We are very pleased to now offer our e-plus vitamin E technology within the Reverse Shoulder product line. Through our e-plus offering, we seek to enhance the clinical success across our shoulder portfolio, including the Turon Anatomic Total Shoulder and Reverse Shoulder implant families. We now proudly offer e-plus technology throughout our entire surgical product portfolio, including knee, hip and shoulder,” said Bryan Monroe, senior vice president for DJO Surgical.
Unique formulations of e-plus have been optimized to reduce wear, eliminate oxidation and maintain mechanical properties in DJO Surgical’s knee, hip and shoulder products as compared with conventional polyethylene. The e-plus formulation, optimized for DJO Surgical’s reverse shoulder prosthesis, reduces wear rates by 92 percent while maintaining the yield strength of conventional polyethylene, according to the company. Officials say that together, the advancements potentially can lead to unparalleled implant longevity.
In 2015, DJO got off to a strong start with new product introductions and strategic technology acquisitions.
During the American Academy of Orthopaedic Surgeons (AAOS) annual meeting in March, DJO launched its Exprt Precision System for knee revision procedures. According to company officials, the Exprt system “redefines” total-knee revision arthroplasty. DJO claims the system’s compact design reduces turn times, minimizes waste, and has proven implant design technology for 40 to 70 percent of the cost of comparable knee revision systems. A simple, comprehensive two-tray system replaces the traditional eight-tray setup used during complex, total-knee revisions, which is intended to reduce prep time and eliminate unnecessary surgical steps.
“The Exprt system offers experienced revision surgeons a toolkit that matches their skill set,” said Mike Mogul, CEO of DJO Global. “The makeup of this revision knee allows for streamlined simplicity at a dramatically lower cost.”
DJO Surgical worked closely with a group of experienced revision surgeons to develop the technology. “The Exprt approach leads to efficient operations that save both time and money, while providing excellent early results,” said C. Lowry Barnes, M.D., chairman of orthopedics at the University of Arkansas for Medical Sciences. “My operating team especially appreciates the fact that only two pans of instruments are opened. I believe that I can speak for the entire Exprt design team when I say that we have met our goals in offering a high-value, high-quality revision knee system for the accomplished surgeon.”
In addition to Barnes, other early adopter surgeons have touted Exprt’s cost.
“In today’s value driven health care environment, cost effectiveness is crucial in order to provide stakeholders with a high-quality result at a reasonable cost,” said Richard Iorio, M.D., a New York, N.Y.-based joint replacement specialist. “Putting the patient ahead of profits, the Exprt System allows skilled surgeons to provide TKA (total knee arthroplasty) patients with a functional knee at a fraction of traditional costs.”
DJO Surgical also played a role in the Zimmer-Biomet merger.
The agreement for Zimmer Biomet Holdings Inc. to divest certain assets was part of U.S. Federal Trade Commission requirements prior to Zimmer Holdings Inc. completing its purchase of Biomet Inc.
DJO Surgical purchased the Biomet Cobalt bone cement, Optivac cement mixing accessories and Discovery elbow system for the U.S. marketplace.
“These product acquisitions are a part of a broader strategy to invest in our fast growing implant business,” said Mogul. “We believe our surgical division is poised to continue its position as the fastest growing orthopedic implant company. I have always admired Cobalt bone cement’s color features, which offer better visualization and much simpler packaging and the Discovery elbow is extremely well-regarded.”
The Cobalt bone cement is used with hip, knee, shoulder, elbow and other orthopedic implant technologies. Cobalt offers a complete range of viscosities as well as antibiotic solutions for enhanced performance and patient safety, according to DJO. The unique Softpac packaging technology creates a “safer, glassless environment and the user-friendly Optivac system provide the best in modern cementing techniques for Cobalt as well as other cement technologies,” company officials said in a release.
The Discovery elbow will be DJO’s first elbow technology and adds to the company’s upper extremity portfolio and shoulder arthroplasty products. The Discovery elbow has more than 12 years of successful clinical outcomes.
“This acquisition is very timely for us based on our disruptive entrance into the revision market with our Exprt revision knee launched at AAOS this year and the Discovery elbow provides great breadth to our strong upper extremity portfolio,” said Brady Shirley, president of DJO Surgical. “With three major launches planned across the knee, hip and shoulder segments in each of the next three years, we are excited about our continued opportunities for growth.”
DJO Global named Shirley as the new president of DJO Surgical, a division that makes implants for hips, knees and shoulders. Shirley has more than 20 years of experience in the orthopedic industry in a variety of roles, including most recently CEO of Innovative Medical Device Solutions (IMDS), an organization that provides product development, manufacturing and supply chain management solutions for medical devices companies. Prior to IMDS, he held several key leadership roles, spanning 17 years at Stryker, which include the president of Stryker Communications and senior vice president of Stryker Endoscopy. At Stryker Communications and Stryker Endoscopy, Shirley was responsible for all domestic operations and profit and loss for the Communications division, as well as global product development and sales and marketing for Endoscopy, representing approximately $1 billion worldwide. “With DJO Surgical’s current market position and growth potential; brand momentum, innovation and market leadership are our most urgent priorities,” said Mike Mogul, DJO Global’s president and CEO. “Brady’s strong Orthopedic background and proven track record and ability to develop and lead top performing teams, drive shareholder value and innovation will support the outstanding team we already have in place to transition DJO Surgical to the next level.”
The company also appointed Susan Crawford as the company’s new chief financial officer. Crawford joined DJO from Life Technologies Corp., where she most recently served as vice president of business transformation, responsible for integrating newly acquired companies and engineering business processes throughout the broader organization. Crawford also assisted the Life Technologies board of directors with evaluating strategic options for the company. Prior to her stint as business transformation vice president, Crawford was vice president of corporate finance planning and analysis at Life Technologies, providing finance leadership on the company’s growth strategy, forecasting and analysis, supply chain productivity and financial modeling for mergers and acquisitions. Before being hired by Life Technologies in 2005, Crawford was chief financial officer for RealNames and PowerTV, as well as head of investor relations and financial planning at Covad Communications. Crawford received a bachelor’s degree in accounting from Rollins College in Winter Park, Fla., and an MBA from the University of Central Florida.
Dollars and Cents
DJO recorded sales of $1.23 billion for FY14 (ended Dec. 31), up 4.6 percent year over year. Despite the gain, the company reported a net loss $90.5 million, an improvement compared to a net loss of $203.5 million in FY13.
“We are pleased to end 2014 with full year constant currency growth in net sales of 4.8 percent and leveraged adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth of 6.6 percent,” said Mogul. “I want to especially congratulate our Bracing and Vascular, Surgical Implant and International teams, for delivering strong organic growth of 6 percent, 15 percent and 9.8 percent, respectively, in 2014.”
Net sales for DJO’s Bracing and Vascular segment for 2014 were $504.6 million, up 6 percent. Sales for DJO’s Recovery Sciences division were $299.1 million, down 4.5 percent from 2013. For 2014, net sales for the International segment were $325.3 million and increased 9.8 percent. Net sales for the Surgical Implant segment, driven by strong sales of each of the company’s shoulder, knee and hip product lines, were $100.1 million, an increase of 15 percent.