8. DJO Inc.
Les Cross, President and CEO
Vickie L. Capps, Exec. VP and CFO
Luke T. Faulstick, COO
Donald M. Roberts, Sr. VP, General Counsel and Secretary
Louis T. Ruggiero, Chief Sales and Marketing Officer
No. of Employees: 3,000
Headquarters: Vista, CA
DJO Inc.—previously DJ Orthopedics before a name change in 2006—is one of the latest medical device companies to get swept up in the market’s current private equity frenzy.
In July this year, the company’s board of directors entered merger discussions with ReAble Therapeutics Inc. for $1.18 billion in cash. Including assumed debt, the transaction is valued at about $1.6 billion. Based in Austin, TX, ReAble is a medical device company focused on rehabilitation, pain management, physical therapy and orthopedics. It also is owned by private equity firm the Blackstone Group. Blackstone has committed to provide the financing that ReAble requires to complete the transaction. That said, the purchase of DJO certainly is a strategic growth acquisition for ReAble more so than a strict private equity buyout.
The deal is expected to close in the fourth quarter, subject to regulatory and DJO shareholder approvals. Terms of the merger agreement allowed DJO to solicit additional bids from third parties for 50 calendar days after July 16. If a rival bid were accepted, DJO would have to pay ReAble a break-up fee of $18.7 million.
DJO specializes in rehabilitation products such as knee braces, pain management devices as well as regeneration and bone growth stimulation products for the non-operative orthopedic and spine markets. The device maker sells its products through agents, distributors and direct sales force to orthopedic and spine surgeons, orthopedic and prosthetic centers, as well as hospitals, physical therapists and other healthcare professionals under the DonJoy, ProCare and Aircast brands.
DJO reported strong financial results for fiscal 2006. Net revenues totaled $413 million, an increase of 44%, compared to $286 million reported for 2005. The company said its domestic rehabilitation, regeneration and international business segments grew by 35%, 16.3% and 144%, respectively. Adjusted net income for the year was $12.3 million, including accounting costs and other fees related to acquisitions as well as a move into new corporate headquarters, compared to $29 million in 2005.
“Our 2006 results reflect the continuing success of our internal growth initiatives, with added acceleration from our acquisition strategy. For the five-year period ending Dec. 31, 2006, these successful strategies have yielded a compound annual revenue growth rate of 22.6%,” said Les Cross, president and CEO.
Cross added that growth was driven by launching a steady flow of 20 new products, in addition to “optimizing the size and productivity” of the company’s sales force.
In April 2006, the company completed the acquisition of Aircast Inc. for approximately $290 million in cash. Aircast, based in Summit, NJ, manufactures orthopedic devices, including ankle bracing products and vascular systems (to prevent deep vein thrombosis following orthopedic surgery) complementary to DJO’s current product line. Also in January 2006, the company purchased Axmed, an orthopedic rehabilitation device maker based in France, for $15 million.
For the first quarter of 2007 (ended March 31), DJO reported net revenue of $115 million, a 39% increase. Net income, however, did not meet the company’s expectations at $5.6 million, compared to $6.5 million in 2006.