07.24.08
9. Orthofix
$490 Million
KEY EXECUTIVES:
Alan W. Milinazzo, Group President and CEO
Thomas Hein, VP, Finance
Scott Dodson, President, Orthopedic Global Business Unit
Brad Mason, Group President, North America
Oliver Burckhardt, President, Orthofix Spine
Denise Pedulla, Sr. VP and Chief Compliance Officer
NO. OF EMPLOYEES:
1,406HEADQUARTERS:
Curaçao, Netherlands AntillesFiscal 2007 was the year Orthofix set about integrating one of its most significant purchases to date. The company acquired Blackstone Medical in September 2006 for $333 million, which was part of a move to make Orthofix a larger player in the spinal market.
Orthofix, based in the Netherlands Antilles, has its US headquarters in Huntersville, NC (a suburb of Charlotte). The company manufactures a broad line of surgical and non-surgical products in spine, orthopedics (joint), sports medicine and vascular market sectors. The addition of Blackstone’s product line provided Orthofix with several new device offerings (and 24% of sales), including cervical and lumbar plates and other fixation systems that incorporate the use of metal bracing and pedicle screws to stabilize the spine; interbody devices and vertebral body replacements used to restore the space between two vertebrae that has been lost as a result of degenerative disc disease or to replace the damaged vertebrae; and an adult stem cell-based biologic bone-grafting product for the growth of new bone around the spine.
Other product lines include non-invasive stimulation products designed to enhance the success rate of spinal fusions and to treat non-union fractures; external and internal fixation devices used in fracture treatment, limb lengthening and bone reconstruction; bracing products used for ligament injury prevention, pain management and protection of surgical repair to promote faster healing; bone cement; and devices for removal of bone cement used to fix artificial implants.
Earlier this year, the company had announced it was looking into the possibility of divesting the fixation assets of its Orthopedic business unit, but it has decided to delay the move in the near term. Orthofix had anticipated using proceeds from the sale to reduce debt and take advantage of “additional strategic opportunities” in the spine sector.
Though the fourth quarter of 2007 underperformed corporate expectations, revenue for the year still showed significant gains—up 34%—to $490.3 million. Reported earnings were $11 million, or $0.64 per diluted share. Adjusted net income, excluding specified non-cash items for 2007, was $44.4 million, or $2.61 per share. Spine revenues were $243.2 million, a 68% increase compared with 2006, due mostly to the Blackstone acquisition. Spinal implant and biologic revenue grew 30%. Orthopedic revenue was $111.9 million, up 17%. Sports medicine revenue rose 11% to $87.5 million.
By sector, the Spine, Orthopedics, Sports Medicine and Vascular divisions made up 49%, 23%, 18% and 4%, respectively, of sales for the year, for a total of 94% of net sales in 2007. Sales of “other” products, including women’s care, airway-management products (for use during anesthesia) and other products accounted for the remainder of sales.
The company’s efforts to build its share in spine continued throughout 2007 and into 2008. Last year, the company prepared to roll out its Advent Cervical Disc implant, the first motion-preservation device developed by its Blackstone unit. The company anticipates it will receive a CE mark this year and FDA approval by the end of 2011.
In 2007, the company also acquired the rights to all of the intellectual property related to the InSWing interspinous process spacer, a device designed to alleviate the leg and back pain suffered by individuals with lumbar spinal stenosis. The device can be used in a minimally invasive surgical procedure involving minimal or local anesthesia, significantly less blood loss and a shorter rehabilitation period than alternative surgical procedures, the company said. Details of the purchase agreement were not disclosed.
In June this year, Orthofix acquired the intellectual property and technology from Intelligent Implant Systems LLC (IIS) for an implantable device that fixes spine disorders. Under the terms of the deal, Orthofix will pay $2.5 million upfront, plus up to an additional $4.5 million based on milestones, to IIS of Charlotte, NC. Orthofix said the spinal fixation device, which is set to launch in late 2010, is locked in place without the use of a torque wrench, which simplifies the procedure for surgeons.
For the first quarter of 2008 (ended March 31), sales were $128 million, an increase of 9%. Net income totaled $3.6 million, or $0.21 per diluted share.