07.28.10
$546 Million
KEY EXECUTIVES:
James F. Gero, Chairman
Alan W. Milinazzo, Group President and CEO
Robert S. Vaters, Exec. VP and CFO
Kevin Unger, President, Orthofix Spinal Implants
Michael Simpson, President, Orthopedics North America
Eric Brown, President, Spine Stimulation
Brad Lee, President, Breg, Orthofix Sports Medicine
Luigi Ferrari, President, Orthofix International
NO. OF EMPLOYEES: 1,484
GLOBAL HEADQUARTERS: Curaçao, Netherlands Antilles
Orthofix began 2009 in a fighting mood. In December of 2008, Ramius Capital, a large New York, N.Y.-based hedge fund, proposed replacing Orthofix’s chairman, deputy chairman and two other board members. Ramius, which owns a little more than 5 percent of Orthofix stock, was pushing the company to shed its underperforming Blackstone Medical divisions and reduce expenses by consolidating operations.
In April of last year, Orthofix shareholders voted to keep the company’s board-level leadership in place.
“The board of directors and management team of Orthofix are thankful that shareholders chose to reject the short-term focus of the Ramius proposals, instead voting to support the company’s long-term strategic plan to deliver shareholder value,” the company’s chief executive, Alan Milinazzo, said in a statement.
Board room machinations aside, the company made financial gains for the year, despite Ramius’ accusations. In 2009, the company improved profitability and strengthened the performance of its spine stimulation, orthopedic and sports medicine divisions, leadership reported.
A key new product introduction was the Firebird pedicle screw system. More than a one-time release, the Firebird system will be used as platform for the launch of additional implants designed to treat spinal deformities, such as scoliosis.
The company’s Breg sports medicine division added to its line of Fusion knee braces with the introduction of the Lateral OA Brace, which features an ultra-thin, low-profile hinge designed for individuals suffering from lateral compartment osteoarthritis (OA). The brace was developed to off-load knee stress for individuals suffering with OA, and the low-profile hinge is designed to reduce interference during the wearer’s movement specifically on the inside part of the knee. The brace provides support for the anterior cruciate ligament and posterior cruciate ligament, as well as protection for collateral ligaments.
The spine stimulation business delivered double-digit growth, due, in part, to the company’s Cervical-Stim device, which is the only cervical spine stimulator on the market approved by the U.S. Food and Drug Administration. Company officials said the Orthopedics division maintained solid market share in Europe, while continuing to make inroads into new international markets in Latin America and Asia. In addition, the Orthopedics division also introduced Trinity Evolution in the United States. Trinity Evolution is an adult stem cell-based bone growth allograft used by surgeons to facilitate bone fusion.
The operating improvements achieved with the firm’s spinal implants and biologics “played a key role” in an 87 percent year-over-year increase in cash flow from operations that Orthofix realized in 2009, officials said. The significant increase in cash flow was used to make $25 million in early repayments of debt. The Spine division also received new management with the appointment of Kevin L. Unger as president of the company’s spinal implants business. Unger joined Orthofix after more than 14 years with Stryker Corp., where he served last as a vice president and general manager in the MedSurg Division.
Total revenue for fiscal 2009 (ended Dec. 31) was $545.6 million, a 5 percent increase compared with 2008. Total net income was $24.5 million compared with a loss of $228 million in 2008. Most of the loss in 2008 was the result of one-time payments related to the purchase of Blackstone Medical.
Excluding certain items, total adjusted operating income for 2009 was $73.9 million, or 13.5 percent of total revenue, compared with adjusted operating income of $60.3 million, or 11.6 percent, in 2008. This represented a 22.5 percent increase in operating income year-over-year. Consolidated earnings before income, taxes, depreciation and amortization was $102.1 million, an increase of 20.2 percent. Cash flow from operations for the full year 2009 was up 87 percent from the prior year to $50 million.
The company’s Spine division represented 51 percent of sales, while Orthopedics was 24 percent; Sports Medicine was 18 percent; and Vascular products (mostly used as part of orthopedic procedures) represented 3 percent of sales. Sales of “other” products, including airway management products for use during anesthesia, women’s care and other products, accounted for 4 percent of total net sales in 2009.
To help lay the groundwork for future product releases, Orthofix signed a license and product development agreement with Stout Medical Group LP, in Perkasie, Pa., for the development and marketing of a new expandable vertebral body replacement (VBR) and corpectomy device. A corpectomy is an operation to remove a portion of the vertebra and adjacent intervertebral discs for decompression of the cervical spinal cord and spinal nerves due to the removal of a tumor or trauma to the spine. A bone graft with or without a metal plate and screws is used to reconstruct the spine and provide stability. Expandable corpectomy devices provide in situ expansion, eliminate the need to cut the device to a specific size, and provide the surgeon with options for less-invasive incisions.
“Our agreement with Stout Medical is expected to allow us to provide a treatment for the tumor and trauma segment of the spinal market and give our surgeon customers a novel expandable corpectomy implant,” Milinazzo said. “Stout has a proven history of developing novel implant designs for the spinal market, and we are pleased to partner with them to commercialize their design.”
The initial term of the agreement is for 15 years, and gives Orthofix exclusive global licensing rights to the new device, which the company expects to be introduced during the second half of this year. According to a recent research report the U.S. market for VBR devices currently is estimated to be approximately $77 million, with the expandable device segment growing the fastest at approximately 12 percent, according to Orthofix.
Orthofix International began 2010 by selling some of its non-core orthopedic holdings. The vascular business, including its AV-Impulse mechanical compression technology, was sold to Mansfield, Mass.-based Covidien in March for net proceeds of $19 million. Under the deal, Orthofix agreed to provide “transitional services” to Covidien for a period of up to five months.
KEY EXECUTIVES:
James F. Gero, Chairman
Alan W. Milinazzo, Group President and CEO
Robert S. Vaters, Exec. VP and CFO
Kevin Unger, President, Orthofix Spinal Implants
Michael Simpson, President, Orthopedics North America
Eric Brown, President, Spine Stimulation
Brad Lee, President, Breg, Orthofix Sports Medicine
Luigi Ferrari, President, Orthofix International
NO. OF EMPLOYEES: 1,484
GLOBAL HEADQUARTERS: Curaçao, Netherlands Antilles
Orthofix began 2009 in a fighting mood. In December of 2008, Ramius Capital, a large New York, N.Y.-based hedge fund, proposed replacing Orthofix’s chairman, deputy chairman and two other board members. Ramius, which owns a little more than 5 percent of Orthofix stock, was pushing the company to shed its underperforming Blackstone Medical divisions and reduce expenses by consolidating operations.
In April of last year, Orthofix shareholders voted to keep the company’s board-level leadership in place.
“The board of directors and management team of Orthofix are thankful that shareholders chose to reject the short-term focus of the Ramius proposals, instead voting to support the company’s long-term strategic plan to deliver shareholder value,” the company’s chief executive, Alan Milinazzo, said in a statement.
Board room machinations aside, the company made financial gains for the year, despite Ramius’ accusations. In 2009, the company improved profitability and strengthened the performance of its spine stimulation, orthopedic and sports medicine divisions, leadership reported.
A key new product introduction was the Firebird pedicle screw system. More than a one-time release, the Firebird system will be used as platform for the launch of additional implants designed to treat spinal deformities, such as scoliosis.
The company’s Breg sports medicine division added to its line of Fusion knee braces with the introduction of the Lateral OA Brace, which features an ultra-thin, low-profile hinge designed for individuals suffering from lateral compartment osteoarthritis (OA). The brace was developed to off-load knee stress for individuals suffering with OA, and the low-profile hinge is designed to reduce interference during the wearer’s movement specifically on the inside part of the knee. The brace provides support for the anterior cruciate ligament and posterior cruciate ligament, as well as protection for collateral ligaments.
The spine stimulation business delivered double-digit growth, due, in part, to the company’s Cervical-Stim device, which is the only cervical spine stimulator on the market approved by the U.S. Food and Drug Administration. Company officials said the Orthopedics division maintained solid market share in Europe, while continuing to make inroads into new international markets in Latin America and Asia. In addition, the Orthopedics division also introduced Trinity Evolution in the United States. Trinity Evolution is an adult stem cell-based bone growth allograft used by surgeons to facilitate bone fusion.
The operating improvements achieved with the firm’s spinal implants and biologics “played a key role” in an 87 percent year-over-year increase in cash flow from operations that Orthofix realized in 2009, officials said. The significant increase in cash flow was used to make $25 million in early repayments of debt. The Spine division also received new management with the appointment of Kevin L. Unger as president of the company’s spinal implants business. Unger joined Orthofix after more than 14 years with Stryker Corp., where he served last as a vice president and general manager in the MedSurg Division.
Total revenue for fiscal 2009 (ended Dec. 31) was $545.6 million, a 5 percent increase compared with 2008. Total net income was $24.5 million compared with a loss of $228 million in 2008. Most of the loss in 2008 was the result of one-time payments related to the purchase of Blackstone Medical.
Excluding certain items, total adjusted operating income for 2009 was $73.9 million, or 13.5 percent of total revenue, compared with adjusted operating income of $60.3 million, or 11.6 percent, in 2008. This represented a 22.5 percent increase in operating income year-over-year. Consolidated earnings before income, taxes, depreciation and amortization was $102.1 million, an increase of 20.2 percent. Cash flow from operations for the full year 2009 was up 87 percent from the prior year to $50 million.
The company’s Spine division represented 51 percent of sales, while Orthopedics was 24 percent; Sports Medicine was 18 percent; and Vascular products (mostly used as part of orthopedic procedures) represented 3 percent of sales. Sales of “other” products, including airway management products for use during anesthesia, women’s care and other products, accounted for 4 percent of total net sales in 2009.
To help lay the groundwork for future product releases, Orthofix signed a license and product development agreement with Stout Medical Group LP, in Perkasie, Pa., for the development and marketing of a new expandable vertebral body replacement (VBR) and corpectomy device. A corpectomy is an operation to remove a portion of the vertebra and adjacent intervertebral discs for decompression of the cervical spinal cord and spinal nerves due to the removal of a tumor or trauma to the spine. A bone graft with or without a metal plate and screws is used to reconstruct the spine and provide stability. Expandable corpectomy devices provide in situ expansion, eliminate the need to cut the device to a specific size, and provide the surgeon with options for less-invasive incisions.
“Our agreement with Stout Medical is expected to allow us to provide a treatment for the tumor and trauma segment of the spinal market and give our surgeon customers a novel expandable corpectomy implant,” Milinazzo said. “Stout has a proven history of developing novel implant designs for the spinal market, and we are pleased to partner with them to commercialize their design.”
The initial term of the agreement is for 15 years, and gives Orthofix exclusive global licensing rights to the new device, which the company expects to be introduced during the second half of this year. According to a recent research report the U.S. market for VBR devices currently is estimated to be approximately $77 million, with the expandable device segment growing the fastest at approximately 12 percent, according to Orthofix.
Orthofix International began 2010 by selling some of its non-core orthopedic holdings. The vascular business, including its AV-Impulse mechanical compression technology, was sold to Mansfield, Mass.-based Covidien in March for net proceeds of $19 million. Under the deal, Orthofix agreed to provide “transitional services” to Covidien for a period of up to five months.