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Enovis is an innovative medtech company that generated more than $535 million in Reconstructive segment sales in 2022. The company ultimately resulted from the 2018 acquisition of DJO by Colfax. Since then, CEO Matt Trerotola has led a company that’s able to take significant market share and seamlessly enter attractive adjacencies.
Our post-AAOS chat with Mr. Trerotola is excerpted below. We covered Enovis’ foundational implant technologies, the company’s market-leading ASC penetration, adoption of technology in joint replacement, the most significant determinant of successful M&A and his expectations for 2023.
Enovis’ focused, forward-looking strategy has the company well along the path to becoming a player with total revenues over $2 billion and sustainable high-single-digit growth.
A theme at Canaccord and AAOS this year seemed to be that technology is great, but it is still about the implant. In terms of devices, what areas of innovation are most important to Enovis?
Matt Trerotola: We’ve got two foundational technologies that have fueled almost a decade of double-digit growth and lots of share gain. They’re still the primary reasons that we’re converting surgeons today.
The first is the AltiVate Reverse shoulder, which pioneered the lateralized reverse. Reverse has proven to be the preferred way to do a shoulder, and the lateralized technique is proven to be the preferred way to do a reverse. Our flagship technology of AltiVate has more data than any other lateralized reverse. We’ve wrapped a lot of innovation around AltiVate over time, including a stemless anatomic we brought out a little while back.
Our second flagship technology is the EMPOWR Knee. It’s been around for some time, but it is still a very exciting technology designed to represent the motion of the knee more closely. Knee replacement has good outcomes, but not high patient satisfaction. Only 80% of patients are satisfied with the results of primary procedures, even though there weren’t that many revisions. That was the opportunity we seized with EMPOWR. It has a 90%-plus satisfaction rate — and even higher than that in some studies — in a market that had just come to accept “okay” levels of satisfaction. It has changed the knee market. We’ve taken tons of share and grown at multiples of the market for years.
Enovis is well ahead of the competition in ASC penetration for joint replacement. What’s the key to success in that setting?
Matt Trerotola: We shared last year that we were approaching about 20% of our business coming from the ASC market. If we included outpatient, the rate would be higher. Everything we’ve seen and heard indicates that the rest of the market is at around 10%. There are a couple of different reasons for our success.
The first is the EMPOWR Knee. If you think about a knee that is more stable and that feels more like your natural knee, hey, that’s great for many people. But it’s particularly great for the younger, more active patients. In the ASC, you’ve got to have a patient whom you believe will come in, get the surgery, go home and not come back. That’s how the economics work. That points you toward younger, more active patients and our EMPOWR Knee is terrific for those patients.
Second, as an agile and entrepreneurial player, we focused on making sure we’re doing things that set up well for the ASC environment. We’ve got simpler instrument tray sets for our knees. We consolidated those a few years back and continue to work to consolidate the instrument tray sets. Our OaraScore software is now broadly used to risk score patients so that surgeons can get a bit of a reality check with data as to which patients are best suited to the ASC.
When we launched our ARVIS enabling tech, we didn’t try to copy what had been done so far. We were trying to think about where things are going. More and more procedures are going into the ASC. ARVIS is smaller, doesn’t require a pre-operative scan and doesn’t add much cost or time to the procedure. That kind of technology is going to be preferred in the ASC. With ARVIS, we feel like we introduced a technology that gives most of the benefits of much more expensive technologies. We’re just getting it into the market, but our customers appreciate that mentality.
Enabling technology usage in joint replacement surgery has stalled at around 20% of cases. What needs to happen to move it into the mainstream?
Matt Trerotola: I’ve been involved in many different industries, and typically there are waves of technology adoption. I think it is reasonable to assume that will happen in orthopedics. It seems likely to me that most surgeries will eventually use software-based planning, patient-specific instruments where appropriate and some type of technology-enabled guidance through the surgical process. That allows the surgeon to plan very efficiently, do it in a repeatable way and record what they are doing to create the data feedback loop.
What happens with robotics is less clear. If you do a really good job of planning procedures and have high-tech guidance, what is left is the positioning of jigs and cuts. It doesn’t take a robot the size of a refrigerator to position jigs and cut once you get to that point. There are ways to mechanize positioning and cuts with a much smaller footprint and in a more cost-effective manner. But there’s also a question of the surgeons. They have experience that they want to apply. Will they want to just take their hands off and let a robot work?
It sounds like we should expect Enovis to remain active on the M&A front. How has the company integrated its many acquisitions without missing a beat?
Matt Trerotola: M&A is one of our fundamental corporate capabilities. We’ve got a toolkit and experience base that we’ve applied here since before my time, and certainly within the last seven-and-a-half years as I’ve led the company before it became Enovis. Several of us on the leadership team spent a portion of our careers at Danaher, arguably the best-ever at successful M&A. It is about having discipline around the strategy of why we’re doing this, a diligence process of how we assess what we’re getting into and then the planning and integration execution on the backside.
There was this myth years ago that most acquisitions fail. Then a famous paper came out that said, yeah, most acquisitions fail unless you’re a company that does them regularly. Then most of your acquisitions succeed. That’s us. We do M&A on a regular basis. We’ve got the discipline and tools; it’s all rooted in strategy. We don’t do acquisitions to get bigger. We do them because they accelerate our strategy, open a new market or bring in a key technology.
What do you expect from the macro environment in 2023?
Matt Trerotola: I’m excited about 2023. Elective surgery volumes have crossed over to volumes above 2019. There’s also the potential to have pent-up demand tailwinds from patients who didn’t get surgery through the COVID period. I’m super excited about the innovation we launched last year that will be coming through this year. Our acquisitions continue to grow, and we have others in the pipeline. We expect a lot of momentum in 2023 toward building a $2 billion high-single-digit grower.
What’s a lesson you’ve learned since Enovis became a stand-alone company?
Matt Trerotola: Focus is a powerful thing. As we have become a focused medtech player, there’s energy and clarity to our strategy. It attracts talent to our company and makes us an attractive acquirer. People are excited to be partnering with us when we invest in them. It has attracted investors in the medtech space who see that we’re just getting started. We’re building a great company with strong, profitable growth and compounding value for our shareholders.
Enovis is an innovative medtech company that generated more than $535 million in Reconstructive segment sales in 2022. The company ultimately resulted from the 2018 acquisition of DJO by Colfax. Since then, CEO Matt Trerotola has led a company that's able to take significant market share and seamlessly enter attractive adjacencies.
Our...
Enovis is an innovative medtech company that generated more than $535 million in Reconstructive segment sales in 2022. The company ultimately resulted from the 2018 acquisition of DJO by Colfax. Since then, CEO Matt Trerotola has led a company that’s able to take significant market share and seamlessly enter attractive adjacencies.
Our post-AAOS chat with Mr. Trerotola is excerpted below. We covered Enovis’ foundational implant technologies, the company’s market-leading ASC penetration, adoption of technology in joint replacement, the most significant determinant of successful M&A and his expectations for 2023.
Enovis’ focused, forward-looking strategy has the company well along the path to becoming a player with total revenues over $2 billion and sustainable high-single-digit growth.
A theme at Canaccord and AAOS this year seemed to be that technology is great, but it is still about the implant. In terms of devices, what areas of innovation are most important to Enovis?
Matt Trerotola: We’ve got two foundational technologies that have fueled almost a decade of double-digit growth and lots of share gain. They’re still the primary reasons that we’re converting surgeons today.
The first is the AltiVate Reverse shoulder, which pioneered the lateralized reverse. Reverse has proven to be the preferred way to do a shoulder, and the lateralized technique is proven to be the preferred way to do a reverse. Our flagship technology of AltiVate has more data than any other lateralized reverse. We’ve wrapped a lot of innovation around AltiVate over time, including a stemless anatomic we brought out a little while back.
Our second flagship technology is the EMPOWR Knee. It’s been around for some time, but it is still a very exciting technology designed to represent the motion of the knee more closely. Knee replacement has good outcomes, but not high patient satisfaction. Only 80% of patients are satisfied with the results of primary procedures, even though there weren’t that many revisions. That was the opportunity we seized with EMPOWR. It has a 90%-plus satisfaction rate — and even higher than that in some studies — in a market that had just come to accept “okay” levels of satisfaction. It has changed the knee market. We’ve taken tons of share and grown at multiples of the market for years.
Enovis is well ahead of the competition in ASC penetration for joint replacement. What’s the key to success in that setting?
Matt Trerotola: We shared last year that we were approaching about 20% of our business coming from the ASC market. If we included outpatient, the rate would be higher. Everything we’ve seen and heard indicates that the rest of the market is at around 10%. There are a couple of different reasons for our success.
The first is the EMPOWR Knee. If you think about a knee that is more stable and that feels more like your natural knee, hey, that’s great for many people. But it’s particularly great for the younger, more active patients. In the ASC, you’ve got to have a patient whom you believe will come in, get the surgery, go home and not come back. That’s how the economics work. That points you toward younger, more active patients and our EMPOWR Knee is terrific for those patients.
Second, as an agile and entrepreneurial player, we focused on making sure we’re doing things that set up well for the ASC environment. We’ve got simpler instrument tray sets for our knees. We consolidated those a few years back and continue to work to consolidate the instrument tray sets. Our OaraScore software is now broadly used to risk score patients so that surgeons can get a bit of a reality check with data as to which patients are best suited to the ASC.
When we launched our ARVIS enabling tech, we didn’t try to copy what had been done so far. We were trying to think about where things are going. More and more procedures are going into the ASC. ARVIS is smaller, doesn’t require a pre-operative scan and doesn’t add much cost or time to the procedure. That kind of technology is going to be preferred in the ASC. With ARVIS, we feel like we introduced a technology that gives most of the benefits of much more expensive technologies. We’re just getting it into the market, but our customers appreciate that mentality.
Enabling technology usage in joint replacement surgery has stalled at around 20% of cases. What needs to happen to move it into the mainstream?
Matt Trerotola: I’ve been involved in many different industries, and typically there are waves of technology adoption. I think it is reasonable to assume that will happen in orthopedics. It seems likely to me that most surgeries will eventually use software-based planning, patient-specific instruments where appropriate and some type of technology-enabled guidance through the surgical process. That allows the surgeon to plan very efficiently, do it in a repeatable way and record what they are doing to create the data feedback loop.
What happens with robotics is less clear. If you do a really good job of planning procedures and have high-tech guidance, what is left is the positioning of jigs and cuts. It doesn’t take a robot the size of a refrigerator to position jigs and cut once you get to that point. There are ways to mechanize positioning and cuts with a much smaller footprint and in a more cost-effective manner. But there’s also a question of the surgeons. They have experience that they want to apply. Will they want to just take their hands off and let a robot work?
It sounds like we should expect Enovis to remain active on the M&A front. How has the company integrated its many acquisitions without missing a beat?
Matt Trerotola: M&A is one of our fundamental corporate capabilities. We’ve got a toolkit and experience base that we’ve applied here since before my time, and certainly within the last seven-and-a-half years as I’ve led the company before it became Enovis. Several of us on the leadership team spent a portion of our careers at Danaher, arguably the best-ever at successful M&A. It is about having discipline around the strategy of why we’re doing this, a diligence process of how we assess what we’re getting into and then the planning and integration execution on the backside.
There was this myth years ago that most acquisitions fail. Then a famous paper came out that said, yeah, most acquisitions fail unless you’re a company that does them regularly. Then most of your acquisitions succeed. That’s us. We do M&A on a regular basis. We’ve got the discipline and tools; it’s all rooted in strategy. We don’t do acquisitions to get bigger. We do them because they accelerate our strategy, open a new market or bring in a key technology.
What do you expect from the macro environment in 2023?
Matt Trerotola: I’m excited about 2023. Elective surgery volumes have crossed over to volumes above 2019. There’s also the potential to have pent-up demand tailwinds from patients who didn’t get surgery through the COVID period. I’m super excited about the innovation we launched last year that will be coming through this year. Our acquisitions continue to grow, and we have others in the pipeline. We expect a lot of momentum in 2023 toward building a $2 billion high-single-digit grower.
What’s a lesson you’ve learned since Enovis became a stand-alone company?
Matt Trerotola: Focus is a powerful thing. As we have become a focused medtech player, there’s energy and clarity to our strategy. It attracts talent to our company and makes us an attractive acquirer. People are excited to be partnering with us when we invest in them. It has attracted investors in the medtech space who see that we’re just getting started. We’re building a great company with strong, profitable growth and compounding value for our shareholders.
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Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
