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Product / Company Performance

ConforMIS Reports 3Q18 Product Revenue of $18.3MM, +0.9% vs. 3Q17 -



ConforMIS posted total 3Q18 revenue of US $29MM, +57% vs 3Q17. However, $10.5MM of that revenue came from a one-time royalty payment as the company successfully settled its patent disputes with Smith & Nephew. Product revenue grew 0.9% vs. prior year, with sales in the U.S. growing by 4.8% for that same period driven primarily by the iTotal PS, a customizable posterior stabilized knee replacement. U.S. sales were offset by a 22% decline in ex-U.S. sales as reimbursement issues in Germany continue to be a headwind for ConforMIS.

The company lowered full year guidance to $78.1MM to $78.6MM excluding the royalty settlement, as it anticipates lower than expected revenue in 4Q18. ORTHOWORLD projects ConforMIS 2018 total revenue of $88.7MM, +13.6% vs 2017. Per leadership, product revenue growth for 2019 will be in the 5% range.

President and CEO Mark Augusti said, “Given the commercial investments we’ve made in sales, I believe we should be seeing better growth than we are realizing. As such, I made a change in our sales leadership. As of last week, U.S. sales is reporting directly to me while we search for a new SVP of Sales.”

Working closely with Mr. Augusti, the salesforce will have to move the needle initially without the benefit of a hip system. While progress has been made in limited launch for ConforMIS’ iTotal hip, with ten surgeons now having completed procedures, full launch is not expected until 2H19. Accounting for ramp up time, top line revenue will not see benefit from the hip system until 1H20. However, leadership expects the eventual expansion of their portfolio to enable them to attract better distributors.

On the upside, ConforMIS had additional positive peer-reviewed clinical trials for iView and iTotal CR Knee products. The iView implant, which allows surgeons to preserve the ACL and PCL while treating arthritic compartments of the knee, showed high survivorship out to five years and a satisfaction rate above 90% with patients. A study involving 360 patients showed low post-operative manipulation rates for the iTotal CR knee replacement system. It also showed survivorship of 99.2% at an average age of just under two years, similar to the results shown by the U.K. National Joint Registry.

ConforMIS’ 3Q18 and YTD segment sales and growth on an as-reported basis are as follows.

  3Q18 3Q17 $ Change % Change
Joint Reconstruction Knees $29.0 $18.4 $10.6 57.3%


  YTD18 YTD17 $ Change % Change
Joint Reconstruction Knees $67.7 $57.4 $10.4 18.1%


ConforMIS’ revenue by geographic region is as follows.

Geographic Region 3Q18 3Q17 $ Change % Change
US $16.27 $15.5 $0.8 4.8%
Ex-US $2.06 $2.7 -$0.6 -22.4%
Total  $18.3 $18.2 $0.2 0.9%


Net earnings for 3Q18 are as follows.

3Q18 Amount ($MM) % of Sales
Sales $29.0  
   Cost of Sales -$9.3 32.0%
   Sales and Marketing -$9.1 31.2%
   Administrative -$6.6 22.7%
   R&D -$3.9 13.3%
   Other -$7.7 26.4%
Net Earnings  -$7.4 -25.7%


Sources: ConforMIS; ORTHOWORLD estimates. All revenue figures presented in USD $MM.

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.


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