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Quarterly Review

4Q13/2013 Revenue: Orthofix

4Q13 revenue: of US $106.1MM, -10%


2013 revenue: of $400.5MM, -11%

  • BioStim $147.9MM, -20%
  • Biologics $53.8MM, flat (Trinity volume +5%)
  • Extremity Fixation $103.4MM, -7%
  • Spine Fixation $95.5MM, -2%


  • ~100% of BioStim is U.S. sales (of that, ~10% is Physio-Stim); growth impacted by 2012 changes in spine stim salesforce, conversion from U.S. Physio-Stim and Extremity Fixation sales from office call to O.R. call; now transitioning to separate salesforce for Physio-Stim
  • ~90% of Biologics from Musculoskeletal Transplant Foundation tissue forms, of which ~100% are sold in U.S.
  • Finished 2013 with >50% of Trinity revenues converted to Trinity Elite from Trinity Evolution
  • ~80% of Extremity Fixation sales are ex-U.S.; sales affected by Brazil sales decrease (accounts for 1/3 of total sales decline) and deferred revenue recognition; key markets showing positive growth for last 2 quarters (Brazil, Italy, U.K.)
  • Spine sales 80% U.S./20% ex-U.S; impacted by 6% decline in ASP due to discounting
  • Investigating allegations of potential improper payments to Brazil subsidiary


Revenue restatement and 2014 initiatives summary:

  • Decreased 2011 revenue by $28.2MM (restated to $441.9MM), 2012 by $14.7MM (to $447.5MM)
  • Has transitioned to only recognized revenue from distributor customers upon receipt of payment
  • Commenced overhaul of processes including IT, product development, supply chain, finance, insurance administration
  • Investing additional $5MM in 2014 R&D (+20% from 2013)
  • Investing in U.S. reimbursement strategy and team to address requirements of 3rd party payers
  • Expanding U.S. commercial contracting group to drive sales through Integrated Delivery Networks, Group Purchasing Organizations, regional hospitals
  • Investigating broader indications for stimulation products
  • Expanding biologics into trauma and joint revision
  • Increasing extremity fixation in ex-U.S. markets and developing products for temporary fixation, deformity correction and pediatrics (launching products within 18 months)
  • Launching Centurion Posterior Cervical and Skyhawk Lateral Fusion systems (latter limited release)