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Quarterly Review

Biomet Fiscal 1Q14 Results and Lanx Acquisition

To date, only Biomet has reported its quarterly results. Here we include coverage of revenue, plus observations on the Lanx acquisition announcement. All highlights pertain to FY1Q14, unless otherwise noted.

Biomet (for fiscal 1Q14, ended 8/31/13)

$730.7MM, +4% (U.S. $469.9MM, +4%; Europe $151.5MM, +2%; International $109.3MM, +9%)

  • Ÿ Hips $149.7MM, +4% (U.S. +3%)
  • Ÿ Knees $225.1MM, +5% (U.S. +5%)
  • Ÿ Sports Med/Extremities/Trauma (S.E.T.) $149.5MM, +19% (U.S. +18%)
  • Ÿ Spine, Bone Healing & Microfixation $101.6MM, -7% (U.S. -9%; excluding royalties and divestiture, +3% worldwide & U.S.)
  • Ÿ Dental $53.9MM, -5%
  • Ÿ Cement, Biologics & Other $50.9MM, +2% (U.S. -1%)

 

General

  • Recon now separated into hip and knee, Microfixation reporting with Spine/Bone Healing (all fall under same leadership), Bone Cements/Accessories now reporting with Biologics and Other
  • Pure price for global hips/knees decreased at low-single-digit rate
  • Noted signs of market improvement, especially in U.S.

 

Hips

  • Growth driven by revision sales (Arcos femoral, Regenerex components, Freedom constrained liners), Taperloc Complete and Global Tissue Sparing stem (available ex-U.S.)
  • Continued global ex-U.S. launch of G7 multi-bearing acetabular cup, enables reduction of OR clutter and confusion, sterilization of fewer instruments

 

Knees

  • Slight decline in Europe sales, offset by double-digit International growth
  • Growth supported by Oxford Partial Knee, Vanguard SSK 360 Revision, E1 bearings, Signature Personalized system
  • >600 surgeons worldwide completed Oxford training
  • Kicking off new U.S. Oxford direct-to-consumer campaigns in select markets in FY2Q
  • Creating a bicruciate-preserving arthroplastic category, XPA, with X signifying imagery of and interaction between ACL and PCL
  • Planning FY15 launch of addition to Vanguard platform in XPA space, at AAOS


S.E.T.

  • Claims market-leading brands with DVR wrist fracture system, Discovery Elbow and ExploR Radial Head, Comprehensive Shoulder, JuggerKnot Soft Anchor
  • Launching ToggleLoc with ZipLoop end during 2HFY14
  • Received FDA clearance to market Signature Personalized Patient Care Glenoid Guide, dual trajectory allows intraoperative choice between reverse and total shoulder
  • In 2Q, will commence clinical use of Signature Glenoid in U.S., Europe, etc.
  • Also in 2Q, completed 1st U.S. implantation of Comprehensive Nano Stemless shoulder in IDE study
  • 2Q launches include AFFIXUS hip fracture nail in Japan

 

Spine, Bone Healing & Microfixation

  • Growth supported by MaxAn anterior cervical plate, Lineum posterior occipital cervical thoracic, system, Solitaire-C spacer, Cellentra viable cell bone matrix
  • Improved sales of non-invasive stimulation devices, especially spinal, but tighter insurance reimbursement guidelines continue, particularly for trauma
  • 2Q launches include additional Lineum system sets

 

Cement, Biologics & Other

  • Cement sales driven by increased ex-U.S. penetration, sales of OptiPac, OptiVac, StageOne knee/modular hip spacer molds
  • Strong uptake in Japan for Cobalt Cement
  • Investing more heavily in biologics

 

Lanx Acquisition
From ORTHOFLASH®, October 7:

Biomet reached a definitive agreement to acquire Lanx, manufacturer of spinal products including the Timberline® Lateral Approach and Aspen® Minimally Invasive fusion systems. The transaction is expected to close on or before 11/29/13. (Source: Biomet, Inc.)

  • Biomet paying $147MM in an all-cash deal
  • Complements Biomet products with lateral systems, MIS fusion
  • Minimal salesforce overlap
  • Lanx founded in 2003, headquartered in Broomfield, Colorado; markets a full line of fusion technologies but focuses on minimally invasive and biologics
  • Analyst estimates place Lanx annual revenue in $80MM to $100MM range
  • For CY12, spine represented 6% of Biomet revenue
  • Could bump Biomet to 3% of spine market share

 

Sources: Company press release, earnings call, filings with the Securities and Exchange Commission

Julie A. Vetalice is Content Coordinator for ORTHOWORLD Inc. She can be reached at 440.543.2101 or julie@orthoworld.com.