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Quarterly Review

Sales Results for 20 Orthopaedic Companies: A Mid-year Status Report

By Julie A. Vetalice

Now that we’ve collected 1H17 results from 20 publicly-traded companies, I’d like to share some performance-based observations. With now just 4 months remaining in the year, these companies provide a helpful gauge in projecting industry growth.

First, just by observing the percent change column in Exhibit 1 below, it’s clear that each company has its own story. Spine-heavy companies like Globus Medical, K2M and NuVasive are showing double-digit revenue growth. And, all three have maintained confidence in their full-year revenue guidance: a range of $263MM to $270MM for K2M, $625MM for Globus and $1.0BB+ for NuVasive (yes, NuVasive plans to meet/exceed that billion dollar mark). A quick calculation reveals that all three are just shy of 50% to their year-end projections.

Orthofix and SeaSpine bumped up their full-year guidance based on strong performance in the first half. In particular, Orthofix’s spine growth was supported by new distributors added over the last several quarters, improved distributor engagement and new products. SeaSpine is also seeing the benefit of new products and increased strength in its distributor base for both spine and orthobiologics.

Alphatec’s revenue decrease was attributed to a blend of volume drop, product mix and pricing due to lost distributors and customers. The company has terminated sales relationships that don’t jibe with its long-term and rebranding strategies, and is transitioning away from stocking distributors and toward dedicated reps/distributors. Alphatec leadership sees substantial opportunity to grow the company’s distribution power.

ConforMIS and Zimmer Biomet are two companies in this group posting overall underperformance, and both have shared modest guidance decreases: ConforMIS is now projecting  $75MM to $78MM, down by $5MM-6MM, and Zimmer is now at $7.8BB to $7.87BB, down $30MM-$40MM. For ConforMIS, headwinds included weak performance in Germany following an unexpected change in reimbursement for iUni and iDuo partial knees, rescheduled cases following a 2015 voluntary recall and changes to the U.S. salesforce. Zimmer Biomet’s sales continue to show the impact of production delays and slow business recapture from U.S. customers, due to supply constraints.

Companies that derive most of their revenue from joint reconstruction include ConforMIS, Exactech, Smith & Nephew, Stryker and Zimmer Biomet, and all but ConforMIS and Zimmer Biomet posted revenue growth in low- to high-single-digits.

While I haven’t elaborated on all 20 companies, each one is linked in Exhibit 1 and takes you to a summary of performance highlights and 2Q-specific results.

 

Exhibit 1: Orthopaedic Sales for Public Companies, As-Reported: 1H17 vs. 1H16 ($MM)

 Company 1H17  1H16  $ Change  % Change 
 Alphatec Spine $52.4  $66.4  -$14.0  -21.2% 
 Anika $44.7  $42.9  $1.8  4.2% 
 ConforMIS $38.9  $39.6  -$0.7  -1.7% 
 ConMed $209.3  $211.2  -$1.8  -0.9% 
 DePuy Synthes $4,425.2  $4,406.3  $18.9  0.4% 
 DJO $583.1  $571.8  $11.3  2.0% 
 Exactech $136.8  $131.4  $5.4  4.1% 
 Globus Medical $308.2  $276.8  $31.4  11.3% 
 Integra $68.5  $53.9  $14.6  27.1% 
 K2M $127.6  $115.5  $12.1  10.4% 
 Mazor Robotics $27.2  $14.7  $12.5  85.0% 
 NuVasive $510.4  $451.3  $59.1  13.1% 
 Orthofix $211.7  $202.8  $8.9  4.4% 
 SeaSpine $66.1  $64.6  $1.5  2.3% 
 Smith & Nephew $1,660.9  $1,627.8  $33.1  2.0% 
 Stryker $3,230.9  $3,077.9  $153.0  4.9% 
 Vericel $17.9  $14.0  $3.9  27.9% 
 Wright Medical $356.9  $340.0  $16.9  5.0% 
 Xtant Medical $43.5  $42.4  $1.1  2.5% 
 Zimmer Biomet $3,652.1  $3,521.0  $131.1  3.7% 

 

Exhibit 2: Orthopaedic Sales by Market Segment for Public Companies: 1H17 Performance vs. 1H16 ($MM)

  Joint Recon Trauma AR/ST Spine Orthobiologics  
 Company Sales % Change YOY Sales % Change YOY Sales % Change YOY Sales % Change YOY Sales % Change YOY Total
 Alphatec Spine             $47.6  -21.0%  $4.8  -22.8%  $52.4 
 Anika                  $44.7  4.2%  $44.7 
 ConforMIS $38.9  -1.6%                  $38.9 
 ConMed         $209.3  -0.9%          $209.3 
 DePuy Synthes $1,704.3  1.4%  $1,220.4  0.7%  $352.7  0.9%  $767.5  -2.3%  $206.7  2.1%  $4,425.2 
 DJO $121.0  19.3%                  $583.1 
 Exactech $132.6  7.9%          $0.3  -92.5%  $3.9  -16.9%  $136.8 
 Globus Medical             $293.1  11.2%  $15.1  13.7%  $308.2 
 Integra  $14.4  33.1%  $54.1  25.6%              $68.5 
 K2M             $123.3  10.2%  $4.3  17.7%  $127.6 
 Mazor Robotics             $27.2  85.0%      $27.2 
 NuVasive     $16.4  41.2%      $430.2  15.1%  $63.8  -3.0%  $510.4 
 Orthofix     $48.7  -5.5%      $40.6  9.6%  $30.6  8.1%  $211.7 
 SeaSpine             $31.4  0.7%  $34.7  3.8%  $66.1 
 Smith &  Nephew $834.9  2.3%  $220.1  6.1%  $606.0  0.3%          $1,660.9 
 Stryker $1,738.4  4.5%  $655.9  8.0%  $240.7  8.0%  $345.7  -0.3%  $106.4  5.6%  $3,230.9 
 Vericel                 $17.9  27.9%  $17.9 
 Wright Medical $163.4  6.6%  $133.7  2.4%  $11.6  -4.7%      $48.2  9.6%  $356.9 
 Xtant Medical             $21.0  -6.9%  $22.5  13.1%  $43.5 
 Zimmer Biomet $2,529.9  -0.5%  $278.6  5.1%  $64.0  4.3%  $200.1  38.8%  $147.9  5.0%  $3,652.1 

 

Sources: Company press releases, websites, U.S. Securities and Exchange Commission, ORTHOWORLD estimates

Julie A. Vetalice is Editorial Assistant for ORTHOWORLD. Reach her by email.