Revenue Report

Orthopedic Public Companies Grow 2.6% YoY in Quarter

Orthopedic Public Companies Grow 2.6% YoY in Quarter
The second quarter of 2019 brought incremental improvement over the first. Stryker and Medtronic saw revenue growth in the mid-single digits, Smith Nephew performed at 1.6% and DePuy Synthes and Zimmer Biomet experienced a year-over-year loss. Price pressure was a common theme in the quarter for many companies, as it offset some gains made from increased surgical volumes for the reporting period.

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The Spine Market: A Look at Past and Forecasted Performance

Spine is the largest individual segment that we track, accounting for 18.2% of the orthopedic industry's overall revenue. Excluding biologics, sales of orthopedic spine products topped $9.3 billion in 2018, growing +2.7% vs. 2017. Growth in the segment exceeded our expectations, as several companies in the top 10 posted double-digit increases that offset lower performance by manufacturers at the top of the list. Here, we take a deeper look at past, present and forecasted performance.

Orthopedic Sales in Line with Seasonal Expectations for 1Q19

Orthopedic Sales in Line with Seasonal Expectations for 1Q19
The first quarter of 2019 brought modest growth to the orthopedic market, as expected seasonal softness and more competition in digital surgery platforms slowed sales for some of the largest players. The 25 companies covered in this article had combined total orthopedic sales of $8.7 billion, growing just 1.1% versus the prior year. While the top two players, DePuy Synthes and Zimmer Biomet, both saw -2% growth, the quarter did feature strong performances by Medtronic (+5%) and Wright Medical (+16%) among the larger players.

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Orthopedic Industry Revenue Reaches $51 Billion in 2018

Orthopedic Industry Revenue Reaches $51 Billion in 2018
According to our estimates published in THE ORTHOPAEDIC INUSTRY ANNUAL REPORT, orthopedic industry revenue reached $51 billion worldwide in 2018 and grew 3.5% over 2017. Results were mixed among the largest companies as some stumbled operationally while others overperformed, due in part to early adoption of technology and entry into high-growth segments. Common strategic themes present in 2018 that will continue as part of the industry's narrative in 2019 and beyond include connected ecosystems of products, flagship technology (e.g. robotics), portfolio-wide pull through and a growing shift to outpatient procedures.

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ConforMIS, Orthofix and OrthoPediatrics Report Preliminary 4Q18 and FY 2018 Results

Preliminary results for ConforMIS, Orthofix and OrthoPediatrics were mixed. While ConforMI's net revenue for the year grew in the double digits, adjusting for product-only revenue reveals a mostly flat year. Orthofix rode strong spinal implant sales to mid-single-digit growth for the year but was impacted by the slowdown in the biologics market. OrthoPediatrics continued to leverage its leadership position in the pediatric space to achieve aggressive sales growth for both the quarter and year.

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3Q18 and 9 Month 2018 Performance Highlights for Public Companies

3Q18 and 9 Month 2018 Performance Highlights for Public Companies
Several companies noted increased case volume in the third quarter, likely driven by a strong U.S. economy leading to more widespread insurance coverage and patients able to pay for elective procedures. Sales results were mixed outside of the U.S., particularly in the EMEA region where reimbursement issues continue to be a challenge in the U.K. and Germany. Companies generally performed well, however, in emerging markets.

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Medartis: Profile of a Newly-Public Orthopaedic Company

Medartis went public on the SIX Swiss Exchange in March, securing proceeds to fund product development, international expansion and potential acquisitions. Their public launch provided deeper insight into the company's position within the global orthopaedic trauma space. We reviewed Medartis' 2017 and 2018 strategic announcements, and spoke with leadership to get a better sense of the company's recent and future movement.

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Spine Market Growth Expected to Remain at 2%

Spine accounts for 18% of the orthopaedic industry's overall revenue. In 2017, sales of spine products (excluding biologics) exceeded $9 billion worldwide, an increase of 2.2% vs. 2016, according to our estimates. The segment remains a story of large, differentiated companies losing market share to the players that derive the majority of their revenue from spine.

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Public Orthopaedic Companies: 1Q18 Revenue

Alongside their 1Q18 results, numerous players reaffirmed or updated their full-year revenue guidance. Globus Medical increased its numbers based on adoption of ExcelsiusGPS, K2M grew its range by $3MM following a distributor partnership and Orthofix upped guidance by about $9MM in acquisition-related contributions. After the quarters close, Wright Medical announced FDA premarket approval for AUGMENT injectable bone graft, and will update its full-year guidance in the 2Q18 call.

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Orthopaedic Industry Reaches $49 Billion in 2017

Orthopaedic industry revenue reached $49.3 billion worldwide in 2017 and grew at 3.7%, ~$1.7 billion over 2016, according to our estimates to be published in THE ORTHOPAEDIC INDUSTRY ANNUAL REPORT. In 2017, the 20 largest orthopaedic device companies-those with revenue above $200 million-posted growth. That's a statement we haven't made for at least the last three years, and one we think indicates positive momentum in orthopaedics. What fueled this growth? New product launches, acquisitions and international expansion were the most-cited contributors by company executives.

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