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Stryker completed its acquisition of Wright Medical in late-2020, and its competitors expect to benefit from opportunities arising from the sizable integration effort. Zimmer Biomet’s CEO Bryan Hanson said, “Most of the time in our industry, bringing two organizations together is a dis-synergy risk. I would expect, given the historical view of acquisitions in our space, that we have an opportunity to take advantage of that.”
Even before closure of the acquisition, smaller foot and ankle players had Wright Medical on the defensive. While our previous installment in this series looked at interesting players outside the United States, this time our overview focuses on three trauma extremities players in the $100 million to $300 million range which are likely to be positively impacted by the purchase of Wright Medical: Acumed, Amplitude Surgical and Paragon 28.
Acumed
Established in 1998 as a small contract manufacturer, Acumed has since grown into a significant player in the trauma space. Controlling interests of Acumed have changed several times. The company became part of the Marmon Group in 1999 before being acquired by Colson Associates in 2002. In late 2019, Marmon – itself now a Berkshire Hathaway company – acquired 60% of Colson’s companies, with plans to acquire the remaining 40% over the next five years.
Revenue Performance
We estimate that Acumed generated $310.6 million in revenue with year over year growth of +7.8% for 2019, as shown in Exhibit 1. The lion’s share of that revenue comes from the trauma segment, where Acumed grew well above the market average. Exhibit 2 shows Acumed’s full 2019 revenue split by segment.
Exhibit 1: Acumed Revenue 2017 to 2019
| Segment | 2017 | 2018 | 2019 |
|---|---|---|---|
| Extremity Joint Replacement | $13.1 | $15.0 | $17.3 |
| Extremity Joint Rep. Growth% | 8.0% | 14.5% | 15.0% |
| Trauma | $200.0 | $217.5 | $234.9 |
| Trauma Growth % | 5.6% | 8.8% | 8.0% |
| Orthobiologics | $52.1 | $55.5 | $58.4 |
| Orthobiologics Growth % | 3.5% | 6.5% | 5.2% |
| Total | $265.2 | $288.0 | $310.6 |
| Total Growth % | 5.3% | 8.6% | 7.8% |
Exhibit 2: Acumed 2019 Revenue Split by Segment
Acumed and OsteoMed, both Colson companies, will gradually merge over the course of 2021. The combined trauma business of the companies generated $357.8 million in 2019, likely making it the fifth largest trauma player in the market. Acumed and OsteoMed offer full extremities lines, making the combined company a dominant player in foot/ankle as well as hand/wrist, elbow and shoulder.
Recent Developments
As mentioned above, Acumed and OsteoMed will integrate gradually throughout 2021. Colson will maintain both brands, with Acumed CEO Sharon Wolfington leading the combined businesses. She said, “We are uniting the strengths of Acumed and OsteoMed to enhance the experience of our customers and their patients. We will continue to offer a growing product portfolio for both brands, leverage investments in systems and processes, and create business continuity with manufacturing and inventory in multiple locations.”
Like its larger peers, Acumed recently took steps to leverage the accelerating movement of orthopedic procedures into outpatient centers. The company introduced ASCent™, a customizable program designed to provide Ambulatory Surgery Centers (ASCs) with clinical value and pricing transparency. It offers Acumed’s portfolio of medical devices at flexible pricing and billing structures along with cost-effective “Essential” sets that minimize storage requirements. Acumed’s loaner bank sets can be shipped within 24 hours’ notice for O.R. days working at maximum capacity.
Amplitude Surgical
Based in France, Amplitude Surgical focuses on lower-limb orthopedics. The company grew steadily from its 1997 founding through 2019. Amplitude now has over 400 employees and representation in 30 countries. As it expands its international profile, the company is increasing its focus on key markets like the United States and Japan.
Revenue Performance
Amplitude generated $118.5 million in revenue during 2019, growing in the low single digits compared to the prior year, as shown in Exhibit 3. Although 85% of the company’s revenue derives from knee and hip replacement, sales from foot and ankle trauma products continue to grow through Amplitude’s Novastep subsidiary. Exhibit 4 shows the company’s full revenue split by segment.
Exhibit 3: Amplitude Surgical Revenue 2017 to 2019 (calendar year)
| Segment | 2017 | 2018 | 2019 | 9m20 |
|---|---|---|---|---|
| Joint Replacement | $95.4 | $101.7 | $102.6 | $57.3 |
| Joint Replacement Growth % | 7.1% | 6.9% | 0.8% | -23.2% |
| Knees | $55.8 | $59.6 | $60.3 | $33.5 |
| Knees Growth % | 7.1% | 7.0% | 1.2% | -23.7% |
| Hips | $39.6 | $42.2 | $42.3 | $23.8 |
| Hips Growth % | 7.1% | 6.7% | 0.2% | -22.5% |
| Trauma | $7.3 | $8.1 | $10.0 | $6.9 |
| Trauma Growth % | 24.5% | 7.9% | 22.9% | -0.6% |
| Sports Medicine | $3.3 | $3.5 | $3.6 | $2.0 |
| Sports Medicine Growth % | 5.2% | 6.9% | 2.5% | -22.8% |
| Orthobiologics | $2.2 | $2.3 | $2.4 | $1.3 |
| Orthobiologics Growth % | 5.1% | 6.9% | 2.5% | -22.1% |
| Total | $108.2 | $115.7 | $118.5 | $67.6 |
| Total Growth % | 8.0% | 6.9% | 2.5% | -21.3% |
Exhibit 4: Amplitude Surgical 9M20 Revenue Split by Segment
Like nearly every company, Amplitude endured a significant slowdown during the low point of the pandemic. For 2Q20, total sales declined almost -55% versus the prior year. The third quarter brought a brief respite as the company rebounded with +3.6% growth year over year. However, leadership noted the winter surge had already cut volumes by -30% in the last weeks of the quarter.
Recent Developments
Amplitude’s foot and ankle subsidiary, Novastep, entered two agreements in 2020 to bolster its footprint in the United States. It entered a distribution agreement in February with Carbon22, a startup developing cost-effective devices and education platforms for surgeons. Its portfolio of patent-pending implant systems includes design features like intra-operative visualization of fusion sites and post-operative healing zones. In May, Novastep signed an agreement with Vivex Biomedical to launch bioSTART® Tissue Repair products, offering amniotic membranes and liquid to support foot and ankle procedures in clinical and outpatient settings throughout the U.S.
In November 2020, European private equity firm PAI Partners purchased a majority stake in Amplitude Surgical. The acquired shares, formerly held by Apax Partners, represent approximately 52.3% of the company’s share capital and voting rights.
Paragon 28
Foot and ankle surgery has been the exclusive focus of Paragon 28 since its founding in 2010. Since then, the company grew to include 250 corporate employees across five locations. Paragon 28’s products have supported over 100,000 surgeries to date.
Revenue Performance
We estimate that Paragon 28 generated $107.4 million in revenue with growth of +31.8% in 2019 vs. the prior year, as shown in Exhibit 5. Trauma sales currently account for the vast majority of the company’s revenue, with support products coming from sports medicine and orthobiologics, as shown in Exhibit 6.
Exhibit 5: Paragon 28 Revenue 2017 to 2019
| Segment | 2017 | 2018 | 2019 |
|---|---|---|---|
| Trauma | $61.0 | $76.1 | $101.0 |
| Trauma Growth % | 18.5% | 24.7% | 32.7% |
| Sports Medicine | $1.8 | $2.1 | $2.5 |
| Sports Medicine Growth % | 16.0% | 19.6% | 19.2% |
| Orthobiologics | $3.0 | $3.2 | $3.9 |
| Orthobiologics Growth % | 7.8% | 5.8% | 23.3% |
| Total | $65.8 | $81.5 | $107.4 |
| Total Growth % | 17.9% | 23.9% | 31.8% |
Exhibit 6: Paragon 28 2019 Revenue Split by Segment
Paragon 28 estimates the orthopedic lower extremity market at nearly $3 billion, with the foot and ankle segment of that market growing in the high single digits. Frank Bono, CTO and Co-Founder of Paragon 28, sees the company joining the industry’s largest players. Asked what the future held for Paragon 28, he said, “Revenue target of one billion. We’re on our way.”
Recent Developments
The company keeps a brisk cadence of development and product launches. Paragon 28 has 215 patents either issued or pending, while the company’s development pipeline boasted over 20 products in late-2020. Bono said, “Extremities, to me, is the last orthopedic frontier where there’s still a lot of opportunity for innovation and improved surgical outcomes. This is still an underserved market for many physicians. In the reconstructive business, foot and ankle doctors used to take first-generation trauma plates and bend them to make them fit the patient’s foot. There’s still a lot of room for research, innovation, development and greatly improved surgical outcomes. This unique opportunity reminds me of spine 25 years ago.”
Paragon 28 seeks to expand its reach in lower extremity by entering the total ankle joint replacement segment. In August 2020, the company completed a Series B financing to support initiatives for global expansion and new product launches, including the APEX 3D™ Total Ankle Replacement.
Stryker completed its acquisition of Wright Medical in late-2020, and its competitors expect to benefit from opportunities arising from the sizable integration effort. Zimmer Biomet’s CEO Bryan Hanson said, “Most of the time in our industry, bringing two organizations together is a dis-synergy risk. I would expect, given the historical view of...
Stryker completed its acquisition of Wright Medical in late-2020, and its competitors expect to benefit from opportunities arising from the sizable integration effort. Zimmer Biomet’s CEO Bryan Hanson said, “Most of the time in our industry, bringing two organizations together is a dis-synergy risk. I would expect, given the historical view of acquisitions in our space, that we have an opportunity to take advantage of that.”
Even before closure of the acquisition, smaller foot and ankle players had Wright Medical on the defensive. While our previous installment in this series looked at interesting players outside the United States, this time our overview focuses on three trauma extremities players in the $100 million to $300 million range which are likely to be positively impacted by the purchase of Wright Medical: Acumed, Amplitude Surgical and Paragon 28.
Acumed
Established in 1998 as a small contract manufacturer, Acumed has since grown into a significant player in the trauma space. Controlling interests of Acumed have changed several times. The company became part of the Marmon Group in 1999 before being acquired by Colson Associates in 2002. In late 2019, Marmon – itself now a Berkshire Hathaway company – acquired 60% of Colson’s companies, with plans to acquire the remaining 40% over the next five years.
Revenue Performance
We estimate that Acumed generated $310.6 million in revenue with year over year growth of +7.8% for 2019, as shown in Exhibit 1. The lion’s share of that revenue comes from the trauma segment, where Acumed grew well above the market average. Exhibit 2 shows Acumed’s full 2019 revenue split by segment.
Exhibit 1: Acumed Revenue 2017 to 2019
| Segment | 2017 | 2018 | 2019 |
|---|---|---|---|
| Extremity Joint Replacement | $13.1 | $15.0 | $17.3 |
| Extremity Joint Rep. Growth% | 8.0% | 14.5% | 15.0% |
| Trauma | $200.0 | $217.5 | $234.9 |
| Trauma Growth % | 5.6% | 8.8% | 8.0% |
| Orthobiologics | $52.1 | $55.5 | $58.4 |
| Orthobiologics Growth % | 3.5% | 6.5% | 5.2% |
| Total | $265.2 | $288.0 | $310.6 |
| Total Growth % | 5.3% | 8.6% | 7.8% |
Exhibit 2: Acumed 2019 Revenue Split by Segment
Acumed and OsteoMed, both Colson companies, will gradually merge over the course of 2021. The combined trauma business of the companies generated $357.8 million in 2019, likely making it the fifth largest trauma player in the market. Acumed and OsteoMed offer full extremities lines, making the combined company a dominant player in foot/ankle as well as hand/wrist, elbow and shoulder.
Recent Developments
As mentioned above, Acumed and OsteoMed will integrate gradually throughout 2021. Colson will maintain both brands, with Acumed CEO Sharon Wolfington leading the combined businesses. She said, “We are uniting the strengths of Acumed and OsteoMed to enhance the experience of our customers and their patients. We will continue to offer a growing product portfolio for both brands, leverage investments in systems and processes, and create business continuity with manufacturing and inventory in multiple locations.”
Like its larger peers, Acumed recently took steps to leverage the accelerating movement of orthopedic procedures into outpatient centers. The company introduced ASCent™, a customizable program designed to provide Ambulatory Surgery Centers (ASCs) with clinical value and pricing transparency. It offers Acumed’s portfolio of medical devices at flexible pricing and billing structures along with cost-effective “Essential” sets that minimize storage requirements. Acumed’s loaner bank sets can be shipped within 24 hours’ notice for O.R. days working at maximum capacity.
Amplitude Surgical
Based in France, Amplitude Surgical focuses on lower-limb orthopedics. The company grew steadily from its 1997 founding through 2019. Amplitude now has over 400 employees and representation in 30 countries. As it expands its international profile, the company is increasing its focus on key markets like the United States and Japan.
Revenue Performance
Amplitude generated $118.5 million in revenue during 2019, growing in the low single digits compared to the prior year, as shown in Exhibit 3. Although 85% of the company’s revenue derives from knee and hip replacement, sales from foot and ankle trauma products continue to grow through Amplitude’s Novastep subsidiary. Exhibit 4 shows the company’s full revenue split by segment.
Exhibit 3: Amplitude Surgical Revenue 2017 to 2019 (calendar year)
| Segment | 2017 | 2018 | 2019 | 9m20 |
|---|---|---|---|---|
| Joint Replacement | $95.4 | $101.7 | $102.6 | $57.3 |
| Joint Replacement Growth % | 7.1% | 6.9% | 0.8% | -23.2% |
| Knees | $55.8 | $59.6 | $60.3 | $33.5 |
| Knees Growth % | 7.1% | 7.0% | 1.2% | -23.7% |
| Hips | $39.6 | $42.2 | $42.3 | $23.8 |
| Hips Growth % | 7.1% | 6.7% | 0.2% | -22.5% |
| Trauma | $7.3 | $8.1 | $10.0 | $6.9 |
| Trauma Growth % | 24.5% | 7.9% | 22.9% | -0.6% |
| Sports Medicine | $3.3 | $3.5 | $3.6 | $2.0 |
| Sports Medicine Growth % | 5.2% | 6.9% | 2.5% | -22.8% |
| Orthobiologics | $2.2 | $2.3 | $2.4 | $1.3 |
| Orthobiologics Growth % | 5.1% | 6.9% | 2.5% | -22.1% |
| Total | $108.2 | $115.7 | $118.5 | $67.6 |
| Total Growth % | 8.0% | 6.9% | 2.5% | -21.3% |
Exhibit 4: Amplitude Surgical 9M20 Revenue Split by Segment
Like nearly every company, Amplitude endured a significant slowdown during the low point of the pandemic. For 2Q20, total sales declined almost -55% versus the prior year. The third quarter brought a brief respite as the company rebounded with +3.6% growth year over year. However, leadership noted the winter surge had already cut volumes by -30% in the last weeks of the quarter.
Recent Developments
Amplitude’s foot and ankle subsidiary, Novastep, entered two agreements in 2020 to bolster its footprint in the United States. It entered a distribution agreement in February with Carbon22, a startup developing cost-effective devices and education platforms for surgeons. Its portfolio of patent-pending implant systems includes design features like intra-operative visualization of fusion sites and post-operative healing zones. In May, Novastep signed an agreement with Vivex Biomedical to launch bioSTART® Tissue Repair products, offering amniotic membranes and liquid to support foot and ankle procedures in clinical and outpatient settings throughout the U.S.
In November 2020, European private equity firm PAI Partners purchased a majority stake in Amplitude Surgical. The acquired shares, formerly held by Apax Partners, represent approximately 52.3% of the company’s share capital and voting rights.
Paragon 28
Foot and ankle surgery has been the exclusive focus of Paragon 28 since its founding in 2010. Since then, the company grew to include 250 corporate employees across five locations. Paragon 28’s products have supported over 100,000 surgeries to date.
Revenue Performance
We estimate that Paragon 28 generated $107.4 million in revenue with growth of +31.8% in 2019 vs. the prior year, as shown in Exhibit 5. Trauma sales currently account for the vast majority of the company’s revenue, with support products coming from sports medicine and orthobiologics, as shown in Exhibit 6.
Exhibit 5: Paragon 28 Revenue 2017 to 2019
| Segment | 2017 | 2018 | 2019 |
|---|---|---|---|
| Trauma | $61.0 | $76.1 | $101.0 |
| Trauma Growth % | 18.5% | 24.7% | 32.7% |
| Sports Medicine | $1.8 | $2.1 | $2.5 |
| Sports Medicine Growth % | 16.0% | 19.6% | 19.2% |
| Orthobiologics | $3.0 | $3.2 | $3.9 |
| Orthobiologics Growth % | 7.8% | 5.8% | 23.3% |
| Total | $65.8 | $81.5 | $107.4 |
| Total Growth % | 17.9% | 23.9% | 31.8% |
Exhibit 6: Paragon 28 2019 Revenue Split by Segment
Paragon 28 estimates the orthopedic lower extremity market at nearly $3 billion, with the foot and ankle segment of that market growing in the high single digits. Frank Bono, CTO and Co-Founder of Paragon 28, sees the company joining the industry’s largest players. Asked what the future held for Paragon 28, he said, “Revenue target of one billion. We’re on our way.”
Recent Developments
The company keeps a brisk cadence of development and product launches. Paragon 28 has 215 patents either issued or pending, while the company’s development pipeline boasted over 20 products in late-2020. Bono said, “Extremities, to me, is the last orthopedic frontier where there’s still a lot of opportunity for innovation and improved surgical outcomes. This is still an underserved market for many physicians. In the reconstructive business, foot and ankle doctors used to take first-generation trauma plates and bend them to make them fit the patient’s foot. There’s still a lot of room for research, innovation, development and greatly improved surgical outcomes. This unique opportunity reminds me of spine 25 years ago.”
Paragon 28 seeks to expand its reach in lower extremity by entering the total ankle joint replacement segment. In August 2020, the company completed a Series B financing to support initiatives for global expansion and new product launches, including the APEX 3D™ Total Ankle Replacement.
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ME
Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
