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Orthopedic sales remained elevated in the second quarter of 2023 as the market continued its sustained rebound from years of disruption. Below are selected quotes from the second quarter by executives at public orthopedic companies covering market dynamics, the other side of joint replacement’s bounce and the M&A environment.
Market Dynamics Improving, but Tougher Comps Ahead
Orthopedic surgical volumes remain a growth driver. Most markets aren’t in overdrive, trying to rapidly work through patient backlogs. Instead, stable markets are benefitting from a modest but likely sustained volume tailwind. However, the second half of 2023 brings considerably stronger comps, so we expect the buoyant first-half growth rates to take a step back.
Joe Wolk, Johnson & Johnson CFO
In medtech, we continue to anticipate stable procedure volumes and healthcare staffing levels in the back half of the year with normal seasonality. We expect continued competitive performance attributable to the commercial execution of recently launched products and improvement in supply. Headwinds from volume-based procurement in China, as well as potential impacts from international sanctions in Russia, are expected to be higher in the second half than the first half of the year.
Curt Hartman, CONMED CEO
At a macro level and consistent with my first-quarter comments, the underlying surgical markets that we serve are healthy, and healthcare staffing levels continue to improve. Conversely, inflationary pressure on the material side has been slower to dissipate, and supply chains are not yet fully recovered. Overall, we see all these dynamics as stable to improving in the second half of 2023.
Matt Trerotola, Enovis CEO
The whole first half has been very healthy in Recon. There seems to be more capacity for surgery that’s enabling surgeons to work through some of the backlog and show, I think, oversized market growth here this year. It seems like there’s more opportunity for that kind of backlog-related tailwind to continue in the coming years. But this year, we’re seeing a pretty heavy amount of vacations in the elective surgery area. That’s something we’re certainly hearing about publicly out there. And so I think you’ll probably see some of the backlog clear pause for a little bit as we go through the summer months and then opportunity then accelerate through the back of the year.
Knee and Hip Rebound Squeezes Smaller Players
As Mr. Trerotola points out, the joint replacement market is growing at multiples of its historical rates. We estimate that large joint replacement sales are up in the high single digits through the first half of 2023. However, the outsized focus on those segments created supply and distribution issues for mid-tier and smaller companies.
Albert DaCosta, Paragon 28 CEO
Most of our lost cases or deferred cases in the U.S. were related to products that are sterile packed for us. When you listen to some of the other larger joint orthopedic companies talking about their increases in volumes over the last couple of quarters, most of their products are sterile packed as well. So we’ve been competing with space on the manufacturing lines with some of these very large hip and knee companies that have had unusual levels of high growth coming out of the post-COVID era. And it just happens that a number of our new products that we’ve launched over the last 24 to 36 months are sterile packed.
Cheryl Blanchard, Anika Therapeutics CEO
Our Joint Preservation and Restoration portfolio continues to strengthen, and our newest products drove continued growth in the second quarter, though slower than we originally expected as some of our distributors experienced the recent industry dynamic of pent-up demand, causing a greater focus on large joints. We are actively determining the strengths and opportunities within our U.S. hybrid channel and acting accordingly to meet our growth objectives.
Consolidation Ramps as Uncertainty Hangs Over GMED/NUVA Deal
The second quarter of 2023 brought a notable bump in M&A activity as market conditions improve. The combination of Globus Medical and NuVasive would be the most consequential market shake-up in several years, but its future remains clouded, pending the next steps from the FTC.
Matt Trerotola, Enovis CEO
It is a more constructive environment than it was several years ago for M&A. I mean, very encouraging for us that [our recent deals] were done in a challenging M&A environment in terms of the strength of sellers. And now it’s a better M&A environment. We’re definitely excited about the capital that we have to deploy and the possibilities for what we can do with it.
Bryan Hanson, Zimmer Biomet CEO
From an M&A standpoint, our first priority is revenue growth and the diversification of the company into faster-growth markets. That may come with some near-term dilution, but we’re also going to be very conscious about driving P&L discipline and looking for accretion in a reasonable amount of time, let’s say, within the first two years. The priority is going to be about accelerating the overall company’s growth.
Chris Barry, NuVasive CEO
As far as the range of outcomes, clearly, the FTC reviewed the information that we provided and ultimately came back to us at some point. I’m confident in the Q3 [close] time frame because of everything I’ve said before; I don’t believe this is anti-competitive. I think there are lots of competitors. There’s a low entry bar for competitors coming into this space. And for all those reasons, the combination of us and Globus is much better for patients. It actually opens up the opportunity to further innovate and ultimately change patient outcomes, which is our focus as a company.
Orthopedic sales remained elevated in the second quarter of 2023 as the market continued its sustained rebound from years of disruption. Below are selected quotes from the second quarter by executives at public orthopedic companies covering market dynamics, the other side of joint replacement's bounce and the M&A environment.
Market Dynamics...
Orthopedic sales remained elevated in the second quarter of 2023 as the market continued its sustained rebound from years of disruption. Below are selected quotes from the second quarter by executives at public orthopedic companies covering market dynamics, the other side of joint replacement’s bounce and the M&A environment.
Market Dynamics Improving, but Tougher Comps Ahead
Orthopedic surgical volumes remain a growth driver. Most markets aren’t in overdrive, trying to rapidly work through patient backlogs. Instead, stable markets are benefitting from a modest but likely sustained volume tailwind. However, the second half of 2023 brings considerably stronger comps, so we expect the buoyant first-half growth rates to take a step back.
Joe Wolk, Johnson & Johnson CFO
In medtech, we continue to anticipate stable procedure volumes and healthcare staffing levels in the back half of the year with normal seasonality. We expect continued competitive performance attributable to the commercial execution of recently launched products and improvement in supply. Headwinds from volume-based procurement in China, as well as potential impacts from international sanctions in Russia, are expected to be higher in the second half than the first half of the year.
Curt Hartman, CONMED CEO
At a macro level and consistent with my first-quarter comments, the underlying surgical markets that we serve are healthy, and healthcare staffing levels continue to improve. Conversely, inflationary pressure on the material side has been slower to dissipate, and supply chains are not yet fully recovered. Overall, we see all these dynamics as stable to improving in the second half of 2023.
Matt Trerotola, Enovis CEO
The whole first half has been very healthy in Recon. There seems to be more capacity for surgery that’s enabling surgeons to work through some of the backlog and show, I think, oversized market growth here this year. It seems like there’s more opportunity for that kind of backlog-related tailwind to continue in the coming years. But this year, we’re seeing a pretty heavy amount of vacations in the elective surgery area. That’s something we’re certainly hearing about publicly out there. And so I think you’ll probably see some of the backlog clear pause for a little bit as we go through the summer months and then opportunity then accelerate through the back of the year.
Knee and Hip Rebound Squeezes Smaller Players
As Mr. Trerotola points out, the joint replacement market is growing at multiples of its historical rates. We estimate that large joint replacement sales are up in the high single digits through the first half of 2023. However, the outsized focus on those segments created supply and distribution issues for mid-tier and smaller companies.
Albert DaCosta, Paragon 28 CEO
Most of our lost cases or deferred cases in the U.S. were related to products that are sterile packed for us. When you listen to some of the other larger joint orthopedic companies talking about their increases in volumes over the last couple of quarters, most of their products are sterile packed as well. So we’ve been competing with space on the manufacturing lines with some of these very large hip and knee companies that have had unusual levels of high growth coming out of the post-COVID era. And it just happens that a number of our new products that we’ve launched over the last 24 to 36 months are sterile packed.
Cheryl Blanchard, Anika Therapeutics CEO
Our Joint Preservation and Restoration portfolio continues to strengthen, and our newest products drove continued growth in the second quarter, though slower than we originally expected as some of our distributors experienced the recent industry dynamic of pent-up demand, causing a greater focus on large joints. We are actively determining the strengths and opportunities within our U.S. hybrid channel and acting accordingly to meet our growth objectives.
Consolidation Ramps as Uncertainty Hangs Over GMED/NUVA Deal
The second quarter of 2023 brought a notable bump in M&A activity as market conditions improve. The combination of Globus Medical and NuVasive would be the most consequential market shake-up in several years, but its future remains clouded, pending the next steps from the FTC.
Matt Trerotola, Enovis CEO
It is a more constructive environment than it was several years ago for M&A. I mean, very encouraging for us that [our recent deals] were done in a challenging M&A environment in terms of the strength of sellers. And now it’s a better M&A environment. We’re definitely excited about the capital that we have to deploy and the possibilities for what we can do with it.
Bryan Hanson, Zimmer Biomet CEO
From an M&A standpoint, our first priority is revenue growth and the diversification of the company into faster-growth markets. That may come with some near-term dilution, but we’re also going to be very conscious about driving P&L discipline and looking for accretion in a reasonable amount of time, let’s say, within the first two years. The priority is going to be about accelerating the overall company’s growth.
Chris Barry, NuVasive CEO
As far as the range of outcomes, clearly, the FTC reviewed the information that we provided and ultimately came back to us at some point. I’m confident in the Q3 [close] time frame because of everything I’ve said before; I don’t believe this is anti-competitive. I think there are lots of competitors. There’s a low entry bar for competitors coming into this space. And for all those reasons, the combination of us and Globus is much better for patients. It actually opens up the opportunity to further innovate and ultimately change patient outcomes, which is our focus as a company.
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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.
