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Most companies entered 2021 expecting that orthopedic sales would return to normal in the second half. However, players in the space started tempering expectations during successive waves of the delta and omicron variants.
Now that we’re through earnings season, we found fourth-quarter orthopedic sales above our expectations, given the market conditions. Unfortunately, much of omicron’s impact slipped into the first quarter of 2022.
Many orthopedic executives expect 2022 to bring all the same challenges we’ve seen previously. COVID surges, critical staff shortages and ongoing supply chain issues will remain headwinds for the foreseeable future.
Hospital Staffing Shortages a Wildcard for 2022
The pandemic exposed labor shortages in critical areas, particularly in healthcare. Zimmer Biomet CFO Suky Upadhyay said the impact of staffing shortages is challenging to read because the situation is unprecedented.
Based on informal surveys conducted by the company, about half of Zimmer Biomet’s polled surgeons reported staffing issues. On average, those hospital staffing issues caused a 10% reduction in procedure volume.
Leaders at Orthofix relayed a conversation with a high-volume surgeon. The surgeon had returned to normalized surgical volumes, but those cases now took him two shifts of staffing instead of one. Orthofix foresees staffing issues at three of its largest institutions persisting for 12 to 18 months.
ConMed CEO Curt Hartman said, “The biggest wildcard to me is hospital staffing. Healthcare worker fatigue is very evident and what that may mean for surgery schedules and overall hospital operations.”
Staffing shortages are costing orthopedic companies in other ways, as well. Smith+Nephew’s labor shortages at its Memphis manufacturing hub hurt its 2021 performance. Meanwhile, Conformis reported higher turnover than usual and increased compensation costs to acquire and retain the right talent.
Global Logistics Issues Straining Even Most Robust Supply Chains
Enovis, formerly DJO, incurred additional costs in 2021 through its commitment to not missing surgeries due to supply constraints. With the company in share-taking mode, CEO Matt Trerotola placed primary focus on supporting surgeons with on-time products.
However, Mr. Trerotola also noted the limited ability to pass through inflationary costs in the orthopedics market.
Even companies that have executed at high levels throughout the pandemic, like Stryker and Globus Medical, feel the mounting pressure despite robust supply chain strategies.
Globus Medical CEO Dave Demski said, “It’s not just chips. It’s that all components are challenging. It hasn’t cost us revenue now, but it’s certainly on our radar and making our life really hard. It’s a risk that’s out there for 2022.”
Companies like OrthoPediatrics avoided some negative impacts by limiting exposure to international supply. The company sources 98% of its raw material and inventory domestically. Even then, OrthoPediatrics sees pockets of inflation and extended lead times among some vendors.
Mixed Orthopedic Sales Outlook for 2022
Given commentary leading up to the close of 2021, we expected slightly softer results for the year. Overall, we estimate the market grew in the double digits compared to 2020 and about 1% compared to 2019.
However, by most accounts, the first quarter of 2022 could be ugly as much of the omicron impact hit in January. ConMed said that many of its customers began 2022 in worse shape than 2021. The company expects conditions to improve throughout the year, but is taking a wait-and-see approach.
Compared to last year, fewer executives were willing to predict how the market will recover.
Zimmer Biomet CEO Bryan Hanson said, “It’s not always the same mix of pressures between COVID and staffing. But, there is consistency in the overall pressure. So I’ve learned my lesson. I’m not going to predict this until I see firsthand proof in the marketplace.”
The 2022 guidance provided by most companies assumes some amount of ongoing disruption throughout the year. We expect the market will further stabilize in 2022, but segments remain slightly below historical growth rates.
Total Orthopedic Sales by Public Company for FY21 ($Millions)
| Company | FY21 | FY20 | $ Chg | % Chg |
|---|---|---|---|---|
| Stryker | $8,969.8 | $7,193.7 | $1,776.1 | 24.7% |
| DePuy Synthes | $8,586.5 | $7,762.0 | $824.5 | 10.6% |
| Zimmer Biomet | $7,069.2 | $6,391.1 | $678.1 | 10.6% |
| Smith+Nephew | $3,644.6 | $3,194.4 | $450.2 | 14.1% |
| Medtronic | $3,109.4 | $2,738.5 | $370.9 | 13.5% |
| NuVasive | $1,139.0 | $1,050.6 | $88.4 | 8.4% |
| Globus Medical | $958.1 | $789.0 | $169.1 | 21.4% |
| Orthofix | $464.5 | $406.6 | $57.9 | 14.2% |
| DJO | $463.0 | $313.7 | $149.3 | 47.6% |
| Medacta | $443.0 | $369.0 | $74.0 | 20% |
| ConMed | $438.4 | $374.7 | $63.7 | 17% |
| Bioventus | $413.2 | $321.2 | $92.0 | 28.6% |
| Sanofi | $334.3 | $234.2 | $100.0 | 42.7% |
| ATEC | $243.2 | $144.9 | $98.4 | 67.9% |
| SeaSpine | $191.5 | $154.3 | $37.1 | 24% |
| Medartis | $180.7 | $144.2 | $36.5 | 25.3% |
| KYOCERA | $179.9 | $162.8 | $17.1 | 10.5% |
| Japan MDM | $159.0 | $171.8 | ($12.8) | (7.5%) |
| Paragon 28 | $147.5 | $111.0 | $36.5 | 32.9% |
| Seikagaku | $142.0 | $117.5 | $24.5 | 20.9% |
| Anika Therapeutics | $138.1 | $122.4 | $15.7 | 12.8% |
| Amplitude Surgical | $119.2 | $102.9 | $16.3 | 15.8% |
| Vericel | $111.6 | $91.6 | $19.9 | 21.8% |
| Conformis | $99.9 | $68.8 | $31.1 | 45.2% |
| Orthopediatrics | $98.0 | $71.1 | $27.0 | 37.9% |
| Treace Medical Concepts | $94.4 | $57.4 | $37.1 | 64.6% |
| Surgalign | $90.5 | $101.7 | ($11.2) | (11.1%) |
| SI-BONE | $90.2 | $73.4 | $16.8 | 22.8% |
| Xtant | $55.1 | $53.2 | $2.0 | 3.7% |
| BoneSupport | $25.5 | $21.7 | $3.8 | 17.7% |
| Implanet | $9.4 | $7.3 | $2.1 | 28.7% |
| Safe Orthopaedics | $5.7 | $5.6 | $0.1 | 1% |
| Episurf | $0.8 | $0.6 | $0.2 | 30.2% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
Most companies entered 2021 expecting that orthopedic sales would return to normal in the second half. However, players in the space started tempering expectations during successive waves of the delta and omicron variants.
Now that we're through earnings season, we found fourth-quarter orthopedic sales above our expectations, given the...
Most companies entered 2021 expecting that orthopedic sales would return to normal in the second half. However, players in the space started tempering expectations during successive waves of the delta and omicron variants.
Now that we’re through earnings season, we found fourth-quarter orthopedic sales above our expectations, given the market conditions. Unfortunately, much of omicron’s impact slipped into the first quarter of 2022.
Many orthopedic executives expect 2022 to bring all the same challenges we’ve seen previously. COVID surges, critical staff shortages and ongoing supply chain issues will remain headwinds for the foreseeable future.
Hospital Staffing Shortages a Wildcard for 2022
The pandemic exposed labor shortages in critical areas, particularly in healthcare. Zimmer Biomet CFO Suky Upadhyay said the impact of staffing shortages is challenging to read because the situation is unprecedented.
Based on informal surveys conducted by the company, about half of Zimmer Biomet’s polled surgeons reported staffing issues. On average, those hospital staffing issues caused a 10% reduction in procedure volume.
Leaders at Orthofix relayed a conversation with a high-volume surgeon. The surgeon had returned to normalized surgical volumes, but those cases now took him two shifts of staffing instead of one. Orthofix foresees staffing issues at three of its largest institutions persisting for 12 to 18 months.
ConMed CEO Curt Hartman said, “The biggest wildcard to me is hospital staffing. Healthcare worker fatigue is very evident and what that may mean for surgery schedules and overall hospital operations.”
Staffing shortages are costing orthopedic companies in other ways, as well. Smith+Nephew’s labor shortages at its Memphis manufacturing hub hurt its 2021 performance. Meanwhile, Conformis reported higher turnover than usual and increased compensation costs to acquire and retain the right talent.
Global Logistics Issues Straining Even Most Robust Supply Chains
Enovis, formerly DJO, incurred additional costs in 2021 through its commitment to not missing surgeries due to supply constraints. With the company in share-taking mode, CEO Matt Trerotola placed primary focus on supporting surgeons with on-time products.
However, Mr. Trerotola also noted the limited ability to pass through inflationary costs in the orthopedics market.
Even companies that have executed at high levels throughout the pandemic, like Stryker and Globus Medical, feel the mounting pressure despite robust supply chain strategies.
Globus Medical CEO Dave Demski said, “It’s not just chips. It’s that all components are challenging. It hasn’t cost us revenue now, but it’s certainly on our radar and making our life really hard. It’s a risk that’s out there for 2022.”
Companies like OrthoPediatrics avoided some negative impacts by limiting exposure to international supply. The company sources 98% of its raw material and inventory domestically. Even then, OrthoPediatrics sees pockets of inflation and extended lead times among some vendors.
Mixed Orthopedic Sales Outlook for 2022
Given commentary leading up to the close of 2021, we expected slightly softer results for the year. Overall, we estimate the market grew in the double digits compared to 2020 and about 1% compared to 2019.
However, by most accounts, the first quarter of 2022 could be ugly as much of the omicron impact hit in January. ConMed said that many of its customers began 2022 in worse shape than 2021. The company expects conditions to improve throughout the year, but is taking a wait-and-see approach.
Compared to last year, fewer executives were willing to predict how the market will recover.
Zimmer Biomet CEO Bryan Hanson said, “It’s not always the same mix of pressures between COVID and staffing. But, there is consistency in the overall pressure. So I’ve learned my lesson. I’m not going to predict this until I see firsthand proof in the marketplace.”
The 2022 guidance provided by most companies assumes some amount of ongoing disruption throughout the year. We expect the market will further stabilize in 2022, but segments remain slightly below historical growth rates.
Total Orthopedic Sales by Public Company for FY21 ($Millions)
| Company | FY21 | FY20 | $ Chg | % Chg |
|---|---|---|---|---|
| Stryker | $8,969.8 | $7,193.7 | $1,776.1 | 24.7% |
| DePuy Synthes | $8,586.5 | $7,762.0 | $824.5 | 10.6% |
| Zimmer Biomet | $7,069.2 | $6,391.1 | $678.1 | 10.6% |
| Smith+Nephew | $3,644.6 | $3,194.4 | $450.2 | 14.1% |
| Medtronic | $3,109.4 | $2,738.5 | $370.9 | 13.5% |
| NuVasive | $1,139.0 | $1,050.6 | $88.4 | 8.4% |
| Globus Medical | $958.1 | $789.0 | $169.1 | 21.4% |
| Orthofix | $464.5 | $406.6 | $57.9 | 14.2% |
| DJO | $463.0 | $313.7 | $149.3 | 47.6% |
| Medacta | $443.0 | $369.0 | $74.0 | 20% |
| ConMed | $438.4 | $374.7 | $63.7 | 17% |
| Bioventus | $413.2 | $321.2 | $92.0 | 28.6% |
| Sanofi | $334.3 | $234.2 | $100.0 | 42.7% |
| ATEC | $243.2 | $144.9 | $98.4 | 67.9% |
| SeaSpine | $191.5 | $154.3 | $37.1 | 24% |
| Medartis | $180.7 | $144.2 | $36.5 | 25.3% |
| KYOCERA | $179.9 | $162.8 | $17.1 | 10.5% |
| Japan MDM | $159.0 | $171.8 | ($12.8) | (7.5%) |
| Paragon 28 | $147.5 | $111.0 | $36.5 | 32.9% |
| Seikagaku | $142.0 | $117.5 | $24.5 | 20.9% |
| Anika Therapeutics | $138.1 | $122.4 | $15.7 | 12.8% |
| Amplitude Surgical | $119.2 | $102.9 | $16.3 | 15.8% |
| Vericel | $111.6 | $91.6 | $19.9 | 21.8% |
| Conformis | $99.9 | $68.8 | $31.1 | 45.2% |
| Orthopediatrics | $98.0 | $71.1 | $27.0 | 37.9% |
| Treace Medical Concepts | $94.4 | $57.4 | $37.1 | 64.6% |
| Surgalign | $90.5 | $101.7 | ($11.2) | (11.1%) |
| SI-BONE | $90.2 | $73.4 | $16.8 | 22.8% |
| Xtant | $55.1 | $53.2 | $2.0 | 3.7% |
| BoneSupport | $25.5 | $21.7 | $3.8 | 17.7% |
| Implanet | $9.4 | $7.3 | $2.1 | 28.7% |
| Safe Orthopaedics | $5.7 | $5.6 | $0.1 | 1% |
| Episurf | $0.8 | $0.6 | $0.2 | 30.2% |
Mike Evers is ORTHOWORLD’s Digital Content Strategist. He can be reached by email.
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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.
