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The second quarter of 2021 brought continued market recovery from the COVID surge of late-2020. Most players exceeded performance expectations but cautioned that the third quarter would likely slow down due to seasonality and the Delta variant. Beyond those market dynamics, commentary from executives at public orthopedic companies also focused on acquisitions, knee replacement sales performance and enabling technology’s impact.
ConMed Sees Far Different Backlog Recovery This Time
“Back in January, there was a prevailing thought out there in the market that the Q3 vacations that we see typically seasonally in this space would be reduced as physicians were anxious to make up for lost procedures from last year. I think that feeling has muted a little bit in the marketplace from what we’re hearing, and everybody sees it in their own circle of friends and family, everybody’s very anxious to take vacations and get back together with family.” – Curt Hartman, ConMed CEO
After the market bottomed out in the second quarter of 2020, the third quarter brought a steep recovery as surgeons churned through freshly accrued backlogs. This year is different, however. With the growing sentiment that we’re not merely a good quarter or half away from COVID being “over,” there is less urgency to immediately recoup postponed cases. ConMed, like most companies, predicts normal or even greater seasonality for the third quarter of 2021. While there is continued bullishness about the second half overall, the general sense among orthopedic players is that the third quarter will be flat compared to the second quarter.
ConMed reported 2Q21 orthopedic revenue of $107.9 million, +78.4% vs. 2Q20. Compared to the second quarter of 2019, the company’s sales declined -6.8%.
Stryker Gains Infusion of Leadership Talent in Wright Acquisition
“We knew Wright had a good business and culture like ours. But there’s been some pleasant surprises along the way. Their talent is excellent. We often buy companies for their products, but then must infuse a lot of our management. Wright is a leader for upper extremities. They are leading our lower extremities business. Our head of knees came from Wright Medical. I would also point to their key opinion leaders, and I’d say that they are better key opinion leaders than we had within Stryker.” – Kevin Lobo, Stryker CEO
Stryker’s competitors eagerly awaited disruption from the company’s integration of Wright Medical, but so far things have proceeded smoothly. Wright Medical’s volatile quarters just before the Stryker announcement largely stabilized during the long closing period of the acquisition. The combined organizations make Stryker the market leader for extremities, where the company previously lacked scale relative to its other product lines. For Stryker’s overall Trauma and Extremities business, growth had decelerated from 2017 through 2019, but the addition of Wright offers an infusion of growth.
Stryker reported 2Q21 orthopedic revenue of $2,263.6 million, +77.3% vs. 2Q20. Compared to the second quarter of 2019, the company grew by +19.2%.
DJO Sets Sights on $1 Billion for Recon Business
“With the addition of Mathys, we now have a clear path to grow to $1 billion in the next five years. We are confident that our proven surgical offense that has delivered 5-plus years of strong double-digit growth will continue to deliver as we go forward. We extended our high-growth extremities core into the fast-growing foot and ankle segment. And now with the Mathys acquisition, we have doubled the addressable market to drive our clinically superior technologies globally. Additionally, we have a very healthy funnel of recon bolt-on acquisition opportunities that could get us to the $1 billion mark even faster.” – Brady Shirley, DJO CEO
DJO’s core strength in joint replacement has been supplemented with the operational efficiencies and financial flexibility offered by owner Colfax Corporation. Since late-2020, the company made three acquisitions to rapidly build out a foot and ankle business expected to generate $100 million annually within three years. That flurry of activity culminated in a fourth acquisition with the purchase of Mathys, giving DJO a formidable international presence and ample cross-selling opportunities. DJO is about halfway to its $1 billion Recon business milestone. We expect the company to remain active with small to mid-sized acquisitions to hasten the ascent.
DJO reported 2Q21 orthopedic revenue of $131.2 million, +54.1% vs. 2Q20. Using the company’s favored comparison metric, sales per day, DJO grew in the low single digits in the second quarter compared to the same period in 2019
Smith+Nephew Faces Questions About Fate of Knee Franchise
“Divestitures are not a consideration of ours at this stage. I think the three franchises in their own markets have a good position. They have growth opportunities. They have potential. We have a great beachhead there. I think it’ll continue to serve very well as the markets in general, both in orthopedics and in sports, continue to move to more decentralized settings, to more specialized settings, and then we are well-positioned to leverage that.” – Roland Diggelmann, Smith+Nephew CEO
Smith+Nephew’s knee franchise began losing momentum in early 2018 with only a few brief forays into market average growth since then. While the pandemic environment and global supply chain issues impacted all orthopedic players, Smith+Nephew’s knee segment suffered more than that of its peers. We see this situation differently than Zimmer Biomet’s decision to spin off its spine business. A key consideration in that move was the lack of synergy between spine and the rest of ortho. Smith+Nephew is uniquely positioned in the ASC space compared to most peers and could realize great synergies in its knee business there over time. The addition of a cementless knee and more traction for its CORI system could get the company’s knee franchise over the hump until ASCs reach critical mass.
Smith+Nephew reported 2Q21 orthopedic revenue of $930.8 million, +55% vs. 2Q20. Compared to 2Q19, the company grew +2.6% for the quarter.
Zimmer Biomet’s “Tip of the Spear” Revision Knee
“Specifically on revision, the reason why I bring it up is typically in somebody’s practice, you get about 10% of the overall revenue associated with revision and more like 90% comes from your typical total knee. Many times, we use that revision as a tip of the spear to convert a surgeon that is a competitive surgeon because they love our revision system. That gets us in the house then to try to pursue that much larger portion of the business, which is your standard knee.” – Bryan Hanson, Zimmer Biomet CEO
While the ROSA robotic system certainly contributed to Zimmer Biomet’s improving knee replacement business, it wasn’t the only factor. The company has had success using its revision knee products as a wedge to pry open competitive accounts. Zimmer Biomet’s knee replacement sales hit then exceeded market growth in the second half of 2019, but COVID’s impact since then has obfuscated the company’s progress. Given the current market dynamics, we think Zimmer Biomet can regain its 2019 pace for knees by the end of this year.
Zimmer Biomet reported 2Q21 orthopedic revenue of $1,812.8 million, +64.6% vs. 2Q20. Compared to the second quarter of 2019, the company’s orthopedic revenue increased +1.3%.
Globus Medical Enters “Virtuous Cycle” of Robotics
“We’re beginning to see several virtuous cycles emerge all emanating from the value created by the adoption of our robotic technology. Surgeons who utilize Excelsius master increasingly complex pathologies because of the technology and may even perform surgery in situations that would be considered inoperable without robotic assistance. These surgeons endorse Excelsius to their peers, leading to additional robot sales. Surgeons who use Excelsius gain exposure to our entire line of innovative spinal implants and have begun to utilize Globus for non-robotic cases as well. We have surgeons who may not have initially championed the purchase of the robot, but after seeing the success of their colleagues also adopt the technology, which has driven Globus implant usage and led to the purchase of additional robots. Finally, we have attracted successful competitive reps who after losing a portion of the business to a robotic conversion had decided to join the team with the best technology, bringing additional business with them.” – Dave Demski, Globus Medical CEO
Here, Globus Medical describes something like the platonic ideal of robotics pull through. These comments notwithstanding, the barrier to realizing these types of positive feedback loops tends to be utilization. Orthopedic robotics have low penetration in the market, and usage rates of those systems tend to be low as well. Still, Globus Medical’s enabling technology entered a new gear over the last three quarters. In that time, the company averaged close to $18 million in quarter enabling technology sales, well over its historical average of $12 million per quarter.
Globus Medical reported 2Q21 orthopedic revenue of $251 million, +68.6% vs. 2Q20. Compared to 2Q19, the company grew an impressive +29% this quarter.
NuVasive Reminds Us of Pulse’s Promised Potential
“Pulse has the ability to transform spine surgery and the trajectory of the company. The evolution from a spinal hardware company to a provider of a comprehensive spine solution is supported by this first-of-its-kind technology. Let me be clear, Pulse is not just a navigation system. Pulse is an integrated platform with multiple applications that can be utilized in 100% of spine procedures. Because of its participation throughout the entire operating room workflow and its extensible architecture for future applications, Pulse has the ability to disrupt the spine market. NuVasive is the industry leader in surgeon education and training. Our clinical professional development programs play a pivotal role in helping surgeons adopt our less invasive surgical techniques and enabling technologies.” – Chris Barry, NuVasive CEO
The Pulse saga is a prime example of how the pandemic exposed or exacerbated existing problems for orthopedic players. NuVasive announced the delay of its Pulse system in 4Q19 and the subsequent pandemic only amplified those challenges. The issues with Pulse can tint the perception of NuVasive’s performance as a whole, which has been strong and steady. The company’s spinal hardware products closed 2019 with +8% growth, well above market average, and are ahead of its 2019 pace so far this year. When Pulse does fully launch, its greater applicability to all spine procedures could be a game-changer for NuVasive.
NuVasive reported 2Q21 orthopedic revenue of $294.8 million, +44.8% vs. 2Q20. Compared to the second quarter of 2019, the company grew by +0.9%.
Surgalign Declares Itself a Software Company
“When I talk about transforming our organization, the key to understand is, we’re a software company now.” – Terry Rich, Surgalign CEO
While many players, especially in the spine market, have talked about evolving into technology companies, they’ve been careful to carve out a place for implants in those comments. Surgalign seems ready to do away with metal and plastic entirely. The company is extremely bullish on the potential for its Holo platform to transform orthopedics and other healthcare markets. Surgalign’s spinal business generates around $100 million annually between implants and biologics, however, it is burdened with supply issues. The company said it is approximately a quarter behind schedule in its separation from RTI. Should the Holo platform gain traction, it could make sense for Surgalign to divest its implant business.
Surgalign reported 2Q21 orthopedic revenue of $24.8 million, +20.9% vs. 2Q20. However, the company declined -24.2% compared to 2Q19.
Mike Evers is ORTHOWORLD’s Digital Content Strategist.
The second quarter of 2021 brought continued market recovery from the COVID surge of late-2020. Most players exceeded performance expectations but cautioned that the third quarter would likely slow down due to seasonality and the Delta variant. Beyond those market dynamics, commentary from executives at public orthopedic companies also focused on...
The second quarter of 2021 brought continued market recovery from the COVID surge of late-2020. Most players exceeded performance expectations but cautioned that the third quarter would likely slow down due to seasonality and the Delta variant. Beyond those market dynamics, commentary from executives at public orthopedic companies also focused on acquisitions, knee replacement sales performance and enabling technology’s impact.
ConMed Sees Far Different Backlog Recovery This Time
“Back in January, there was a prevailing thought out there in the market that the Q3 vacations that we see typically seasonally in this space would be reduced as physicians were anxious to make up for lost procedures from last year. I think that feeling has muted a little bit in the marketplace from what we’re hearing, and everybody sees it in their own circle of friends and family, everybody’s very anxious to take vacations and get back together with family.” – Curt Hartman, ConMed CEO
After the market bottomed out in the second quarter of 2020, the third quarter brought a steep recovery as surgeons churned through freshly accrued backlogs. This year is different, however. With the growing sentiment that we’re not merely a good quarter or half away from COVID being “over,” there is less urgency to immediately recoup postponed cases. ConMed, like most companies, predicts normal or even greater seasonality for the third quarter of 2021. While there is continued bullishness about the second half overall, the general sense among orthopedic players is that the third quarter will be flat compared to the second quarter.
ConMed reported 2Q21 orthopedic revenue of $107.9 million, +78.4% vs. 2Q20. Compared to the second quarter of 2019, the company’s sales declined -6.8%.
Stryker Gains Infusion of Leadership Talent in Wright Acquisition
“We knew Wright had a good business and culture like ours. But there’s been some pleasant surprises along the way. Their talent is excellent. We often buy companies for their products, but then must infuse a lot of our management. Wright is a leader for upper extremities. They are leading our lower extremities business. Our head of knees came from Wright Medical. I would also point to their key opinion leaders, and I’d say that they are better key opinion leaders than we had within Stryker.” – Kevin Lobo, Stryker CEO
Stryker’s competitors eagerly awaited disruption from the company’s integration of Wright Medical, but so far things have proceeded smoothly. Wright Medical’s volatile quarters just before the Stryker announcement largely stabilized during the long closing period of the acquisition. The combined organizations make Stryker the market leader for extremities, where the company previously lacked scale relative to its other product lines. For Stryker’s overall Trauma and Extremities business, growth had decelerated from 2017 through 2019, but the addition of Wright offers an infusion of growth.
Stryker reported 2Q21 orthopedic revenue of $2,263.6 million, +77.3% vs. 2Q20. Compared to the second quarter of 2019, the company grew by +19.2%.
DJO Sets Sights on $1 Billion for Recon Business
“With the addition of Mathys, we now have a clear path to grow to $1 billion in the next five years. We are confident that our proven surgical offense that has delivered 5-plus years of strong double-digit growth will continue to deliver as we go forward. We extended our high-growth extremities core into the fast-growing foot and ankle segment. And now with the Mathys acquisition, we have doubled the addressable market to drive our clinically superior technologies globally. Additionally, we have a very healthy funnel of recon bolt-on acquisition opportunities that could get us to the $1 billion mark even faster.” – Brady Shirley, DJO CEO
DJO’s core strength in joint replacement has been supplemented with the operational efficiencies and financial flexibility offered by owner Colfax Corporation. Since late-2020, the company made three acquisitions to rapidly build out a foot and ankle business expected to generate $100 million annually within three years. That flurry of activity culminated in a fourth acquisition with the purchase of Mathys, giving DJO a formidable international presence and ample cross-selling opportunities. DJO is about halfway to its $1 billion Recon business milestone. We expect the company to remain active with small to mid-sized acquisitions to hasten the ascent.
DJO reported 2Q21 orthopedic revenue of $131.2 million, +54.1% vs. 2Q20. Using the company’s favored comparison metric, sales per day, DJO grew in the low single digits in the second quarter compared to the same period in 2019
Smith+Nephew Faces Questions About Fate of Knee Franchise
“Divestitures are not a consideration of ours at this stage. I think the three franchises in their own markets have a good position. They have growth opportunities. They have potential. We have a great beachhead there. I think it’ll continue to serve very well as the markets in general, both in orthopedics and in sports, continue to move to more decentralized settings, to more specialized settings, and then we are well-positioned to leverage that.” – Roland Diggelmann, Smith+Nephew CEO
Smith+Nephew’s knee franchise began losing momentum in early 2018 with only a few brief forays into market average growth since then. While the pandemic environment and global supply chain issues impacted all orthopedic players, Smith+Nephew’s knee segment suffered more than that of its peers. We see this situation differently than Zimmer Biomet’s decision to spin off its spine business. A key consideration in that move was the lack of synergy between spine and the rest of ortho. Smith+Nephew is uniquely positioned in the ASC space compared to most peers and could realize great synergies in its knee business there over time. The addition of a cementless knee and more traction for its CORI system could get the company’s knee franchise over the hump until ASCs reach critical mass.
Smith+Nephew reported 2Q21 orthopedic revenue of $930.8 million, +55% vs. 2Q20. Compared to 2Q19, the company grew +2.6% for the quarter.
Zimmer Biomet’s “Tip of the Spear” Revision Knee
“Specifically on revision, the reason why I bring it up is typically in somebody’s practice, you get about 10% of the overall revenue associated with revision and more like 90% comes from your typical total knee. Many times, we use that revision as a tip of the spear to convert a surgeon that is a competitive surgeon because they love our revision system. That gets us in the house then to try to pursue that much larger portion of the business, which is your standard knee.” – Bryan Hanson, Zimmer Biomet CEO
While the ROSA robotic system certainly contributed to Zimmer Biomet’s improving knee replacement business, it wasn’t the only factor. The company has had success using its revision knee products as a wedge to pry open competitive accounts. Zimmer Biomet’s knee replacement sales hit then exceeded market growth in the second half of 2019, but COVID’s impact since then has obfuscated the company’s progress. Given the current market dynamics, we think Zimmer Biomet can regain its 2019 pace for knees by the end of this year.
Zimmer Biomet reported 2Q21 orthopedic revenue of $1,812.8 million, +64.6% vs. 2Q20. Compared to the second quarter of 2019, the company’s orthopedic revenue increased +1.3%.
Globus Medical Enters “Virtuous Cycle” of Robotics
“We’re beginning to see several virtuous cycles emerge all emanating from the value created by the adoption of our robotic technology. Surgeons who utilize Excelsius master increasingly complex pathologies because of the technology and may even perform surgery in situations that would be considered inoperable without robotic assistance. These surgeons endorse Excelsius to their peers, leading to additional robot sales. Surgeons who use Excelsius gain exposure to our entire line of innovative spinal implants and have begun to utilize Globus for non-robotic cases as well. We have surgeons who may not have initially championed the purchase of the robot, but after seeing the success of their colleagues also adopt the technology, which has driven Globus implant usage and led to the purchase of additional robots. Finally, we have attracted successful competitive reps who after losing a portion of the business to a robotic conversion had decided to join the team with the best technology, bringing additional business with them.” – Dave Demski, Globus Medical CEO
Here, Globus Medical describes something like the platonic ideal of robotics pull through. These comments notwithstanding, the barrier to realizing these types of positive feedback loops tends to be utilization. Orthopedic robotics have low penetration in the market, and usage rates of those systems tend to be low as well. Still, Globus Medical’s enabling technology entered a new gear over the last three quarters. In that time, the company averaged close to $18 million in quarter enabling technology sales, well over its historical average of $12 million per quarter.
Globus Medical reported 2Q21 orthopedic revenue of $251 million, +68.6% vs. 2Q20. Compared to 2Q19, the company grew an impressive +29% this quarter.
NuVasive Reminds Us of Pulse’s Promised Potential
“Pulse has the ability to transform spine surgery and the trajectory of the company. The evolution from a spinal hardware company to a provider of a comprehensive spine solution is supported by this first-of-its-kind technology. Let me be clear, Pulse is not just a navigation system. Pulse is an integrated platform with multiple applications that can be utilized in 100% of spine procedures. Because of its participation throughout the entire operating room workflow and its extensible architecture for future applications, Pulse has the ability to disrupt the spine market. NuVasive is the industry leader in surgeon education and training. Our clinical professional development programs play a pivotal role in helping surgeons adopt our less invasive surgical techniques and enabling technologies.” – Chris Barry, NuVasive CEO
The Pulse saga is a prime example of how the pandemic exposed or exacerbated existing problems for orthopedic players. NuVasive announced the delay of its Pulse system in 4Q19 and the subsequent pandemic only amplified those challenges. The issues with Pulse can tint the perception of NuVasive’s performance as a whole, which has been strong and steady. The company’s spinal hardware products closed 2019 with +8% growth, well above market average, and are ahead of its 2019 pace so far this year. When Pulse does fully launch, its greater applicability to all spine procedures could be a game-changer for NuVasive.
NuVasive reported 2Q21 orthopedic revenue of $294.8 million, +44.8% vs. 2Q20. Compared to the second quarter of 2019, the company grew by +0.9%.
Surgalign Declares Itself a Software Company
“When I talk about transforming our organization, the key to understand is, we’re a software company now.” – Terry Rich, Surgalign CEO
While many players, especially in the spine market, have talked about evolving into technology companies, they’ve been careful to carve out a place for implants in those comments. Surgalign seems ready to do away with metal and plastic entirely. The company is extremely bullish on the potential for its Holo platform to transform orthopedics and other healthcare markets. Surgalign’s spinal business generates around $100 million annually between implants and biologics, however, it is burdened with supply issues. The company said it is approximately a quarter behind schedule in its separation from RTI. Should the Holo platform gain traction, it could make sense for Surgalign to divest its implant business.
Surgalign reported 2Q21 orthopedic revenue of $24.8 million, +20.9% vs. 2Q20. However, the company declined -24.2% compared to 2Q19.
Mike Evers is ORTHOWORLD’s Digital Content Strategist.
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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.
