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Orthofix Continues Turnaround
Orthofix Internatinal N.V.'s President and CEO, Alan Milinazzo told analysts on July 28 that while investors were concerned about the growth rate of the spinal implants market, Orthofix was doing just fine.
The company's spine business grew by 11% in the second quarter of 2010 to $78.7 million. Total company revenue of $142 million for the quarter was an increase of 4% overall from the year's previous quarter.
|
Orthofix |
2Q10 |
|
|
|
Sales $mm |
% Change |
|
Total Sales |
$142.8 |
up 4% |
|
Spine Stim |
$44.9 |
up 12% |
|
Implants/Biologics |
$33.8 |
up 10% |
|
Total Spine |
$78.7 |
up 11% |
|
Orthopedic |
$36.6 |
up 12% |
|
Sports Medicine |
$23.1 |
down 6% |
|
Other |
$4.4 |
down 55% |
Source: Orthofix
Milinazzo said, “Our strong second quarter results were driven primarily by another quarter of improved operating results at our Spinal Implants and Biologics division, as well as continued solid performance from our Spine Stimulation and Orthopedics divisions. With the move into our expanded new facility in Texas and our integration plan complete, we have already begun to benefit from the synergies. We will continue to focus on steps to improve our operating margins even further.”
Share Taker
Canaccord analyst Bill Plovanic said the company’s spinal implants business was benefitting from the current environment where hospitals are opening bidding to multiple competitors in order to drive down prices. "This environment has allowed Orthofix to garner new business faster than normally is available," said Plovanic in an investor note.
Plovanic said the company's spine business continues to be a share taker and is not being impacted by the current pricing pressures seen throughout the industry.
Market Opportunities
"The environment has created an opportunity for smaller players with minimal market share and broad product lines to penetrate new accounts. As hospitals put out RFPs (request for proposals), opportunities are created to bid on business that previously was not open for competition. We believe this is positive for Orthofix as it can gain market share at a faster rate than it was before. Specifically, management noted considerable traction from its Firebird and Pillar products," added Plovanic.
Spine Growth Driver
The analyst also noted that the Blackstone business "had been a thorn in the company’s side through 2007 and 2008 with flat to decelerating sales of implants slightly offset by biologics. However, in 2009 that trend reversed itself and spine became a growth driver for the company of both revenues and operating profits."