Orthofix International N.V. has put its Blackstone Medical, Inc. legal problems to bed by executing a $32 million final settlement with the U.S. Government.
Orthofix acquired Blackstone in 2006 and will pay for the entire settlement with funds from an escrow fund set aside when it purchased the company.
The settlement agreement, entered into on October 29, 2012, was between the U.S. Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services; the TRICARE Management Activity, through its General Counsel; the Office of Personnel Management, in its capacity as administrator of the Federal Employees Health Benefits Program; the United States Department of Veteran Affairs and Blackstone Medical, Inc.
Whistleblower Settlement
The settlement also includes resolution of the whistleblower lawsuits filed by Susan Hutcheson and Philip Brown. Hutcheson will reportedly receive $8 million as her share of the settlement amount.
Orthofix also agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.
Bob Vaters, Orthofix’s president and CEO noted that the company also finalized a Foreign Corrupt Practices matter in the third quarter of 2012. “Orthofix has made significant improvement to its compliance practices, and I look forward to a continued stronger focus on the company’s operations, including investments in R&D to position the company for long-term growth.”
Third Quarter Sales and Earnings
Vater’s comments came on the heels of the company’s third quarter sales results which showed constant currency growth of 1% on $114.8 million in sales. Currency negatively impacted net sales by 3%. Adjusted net income climbed by 13% during the quarter, prompting Vaters to note the company’s ability to achieve operating margin leverage while navigating through a challenging environment. “Finishing the quarter with a net cash balance and continued strong adjusted earnings, we are well positioned to make product portfolio and distribution investments that will drive long-term growth.”
