Allograft implants are a $3.0 billion (annual sales) industry in the U.S. and Alachua, Florida-based Regeneration Technologies, Inc., (RTI), now known as RTI Surgical, Inc., was one of a handful of innovative companies (along with MTF, CryoLife and AlloSource) that pioneered the industry.
RTI’s original two innovations were engineered bone allografts and a tissue cleaning process, BioCleanse, which ensured that allografts could be safely and routinely implanted in any patient.
RTI sold its first share of common stock to the public in April 2000. The allograft industry was generating $410 million in annual revenues at the time and RTI accounted for $122 million or 30% of that total.
Since 2000, allograft industry sales have septupled (7x) and RTI has grown to $200 million in tissue (allograft and xenograft) sales and about $80 million in spine hardware sales. RTI is about 6% of the allograft market today.
This chart shows RTI’s sales and market value growth in the 18 years since going public in 2000.
RTI had a lot of activity in 18 years, but no forward motion.
Sales rose 128% over that time, but the value of the company fell 16%. RTI was worth less in 2017 than it was in 2000.
The company lost money in 10 of those 18 years.
If each year’s earnings or losses were added up, it would total a negative $250 million. The fastest growing category between 2000 and 2018 was marketing, general and administrative expenses, which rose 551%.
Over the course of those 18 years a handful of employees left to form innovative allograft companies based on living cell allografts, nerve allografts or amniotic tissue allografts. The combined market value of those companies, as we write these words, is $2.9 billion.
The board of directors finally decided to make a change in 2017. The former CEO, Brian Hutchison, was let go and Camille Farhat, a veteran leader and executive from GE, Medtronic, Baxter and American Medical Systems took on the job of leading and, yes, fixing Regeneration Technologies.
Since joining RTI, investor interest and confidence in the company appears to have made a small recovery. It could be a honeymoon, but it feels more durable than that. It is also noteworthy that Mr. Farhat’s compensation is tied to the stock price appreciating well beyond its current trading range.
Who is Camille Farhat and what is his plan for solving the puzzle that is RTI?
