Mr. Farhat’s tenure in orthopedics was not long. Just 3 years. Yet, his effect on one company, RTI Surgical, Inc. was profound.
We spoke to him, fresh from RTI Surgical’s announcement that the sale of RTI’s OEM business had closed, the name was changing to Surgalign Spine Technologies, Inc. to reflect its sole focus on spinal implants and he was retiring. We asked the obvious question—what would he do for an encore?
After taking a few months off, he said, he’d likely apply his considerable talents to addressing illiteracy and hunger.
Two things are true about Camille Farhat; he goes after big problems and he finds innovative ways to solve them.
The Insolvable Problem Known as RTI Surgical
Within orthopedics, Mr. Farhat’s legacy is based on the three-year transformation of perennial underperformer, RTI Surgical. RTI, which was founded by Jamie Groomes from the University of Florida in 1997, was one of the founding companies (along with MTF, CryoLife and AlloSource) of the $3 billion (annual sales) allograft life sciences 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.
Within a year, Jamie was replaced as CEO and, ultimately, eased out by “professional managers.”
Since 2000, allograft industry sales have septupled (7x) and RTI reached $200 million in tissue (allograft and xenograft) sales and about $80 million in spine hardware sales the year before Farhat joined.
This chart shows RTI’s sales and market value growth in the 18 years before Farhat.
The management team that replaced Groomes created a lot of RTI activity in those 18 years, but no forward motion. They diversified beyond allograft into multiple new markets, including spinal hardware, but with limited connectivity and depth to support such expansion. In addition, they placed costly bets in the pipeline that failed to materialize in a meaningful way. They grew sales 128%, but marketing, general and administrative expenses soared 551%. The company lost money in 10 of its first 18 years and was worth 16% less in 2017 than when it went public in 2000.
Over the course of RTI’s pre-Farhat 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 over $1 billion. Notably, one of those companies, Axogen, was founded by Jamie Groomes and currently carries a market value of $490 million—2x RTI’s value at the time Farhat joined the firm.
