10+ orthopedic products from AAOS 2019 you need to know

Attendees line up to register for the American Academy of Orthopaedic Surgeons annual meeting in Las Vegas this week. More than 30,000 people were expected. (Image from AAOS)

The American Academy of Orthopaedic Surgeons (AAOS) annual meeting in Las Vegas is abuzz about robotics, according to industry analysts from SVB Leerink.

While the SVB Leerink analysts termed Stryker’s  (NYSE:SYK) Mako platform “best-in-class,” it’s an expanding category. Other major orthopedics companies are using this week’s AAOS meeting to introduce new offerings or tout updates to existing ones.

Johnson & Johnson (NYSE:JNJ), for example, said it plans to debut its Orthotaxy total knee system in 2020, with spine, hip and eventually shoulder indications likely to follow. J&J bought the French robot-assisted surgery startup in 2018, and didn’t have any photos of the prototype to share. But the analysts said it attaches to the patient table and includes a saw/bone cutting capability, like Mako. Unlike Mako, it will not have haptic capability. Rather, it gets the surgeon locked into a cutting plane and preserves the surgeon’s control of the saw (side to side and front to back) on that plane.

Get the full story on our sister site, Medical Design & Outsourcing.

 

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Colfax slides on $3.2B DJO Global buy, plan to ditch air & gas handling biz

DJO GlobalColfax (NYSE:CFX) shars took a hit today after the industrial giant offered $3.15 billion to acquire orthopedics company DJO Global and said it plans to sell off its air & gas handling business.

Vista, Calif.-based DJO, which is owned by a private equity consortium headed up by Blackstone, last week posted losses of -$29.5 million on sales of $294.1 million for the three months ended Sept. 29, marking a red ink expansion of 30.0% on sales growth of 1.1% compared with Q3 2017.

“The acquisition of DJO is a compelling next step in the strategic evolution of Colfax that creates a new growth platform in the high-margin orthopedic solutions market,” president & CEO Matt Trerotola said in prepared remarks. “As a clear market leader in bracing and rehabilitation systems – with a track record of innovative new products, globally recognized brands, and a diverse product portfolio – DJO is well-positioned to benefit from secular trends driven by changing demographics and increased preventive healthcare. This transaction reflects our strategic intent to diversify our portfolio and end-market exposure, reduce cyclicality, and increase profitability. We see significant opportunities to apply our proven Colfax business system across DJO to create a continuous improvement culture, further improve productivity and margins, and accelerate innovation and new product development.

“We are committed to reducing leverage and restoring balance sheet flexibility near-term and will explore strategic options for our air & gas handling business. Longer-term, we see tremendous opportunities to build our new medical technology platform with additional investment. We are excited to welcome DJO’s strong management team and talented associates to the Colfax family,” Trerotola said.

“Joining Colfax is a win for our customers, and all DJO stakeholders,” added DJO president & CEO Brady Shirley, who will lead the DJO business after the deal closes, expected during the first quarter next year. “Colfax has the financial strength, experience, and proven business system to support our operational performance and growth. Importantly, they are committed to our mission to get and keep people moving, and we are confident that the Colfax team’s operating expertise across a broad array of businesses makes them the ideal partner to help us build on our momentum, drive new levels of innovation, and continue to deliver outstanding service to our customers.”

Colfax said it expects the deal to add to its adjusted EPS in the first full year after closing, plus tax benefits from DJO’s roughly $800 million in net operating loss carry-forwards.

J.P Morgan is financial advisor to COlfax, with Kirkland & Ellis as legal advisor; Goldman, Sachs, Credit Suisse, and Wells Fargo Securities are financial advisors to DJO, with Simpson Thacher & Bartlett as legal advisor.

Colfax co-founders, brothers Steven and Mitchell Rales, also built Danaher (NYSE:DHR), where Trerotola worked before joining Colfax, according to Reuters.

Wall Street reacted negatively to the news, sending CFX shares down -14.8% to $23.84 apiece today in mid-afternoon trading.

“It’s a completely new market for the firm, outside of the industrial market. Also, the strategic review of the non-welding business was unexpected,” Northcoast Research analyst Tom Hayes told the wire service.

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Losses widen in Q3 for DJO Global

DJO GlobalDJO Global‘s third-quarter losses widened on low-single-digit sales growth as the orthopedics company nears the end of a second year of restructuring.

San Diego-based DJO, which is privately held, posted losses of -$29.5  million on sales of $294.1 million for the three months ended Sept. 29, marking a red ink expansion of 30.0% on sales growth of 1.1% compared with Q3 2017.

Adjusted to exclude one-time items, including more than $21 million in restructuring charges, earnings before interest, taxes, depreciation & amortization were up 8.1% to $72.2 million.

“Our growth initiatives are working,” president & CEO Brady Shirley said in prepared remarks. “We’re seeing revenue growth return in key segments and ongoing margin expansion, evidence that our efforts are driving results, and we continue to anticipate a stronger trajectory for the remainder of our fiscal year.”

“We have made such great progress in our transformation journey. Productivity was strong again in the quarter, as it has been the last several quarters, with Adjusted EBITDA for the quarter increasing 8.1%, or 2.9 times the growth in revenue, and margins improving about 120 basis points,” added CFO/COO Mike Eklund.

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DJO Global posts shrinking losses, growing sales in Q1

DJO Global saw losses shrink and sales rise as a result of internal efforts to transform its business and reduce costs, according to its first quarter earnings release.

The privately held, San Diego-based medical device maker posted losses of $17.6 million on sales of $292.6 million for the three months ended March 31, seeing losses shrink 56% while sales grew 1.5% compared with the same period during the previous year.

DJO Global reported that its adjusted EBITDA increased 13.2% over the same year during the previous quarter, clocking in at $64.8 million.

“After starting the quarter with slow revenue trends reflecting the overall market performance, we saw improvement later in the quarter, particularly in March. In line with our annual plan, we expect to build revenue momentum throughout the year as growth investments that began late in 2017 begin to materialize. Overall performance was highlighted by continued, strong earnings growth and significant margin expansion,” prez & CEO Brady Shirley said in a press release.

“From a bottom-line perspective, we continue to demonstrate that our multi-year transformation is working, delivering 13% Adjusted EBITDA growth and over 200 basis point improvement in margin. The growth in Adjusted EBITDA is a product of improving gross margins and strong control of operating expenses, reflecting the hard work our team has put into our transformation initiatives. Additional operations initiatives are already underway focused on enhancing customer satisfaction as well as financial metrics. We remain confident in our ability to continue the improvement we have seen since the start of this journey early last year,” DJO CFO & COO Mike Eklund said in a prepared statement.

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DJO Global swings to Q4 black on tax reform gain

DJO Global swung to black ink during the fourth quarter, thanks to a nearly $70 million gain from last year’s tax reforms, which also helped pare its full-year losses by some 88%.

The privately held, San Diego-based medical device maker posted profits of $61.2 million on sales of $312.2 million for the three months ended Dec. 31, 2017, for a 5.3% top-line increase over Q4 2016, when losses were -$202.1 million.

Full-year losses were down -87.5% to -$36.0 million on sales growth of 2.7% to $1.19 billion, DJO said.

“Our team delivered outstanding fourth-quarter and full-year operating results,” president & CEO Brady Shirley said in prepared remarks. “We had continued double digit growth in the fourth quarter from our innovative surgical products, strong performance in our international business segment and realization of cost improvement from our broader business transformation. At 14% adjusted EBITDA growth in 2017, we delivered not only our best performance in many years, but also believe we delivered a top performance in the orthopedic market. I am proud of the DJO team and happy to see their dedication and hard work pay off in 2017. We are excited to enter 2018 with a strong dedication to continued discipline and an opportunity to begin to invest in growth for the future.”

“With our transformation initiatives, we have greatly improved the foundation of our company both operationally and financially, producing the strongest adjusted EBITDA growth for the company in many years,” added CFO & COO Mike Eklund. “There is certainly more work to do, but I am pleased with the team’s achievement thus far and as confident as ever in our ability to continue improving operating metrics and profitability again in 2018.”

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